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Business News: Unsatisfied Buyers Beware –Returning too much merchandise of a sort too
quickly can make retailers suspect fraud
Safdar, Khadeeja . Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]05 Apr 2018: B.3.
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More consumers are finding out that stores are using a third-party service to monitor their shopping behavior and
limit the amount of merchandise they can return.
Best Buy Co. has been the target of a large share of consumer complaints on Facebook, Twitter, Yelp and other
online forums about its efforts to police returns with the help of a firm called Retail Equation. But the same service
is used by a variety of other retailers, including J.C. Penney Co., Sephora, CVS Health Corp., Advance Auto Parts
Inc., Dick’s Sporting Goods Inc., Home Depot Inc. and Victoria’s Secret. Some only penalize shoppers for
merchandise that is returned without a receipt, while others also count receipted returns.
The Wall Street Journal previously reported that Retail Equation develops a “risk score” on each customer based
on the person’s shopping behavior, then sometimes issues warnings and denials. The firm, based in Irvine, Calif.,
receives information about shoppers when they provide a form of identification to retailers.
The actions that hurt a shopper’s score and the thresholds for getting rejected on additional returns vary by retailer
and often aren’t disclosed in their policies. Behaviors that can harm a score include returning a large percentage of
purchases in a short period and bringing back items that tend to get stolen at that retailer.
Retail Equation said it doesn’t share a person’s data from one retailer with another.
U.S. retailers lost more than $351 billion in sales last year due to merchandise returns, and an estimated $22.8
billion of that came from fraudulent and abusive returns, according to a report by Appriss Inc., a Louisville, Ky.,
data analytics firm that acquired Retail Equation in 2015. The company said it used a recent survey conducted by
the National Retail Federation to determine the losses.
Sue Tillman, 55-year-old social worker, of Guilderland, N.Y., said she received a warning in August from Retail
Equation when she tried to return men’s shirts at the J.C. Penney store in nearby Albany. She said she had a
receipt and was following the store’s guidelines. After returning one, she said a salesperson told her she would be
denied from making returns for 60 days and advised her to contact Retail Equation to request her so-called return
activity report, a history of her transactions.
Her report reveals the firm has been tracking her shopping behavior for at least seven years. Since the start of
2017, Ms. Tillman returned 10 other items at Penney, each with a receipt, according to the August report, which
was reviewed by the Journal.
At J.C. Penney, returning too many items or bringing back products that tend to get stolen such as cosmetics can
hurt a shopper’s score. The retailer uses Retail Equation to help prevent fraudulent or abusive returns, but the
system doesn’t “impact the vast majority of day-to-day transactions,” said spokesman Joseph Thomas.
While most retailers don’t publicize their relationship with Retail Equation, many disclose in their return policies
that they work with a third party.
“When we identify excessive return patterns, we notify those customers that we may limit future returns or
exchanges if no proof of purchase is provided,” said a Sephora spokeswoman.
Victoria’s Secret reveals the thresholds for returns on its website. At the lingerie retailer, owned by L Brands Inc.,
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shoppers can make up to seven returns in a 90-day period and bring back $250 of merchandise over the same time
frame without a receipt.
Home Depot said it only uses Retail Equation to track returns with no receipt.
CVS started using Retail Equation last year, and about one-third of 1% of returns have been declined at its stores
since, said CVS spokesman Mike DeAngelis. “Similar to other major retailers, we reserve the right to decline to
accept a return even if accompanied by a receipt if it does not pass our third-party verification,” he said.
Robert Berardino, 43, a technology manager from Millersville, Md., said he learned about Retail Equation for the
first time in February when he went to Dick’s Sporting Goods in Gambrills, Md., and tried to return three items his
wife had purchased online.
He said he brought a receipt but he received a warning notice after the first return, a pair of shoes. Dick’s Sporting
Goods didn’t respond to requests for comment.
“It was insulting,” Mr. Berardino said.
Credit: By Khadeeja Safdar
DETAILS
Subject:
Sporting goods; Retailing industry; Retail stores
Location:
United States–US
Company / organization:
Name: Dicks Sporting Goods Inc; NAICS: 451110; Name: Appriss Inc; NAICS: 518210,
519130; Name: Twitter Inc; NAICS: 519130; Name: Advance Auto Parts Inc; NAICS:
441310; Name: National Retail Federation; NAICS: 813910; Name: Best Buy Co Inc;
NAICS: 443141, 443142; Name: J C Penney Co Inc; NAICS: 446110, 452111, 454113,
551112; Name: Home Depot Inc; NAICS: 444110; Name: Facebook Inc; NAICS:
518210, 519130; Name: CVS Health; NAICS: 446110; Name: Wall Street Journal;
NAICS: 511110; Name: L Brands Inc; NAICS: 424210, 448120
Publication title:
Wall Street Journal, Eastern edition; New York, N.Y.
Pages:
B.3
Publication year:
2018
Publication date:
Apr 5, 2018
Publisher:
Dow Jones &Company Inc
Place of publication:
New York, N.Y.
Country of publication:
United States, New York, N.Y.
Publication subject:
Business And Economics–Banking And Finance
ISSN:
00999660
Source type:
Newspapers
Language of publication:
English
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Document type:
News
ProQuest document ID:
2021655774
Document URL:
http://ezproxy.limcollege.edu:2048/login?url=https://search.proquest.com/docview/
2021655774?accountid=45025
Copyright:
(c) 2018 Dow Jones &Company, Inc. Reproduced with permission of copyright owner.
Further reproduction or distribution is prohibited without permission.
Last updated:
2018-04-05
Database:
ProQuest Central
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Your tasks:
Read the following article from the Wall Street Journal:
“Unsatisfied buyers beware: Returning too much merchandise of a sort too quickly
can make retailers suspect fraud,” The Wall Street Journal, April 5, 2018, by Khadeeja
Safdar.
b) Answer the questions below in detail. Be sure to reference specific marketing
concepts you have learned so far.
1. In your own words, explain the service that companies like Retail Equation
provide.
2. Describe the problemthat retailers are trying to solve through services like Retail
Equation.
3. What are the factors that impact a consumer’s ‘risk score’, as determined by
companies like Retail Equation?
4. What are the risksand potential rewardsthat retailers could experience by
deploying a service like Retail Equation to generate a risk score for consumers?
General instructions:
Your assignment should be 400 – 600 words in length. Use the word count function in
MS Word to check your word count.
Use 1-inch margins on all sides. Double-space your document.
Do not include a title-page. Include your name, the title of your assignment, and the
date on top of the document.
Submit the assignment via Blackboard (using the appropriate assignment link).
Please note that your assignment is subject to plagiarism checks (e.g., using
SafeAssign)
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