Study: Lenient return policies may both help and harm

WASHINGTON In an effort to provide good customer service and hopefully increase sales, many retailers are offering more relaxed return policies this holiday season. According to the National Retail Federation’s third annual Return Fraud Survey, completed by 82 retail loss prevention executives last month, more than half of retailers (52%) say their holiday return policies will be more lenient than the policy for the rest of the year, up from 35% who said so in 2007.

In addition, the number of retailers who said their holiday return policy will loosen compared to last holiday season will triple, from 3.4% of retailers to 11%. Common changes may include retailers extending the amount of time for returns to be made and also being more flexible to customers without a receipt. In comparison, 17.1% of retailers said their return policy will tighten this holiday season, up slightly from 15.3% last year. In addition, 71.9 % of retailers’ policies will remain the same.

“In a year where practicality is paramount, many retailers are making return policies more flexible for customers who need to bring back duplicate or unwanted gifts after the holidays,” said NRF vp of loss prevention Joe LaRocca. “Retailers seem to be finding a balance between providing good customer service to shoppers while preventing criminals from taking advantage of lenient policies.”

Retailers know the decision to make return policies more lenient may come at a cost. According to the survey, return fraud continues to plague the industry and will cost retailers an estimated $3.54 billion this holiday season, down slightly from $3.6 billion last year. (Retailers will lose $11.8 billion to return fraud in 2008.) However, retailers seem to be tackling the problem, as return fraud is expected to decrease to 7.5% of holiday returns from 8.9% last year.

Though retailers seem to be confronting return fraud, incidents continue to permeate through most retail stores. According to the survey, most retailers (88.9%) have had stolen merchandise returned to stores within the past year. Retailers also report being victimized by returns of merchandise originally purchased with fraudulent or stolen tender (74.1%) and returns using counterfeit receipts (45.7%).