Quick & easy gift returns? Not this year

Sears has restocking fees; Penney wants the "return tag" intact; OfficeMax won't accept opened gifts

By Parija Bhatnagar, CNN/Money staff writer

NEW YORK (CNN/Money) - Better hope and pray -- very, very hard -- that you like the gifts Santa puts under the tree this year because retailers' holiday return policies are becoming even more tricky and nasty.

Edgar Dworsky, a consumer advocate and editor of Consumer World, says folks may be in for a rough ride if they get stuck with yet another reindeer mug or blue flannel bathrobe.

"Watch out for restocking fees," Dworsky said.

While consumer electronics stores such as Best Buy (Research) and Circuit City (Research) typically apply restocking fees on "opened" returns, Dworsky said department stores have tended to use them in a limited way.

"Sears had a 15 percent restocking fee on returns for consumer electronics. But these fees have now been expanded to other product categories as well. That's a first for department stores," he said.

Other retailers are cracking down on returns of holiday clothing.

"J.C. Penney's return policy requires that if you're returning formal wear, the tag attached to the item must be intact and in the same conspicuous spot," he said.

Some observers point out that these increasingly tougher measures aren't the best way for retailers to build customer loyalty, especially during the critical holiday shopping period that accounts for as much as 50 percent of merchants' profits and sales.

At the same time, Dworsky and others admit that consumers themselves are partly responsible for retailers playing hardball.

"Our research on holiday gift returns shows that it's only three percent of Americans who are real jerks and they indulge in consumer fraud and return abuse," said Britt Beemer, a retail industry observer and chairman of America's Research Group. "The rest of us have to deal with the consequences."

"Retailers are fighting lower profits than in years past. The industry's is definitely more competitive today and companies have to do what they can to not take unnecessary markdowns," Beemer said.

Joseph LaRocca, vice president of loss prevention with industry trade group the National Retail Federation (NRF), estimates that the industry loses about $30 billion annually to consumer fraud and organized retail theft.

"There are many reasons people return goods," LaRocca said. "Honest people buy the wrong products. But some people think of stores as their own personal closets. They buy items, abuse them and try to return them. "

Some people, he said, act as a "gang of criminals" by stealing from stores and then making a fraudulent return to pocket the money. Others even turn to the Internet to offload pilfered merchandise on eBay, for example.

"If [a shoplifter] brings back the merchandise to the store for a refund, he gets back not 100 percent of the value but 108 percent if you include the tax," LaRocca said.

As retailers continue to leak more dollars to crime, merchants will continue to tighten their policies, he added. "To good honest consumers, these changes are mostly invisible. It's to catch those customers who aren't," he said.

OfficeMax won't budge; Wal-Mart "tracking" serial returners?
Dworsky picked office supplies chain OfficeMax as a retailer with strict return policies. "They will not take back digital cameras and other electronics if the box is opened," he said.

Beemer credits Wal-Mart with offering a relatively "liberal" returns policy.

In an e-mail to CNN/Money, Wal-Mart spokeswoman Sharon Webber said the world's largest retailer "for several years has accepted returns without a receipt, even though many of our competitors require receipts for all returns."

However, a recent report in ConsumerReports.org said Wal-Mart and other big retailers including Home Depot and Barnes & Noble now use proprietary software systems to track returns and alert cashiers to customers who repeatedly return merchandise.

Home Depot (Research) could not immediately be reached for comment.

Wal-Mart provided this e-mailed response: "In the event that a customer has returned more than three items without receipts within a 45-day period, the cash register system will automatically flag the transaction, and a customer service manager or a salaried manager must approve the return," said Webber.

"These cash register messages will remain for six months and will disappear if there are no more returns without receipts during that time period. The return tracking system is a proprietary system developed by our own team," she said.

Said Dworsky, "I think many more retailers will start to use this type of tracking software although they won't publicly talk about it."

"I've been to KB Toys, Sports Authority and Express and all these stores were using the software," he said.

Retailers aren't required by law to tell consumers that their purchase and return activity is tracked. However, Dworsky said most retailers are required to disclose their return policy to consumers.

"If retailers are using a tracking database to analyze consumers' purchasing history, they should make shoppers aware of it either by putting a notice on the window or printing it on the receipt," he said. "This is especially important if stores deny a return if consumers exceed a certain limit.

Dworsky said, "Again, it's up to consumers to become aware of all the policies for a store."