- The Washington Times - Monday, January 24, 2005

RICHMOND - A General Assembly bill — hailed by consumer groups — would require retailers across Virginia to tell shoppers exactly how they limit merchandise returns.

The proposed legislation, which may be the first of its kind in the country, took consumer groups and the retail industry by surprise.

J. Craig Shearman, a spokesman for the National Retail Federation, said he has heard of no other state that has introduced a bill requiring stores to inform consumers how they limit returns. But the organization is opposed to similar legislation that U.S. Sen. Charles E. Schumer, New York Democrat, is expected to introduce soon.

“And I think we would be particularly opposed to state-level legislation,” Mr. Shearman said.

Delegate Robert Tata, a Republican from Virginia Beach, said he introduced the bill at the suggestion of a constituent: Michael Cohen.

Mr. Cohen, who works for a defense contractor, said he has a keen interest in consumer and civic issues. And he grew concerned after learning that some retailers use a technology service to monitor returns and deny them based on certain criteria, such as the frequency of a customer’s returns.

The tracking underscores the industry’s challenge of reining in billions of dollars in fraud, including organized rings of thieves who steal goods and then return them to stores. Some retailers are also targeting a practice known as “wardrobing,” in which people buy clothing with the intention of returning it later.

Although Mr. Cohen doesn’t characterize himself as a frequent returner, he said it would bother him if he learned that the company was silently monitoring him when he returned ill-fitting pants or defective products.

Mr. Cohen said he doesn’t mind if retailers limit returns. “What I’m saying is that they should have to disclose if they’re tracking your return patterns,” he said.

Virginia already requires retailers to post a notice if they do not accept returns or exchanges.

The proposed legislation goes one step further: It would require any retailer that limits the number or frequency of returns and exchanges to say so on a store sign or in some other conspicuous area, and make any details available to the customer upon request.

The measure wouldn’t apply to merchants who unconditionally provide cash refunds or credit to a shopper’s credit card for at least 20 days, when provided with receipts or other proof of purchase.

Retailers would face fines of up to $2,500 per violation.

Consumer advocates sounded alarms after learning that several retailers, including Express, KB Toys Inc. and Staples Inc., are using the monitoring service developed by the Return Exchange Inc. of Irvine, Calif.

Executives at the Return Exchange did not respond to two phone messages left last week and the previous week. But a public relations firm representing the company later called and provided background information on the technology.

The company’s system, trademarked as Verify-1, collects and analyzes information about shoppers’ return behavior and determines whether to authorize returns.

Each retailer provides specific criteria for accepting and declining returns.

Stores using the technology swipe a customer’s driver’s license, much like they would do with a credit card, and the information is sent to a secure database.

There, it is compared to a retailer’s returned merchandise policy and reviewed for possible fraudulent or abusive return patterns.

The Return Exchange says about 99 percent of people who try to make returns will never be turned down by its system.

“It’s designed to catch those who fall within the top 1 percent of all returns made at a particular retailer,” the company said.

If a return is denied, a shopper can appeal the decision, the company said.

Anthony Hebron, a spokesman for Columbus, Ohio-based Limited Brands Inc., said the company’s Express chain is using the system to detect fraud and to “speed up the returns.”

Mr. Hebron said the company’s return policy is clearly posted in its stores.

He did not provide details on the company’s criteria for accepting and denying returns.

A spokesman for Staples, an office-supplies chain based in Framingham, Mass., said the company uses the system “selectively” — only at certain stores and only with customers without receipts.

He declined to provide further details on the company’s guidelines for limiting returns and on why the stores were chosen.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide