Stores from Gap to Target tighten refund rules

By

Posted 10:45AM on Tuesday, May 14, 2002

After years of cheerfully exchanging deodorant-smudged shirts, scratched videocameras and even used lipsticks, retailers are adding a new word to their lexicon: "No." In recent months, companies from Home Depot to Saks Fifth Avenue have overhauled their return policies. In January, Kmart announced a waiting period for some cash refunds. Old Navy no longer gives store credit without a receipt. Gap, which used to exchange pretty much anything at anytime, now requires clothes kept longer than two weeks to come back unworn, unwashed and with the tags on. Just yesterday, Gap further tightened its rules, declaring that items purchased overseas can no longer be returned to its U.S. stores. Target, too, has tightened up. Previously, it almost always allowed exchanges for store credit, whether or not the customer had a receipt. Now, all returns require a receipt and merchandise brought back without one can be subbed only for a similar item in the same department. Target is also charging "guests" (the company's term for customers) a 15 percent restocking fee on some returned electronics, even if they were never opened. Major retailers are also using sophisticated software to flag "habitual returners." Make too many exchanges without receipts, and Gap and Target will send you a letter or pull you aside at the counter. Blame it on the tight economy. With growth slowing in the retail business, companies are scrambling to plug the leaks. About 6 percent of all retail purchases are returned every year, and stores say a growing proportion of those are from customers perpetrating some kind of scam. "We're seeing too many big-screen TVs coming back the day after the Super Bowl and too many prom dresses coming back the day after prom night," says Scott Kruger of the National Retail Federation. Some retailers, such as Lands' End, one of the standard bearers of the no-questions-asked return policy, have resisted this trend. But yesterday, the retailer got a new owner, Sears. It says it will retain Lands' End's return policy, though it is noncomittal about whether that will apply to Lands' End items sold in Sears outlets. For Americans accustomed to returning their beach chairs when summer ends, it's a harsh new world. And even more conservative returners are finding the environment tougher. Last November, Dana Moses, a loyal Gap shopper since the 1980s, found herself making frequent trips to a Manhattan Gap returns counter after receiving a slew of unneeded gifts for her newborn son -- including three identical Baby Gap hats. After about a dozen returns, she got a series of letters from the company, informing her that she would no longer get refunds unless she had orginal receipts. "What am I supposed to do," she asks. "Ask Great Aunt Sadie for her original receipt?" Ms. Moses is so discouraged that she is boycotting Gap. The retailer suggests that people in her situation take the issue up with store managers. Some stores are actually making customers pay for returns. In addition to Target, CompUSA and Best Buy were already slapping 10 percent to 15 percent restocking fees on some returned electronics. Unlike Target, however, their policies apply only if the box has been opened. Kim Tavis, a dental assistant from Elverson, Pa., collided with Best Buy's policy this January, when she tried to return the $600-plus digital camera her husband bought her for Christmas. She was charged $75. "How much can it cost them to put it back on the shelf?" she asks. A Best Buy spokeswoman says the chain resells opened items at a discount, which she says explains the "restocking" fee. The restocking fees generally apply only to big-ticket items such as digital cameras and laptop computers. Retailers say college students, for example, were buying computers and then returning them after they handed in their term papers. But consumers can easily avoid the fees by shopping around them: Wal-Mart, Kmart and Radio Shack don't charge restocking fees, and Circuit City has recently abolished them due to customer frustrations. In this new stricter environment, "save your receipt" has become a warning rather than a suggestion. Stores like Old Navy and Target, which used to offer store credits to customers who returned items without proof of purchase, now only offer extremely limited exchanges. "Guests can get a red sweater instead of a blue sweater, but they can't get red sneakers," says Target spokesman Douglas Kline. Both J.C. Penney and Home Depot abandoned the practice of offering cash refunds on some exchanges without receipts. Now the rule is store credits only. But even a receipt isn't a money-back guarantee. Target allows returns only within 90 days, while Radio Shack gives a 30-day window. And, at Old Navy, Gap and Banana Republic, customers with gift receipts must wait for refund checks to arrive in the mail. Retailers are full of stories about abuses of the more liberal policies. Circuit City says one customer brought back a videocamera claiming it didn't work properly, but upon inspection, employees found a tape inside showing the owner jumping off a diving board with the camera. Digital piracy has added to the problem. Tower Records saw nationwide CD returns surge to nearly 50,000 a month in 1998, as customers purchased albums "temporarily" to burn copies at home. In 2000, the company stopped accepting returns on CDs that weren't still in shrink wrap, and is currently testing a new policy in its Berkeley stores where open discs are refunded at 75 percent. While Saks now requests some proof of purchase, in general upscale retailers have been less aggressive about tightening their return policies. They're hoping the shame factor alone will discourage returns. Nordstrom, for one, says it will often allow cash refunds with few questions asked. In fact, Nordstrom says it once accepted snow tires on a return -- and it doesn't even sell snow tires. The company had opened a store in an Anchorage, Alaska, building that used to house a tire shop, and the customer had bought the tires from the original store.