Major retailers, including Best Buy, JCPenny, Victoria’s Secret and a variety of others, have been tracking the return habits of shoppers and secretly punishing those who are suspected it be abusing return policies.
According to a report in the Wall Street Journal, the retailers are making use of the services of a third-party company, The Retail Equation, that keeps a running tally of all returns made by each customer in order to prevent potential fraud.
The Retail Equation, which is based in Irvine, California, claims on its website to be responsible for approving nearly 610 million returns. The company also claims to approve over 99 percent of all returns.
Retail fraud is a legitimate issue for retailers. According to a 2017 survey conducted by the National Retail Federation, retailers estimate about 11 percent of all sales are returned and about 11 percent of those returns are believed to be fraudulent. However, it appears that in some cases, The Retail Equation may crack down on the wrong customers.
According to consumers, the service being utilized by a number of major retailers is not as generous as it claims. One Best Buy customer, Jake Zakhar, reported that he was banned from making a return with the chain for a year due to previous returns tracked by The Retail Equation.
When Zakhar contacted The Retail Equation, the company informed him he mad three returns totaling $87.43— enough for them to deem him a potential candidate to commit return fraud. The Retail Equation refused to lift the ban.
“On very rare occasions—less than one tenth of one percent of returns—we stop what we believe is a fraudulent return,” Jeff Haydock, a spokesman for Best Buy, told the Wall Street Journal. “Fraud is a real problem in retail, but if our systems aren’t as good as they can be, we apologize to anyone inappropriately affected.”
Best Buy has since set up a dedicated hotline that consumers can call if they believe they have been incorrectly banned from making returns.
While Zakhar’s history only contained a few items, The Retail Equation has information on customer returns that date as far back as 2004. The company keeps huge swaths of information about individuals and their spending habits, often without the consumer being fully aware that the information is being shared with a third-party firm.
“There should be no secret databases. That’s a basic rule of privacy practices,” Ed Mierzwinski, consumer program director at the Public Interest Research Group, told the Associated Press regarding The Retail Equation. “Consumers should know that information is being collected about them.”
