The Return Exchange

By Evan Schuman  |  Posted 2004-12-17 Print this article Print

’s Perspective"> Mark Hammond, the chairman and CEO of The Return Exchange, said his clients include about one-dozen of the nation’s 100 largest retail chains. Schumer said those chains “have adopted secret store blacklists that were never announced and have unpublished rules, yet nonetheless stop people who make so-called excessive returns from returning extra goods. These unwritten policies could unknowingly prevent shoppers from returning gifts, wreaking havoc on the Christmas gift giving season.”
Beyond trying to pass a law forcing the disclosures, Schumer has asked the Federal Trade Commission to investigate “this blacklisting practice.”
Internal theft is still a critical retail problem. Will psychology help? To read more about discovering theft behavior click here. Hammond and other executives with The Return Exchange say the proposed legislation makes no sense because there is no specific number of returns that are banned. The pattern of a potential return abuser is based on a complicated—and highly-customized—algorithm.”We don’t use numeric rules. We take into account multiple characterics including time, duration, dollar amount and frequency of behavior,” he said in an interview.Schumer’s proposed legislation “doesn’t seem to make sense because it’s hard to disclose something like that in signage,” Hammond said. “You don’t describe in detail how a FICO credit score is calculated or every aspect of a check authorization. This is a new technology for a lot of people.” The resistance to the disclosure is therefore based on two issues: the impracticality of explaining a complicated formula to consumers; the need to keep some of the precise calculations secret to thwart those who want to get around the system’s traps. Mark Hilinski, senior vice president of sales and marketing of The Return Exchange, argues that a lot of the controversy makes little sense because such an extremely small number of people will have their returns halted. The Return Exchange’s service rejects only one-tenth of one percent of the reviewed returns and, he adds, “75 percent of all customers don’t make returns at all.” How do you deal with minimally-trained, seasonal employees? Here’s how one retailer opted to minimize seasonal employee damage. Click here. Schumer’s position is that a lot more consumers are being impacted because of the hassle and effort involved.Schumer said the database calculations do not “account for situations like New York City commuters who might purchase clothing items after work, catch a train home, try them on and match them to other garments and return the rejects the next day. And perhaps most important, these policies actually punish many honest shoppers who give these stores a high volume of repeat business, which is usually the real reason behind a high return rate.” Schumer’s office issued a statement saying that “because these systems penalize many honest shoppers and also raise privacy concerns, Schumer has urged the Federal Trade Commission to study what consumer information these companies are gathering, what they are telling consumers about the information they are gathering and whether the companies are disclosing the criteria that consumers would need to meet in order to lose their right to return clothing.” One retail concern is that many stores do not have sales associates or clerks check their internal databases of returns—assuming they even maintain such a system—across the chain. A store manager might be inclined to let certain returns go through but might not if that manager knew of the number of returns that customer performed at the chain’s other stores. Next Page: Why the databases can’t be combined.

Evan Schuman is the editor of's Retail industry center. He has covered retail technology issues since 1988 for Ziff-Davis, CMP Media, IDG, Penton, Lebhar-Friedman, VNU, BusinessWeek, Business 2.0 and United Press International, among others. He can be reached by e-mail at

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