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American Morning

'Wall Street Journal' Reporter: Retailers Overhauling Return Policies

Aired May 15, 2002 - 9:49   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAHN, CNN ANCHOR: This morning, we have some good news and some bad news. The good news is that retail sales were up last month. Now, for the bad news. "The Wall Street Journal" reports that many stores are overhauling their return policies, largely because of customer abuse. Major retailers, from Target, to Saks, to The Gap, to Home Depot, are looking out for habitual returners and already-been- used merchandise.

We took our own sample, asking people on the street if they had ever returned something after wearing it.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I have to say I have. Sometimes you just, you can't afford it sometimes, but you want it so bad.

UNIDENTIFIED FEMALE: I've never done it personally. I have a bunch of friends that do it, like they'll wear something to a party, like a $300 skirt, and return it.

UNIDENTIFIED FEMALE: If I needed an outfit for a certain event and then, you know, didn't think I would wear it again, yes, I would take it back.

UNIDENTIFIED FEMALE: I wouldn't do it. Guilt. Couldn't do it.

(END VIDEO CLIP)

ZAHN: Guilt, couldn't do it. Glad to hear that.

Joining us now to talk more about what's driven retailers to the point of no return, Jane Spencer from "The Wall Street Journal."

Good Morning.

JANE SPENCER, "THE WALL STREET JOURNAL": Good morning.

ZAHN: I couldn't believe what you found. There are some really elaborate schemes people are using to return stuff.

SPENCER: Well, they start with some very low-tech ones, such as just going into a book store and picking up a book and bringing it straight to the return counter and getting a store credit from the store -- some people shop that way.

ZAHN: Without a receipt, and they'll give them the money?

SPENCER: The policies have been so loose for several decades that it's just incredibly easy: You can bring back anything -- used lipstick, sandy beach towels, and they're just no questions asked. That's starting to change a bit, though.

ZAHN: Some of it used -- like a little thing of lipstick, and what pretense would you be returning it? I don't like the color?

SPENCER: Yes. The stores figure the economic benefits of keeping customers happy outweigh the cost of absorbing returns, although...

ZAHN: Unfortunately though, they have had to absorb cost of these returns. I'm going quickly to put up some changes stores have made to accommodate what they say is abuse. Look at what The Gap used to do. Washed and worn merchandise was often refunded. Guess what? You can't do that any more. You have a 14-day window for returns with a receipt. They must be unworn, with tags on it.

SPENCER: Gap is also tracking habitual returners, which you mentioned before. They keep track of every exchange you make. And with gift receipts, say you have a baby shower and you get a ton of gifts. If you take too many exchanges with a gift receipt, trying to get money back, they will send you a letter saying you've made too many of these, you have to stop. And they will stop you from making any more returns.

ZAHN: Doesn't that discourage people from buying baby gifts there ultimately? Because you never know what anybody wants.

SPENCER: Well, Gap says if you have a problem, take it up with the manager.

ZAHN: That makes sense.

SPENCER: Although I've talked with some customers who had very tough discussions with the managers over this. They are strict about it now.

ZAHN: Let's focus in on Home Depot now. The old return policy was really quite liberal, no time limit, cash refunds often given with no receipt. Here is the new return policy: 90 day window on returns, store credit only with no receipt.

SPENCER: I guess they say people bringing back lawn mowers at the end of the summer, and they're tired of it.

ZAHN: And they would actually give them the money back?

SPENCER: They would, they had a very open policy, and people were taking advantage of it -- although it kept people going to Home Depot. I don't know if it was entirely ridiculous, it made shopping there very easy. ZAHN: Yes, I guess you would have to measure that someplace in the equation.

Look what Saks Fifth Avenue is doing. It used to be that you could return anything, anywhere, anytime. Not any more. You need a proof of purchase.

SPENCER: Proof of purchase is defined very loosely by Saks. If they can look up your purchase records in the computer, that counts -- if it has a Saks tag on it -- so they're not requiring that you have a receipt in hand. But Saks, like a lot of the upscale retailers, had incredibly loose policies where they just -- don't ask, don't tell was the rule. But so many women were, you know, wearing a dress to a party, as we just heard in those clips, and bringing it back, reeking of cigarette smoke, and getting a full refund, and they're just cracking down.

ZAHN: A lot of abuses in electronic stores. In your piece, you wrote about college students that use computers for weeks and then went back, and when the test was over returned them.

SPENCER: Circuit City told me a great story of someone who brought back a video camera saying, You know, I don't know what's wrong with this. They took it back and looked inside, and there was a tape of the guy jumping off a diving board with the camera.

ZAHN: Oh great, right into the water. Very smart indeed. So they're also restocking fees people should be aware of, even if you legitimately return a product that you haven't used or abused?

SPENCER: Yes. Well, this has been true for a few years now, that a lot of the major electronic stores have these fees, usually about 15 percent on things like digital cameras and very high-end electronics -- laptops -- things that people borrow for sort of retail one-night stands. So Target actually just introduced a fairly tough one, which is that if the seal on the box is open, they will charge you 15 percent. And some items don't have a seal, so those ones, regardless, even if you've never opened the box, they'll charge you 15 percent.

ZAHN: Wow. There's no -- we don't know how widespread this is, but it's happening in enough of these places they're clamping down.

SPENCER: Well, supposedly, an estimated 1.5 percent of all returned merchandise involves some sort of fraud or scam.

ZAHN: Not good.

SPENCER: And in some sectors, like women's fashion, 30 percent of merchandise is returned.

(CROSSTALK)

ZAHN: Think about it the next time you buy a skirt, and make sure it doesn't have cigarette smoke and all that other stuff and it hasn't been to a party the night before. Jane Wells, thank you for the warning -- Jane Spencer, excuse me -- of "The Wall Street Journal." Glad to have you with us this morning.

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