Software Monitors Returns at Retailers

How many returns are too many? Shoppers may soon find out as "Black Friday," the day after Thanksgiving, kicks off the 2004 holiday shopping season. A software application from The Return Exchange Inc. called Verify-1 that monitors and records the frequency of returns by consumers is starting to catch on.It appears that several major national retailers such as The Limited, Express, Victoria's Secret, KB Toys, The Sports Authority, Staples and others are outsourcing the collection of return and exchange data to the Irvine, Calif., software company, according to a Web posting by the Privacy Rights Clearinghouse in San Diego, Calif.

Stores have been tracking customer buy and return habits for some time. Retailers collect a state issued identification or license number when a consumer makes a return to protect the company against fraud. Now, some retailers intend to deny returns to those who are habitual about buying and returning merchandise. The posting at www.privacyrights.org, however, states the PRC is concerned about consumers being denied the ability to make a legitimate return.

Apparently, apparel retailers claim they lose $16 billion in fraud annually from shoppers who never intend to keep the merchandise or wear it once and try to take it back.

Verify-1 lets merchants enforce their return policy as well as authenticate the return. The Return Exchange's Website states: "If the return is authorized, a return authorization code is immediately sent back to the terminal for continued processing. If a pattern of unusual return activity is detected, a decline code is sent back to the terminal, and the consumer is offered a courtesy notice directing them to contact customer service at The Return Exchange."

The Return Exchange, incorporated in 1999, began touting itself in 2000 as an "Internet-based total product return services provider, supplying complete end-to-end return process management to e-tailers, click-and-mortar retailers and bricks-and-mortar retailers. Its services include online product return authorization, reverse logistics for product processing and distribution and product liquidation via online auctions" -- and now -- monitoring the frequency of consumer returns to detect fraud.