Return of The Returnaholics!

On June 27, 2010, I was honored to be a guest expert on NBC’s The Today Show. The topic was “returnaholics” who, according to the National Retail Federation, cost U.S. retailers $10 – 15 billion per year due both to fraud and the fact that much of the returned merchandise is either used, damaged, or unsellable. Even “The Simpsons” recently aired a show that highlighted this problem (Fox, 10/3/10). See 4-minute NBC online video at: http://www.theshulmancenter.com/Returnaholics.html and a good online article at: http://www.walletpop.com/blog/2010/05/18/returnaholics-cost-retailers-billions-of-dollars-a-year/

NBC news anchor Lester Holt asked what motivates returnaholics and whether returnaholism is a disorder. I replied that there are three kinds of people we’re talking about. First, there are people who return things with intent to defraud—through false returns—to get money back and/or store credit; second, there are people who take advantage of the system, buying things knowing in advance or in the back of their minds that they are likely to return them after a short (or longer) period of usage;

and third, there are “bulimic shoppers”—a sub-group of shopaholics—whose constant returning has less to do with fraud and more to do with their ritualistic and obsessive attempts to fill an endless void in their lives; these returnaholics—who don’t know what they really want or feel frustrated they can never obtain it—rarely even wear or use what they purchase.

But the most interesting part of the interview came toward the middle when Mr. Holt asked me if I thought retailers enabled returnaholics with their generally liberal return policies. I have to admit, he caught me off guard for a moment and I answered, “well, I don’t know if they enable it but I understand that, especially in today’s economy, each store has to compete for customers and this may lead to more lenient return policies to foster customer satisfaction and loyalty.”

And while I realize that every store has its limits to what it will exchange or refund, I did think later that maybe retailers do have to be tougher on all three types of returnaholics: the fraudsters; those who simply take advantage or push the limits of customer service; and even those bulimic shoppers who have legitimate returns but impact the system just by their sheer volume and frequency.

I further wondered: at what point do stores enable fraud, scamming, and compulsive shopping? This is not to say that individuals aren’t responsible for their own behavior but are we so afraid to set limits and enforce rules even if it means losing a certain (or uncertain) percentage of customers?

Let’s consider for a moment how bars and restaurants have to, by law and theory, cut off a patron’s alcohol consumption once he or she has reached discernable tipsiness (no obvious task) even if it means losing a few dollars (of course, a lawsuit would be more expensive). Likewise, casino employees are trained to look for problem gamblers and cut them off when it appears they are becoming too distraught even if they still have money or chips left to play. Even restaurants, especially fast food joints, have backed off serving Super-sized portions and using trans-fats despite risking reduction in flavor and profit to promote more healthy options for their consumers.

Are these kinds of policy decisions—whether mandated or voluntary—honoring patrons or enabling them, protecting businesses or interfering with them? We could be cynical and say that no bar, casino, or restaurant cares about what happens to their customers—as long as they’re making a buck. But, actually, isn’t it in the long-term interest of businesses to be customer-friendly not by just giving them what they want but by recognizing that a drunk or broke or dead customer is one less customer to serve. Keep ‘em alive longer—now that’s good for business! What about shopaholics? Have you ever heard of a store cutting a customer off because he or she was purchasing too much? Probably not. They get cut off if their checks bounce, if their credit card limit is reached, and if their house account is overdue. When a shopaholic runs out of money, turning to shoplifting and employee theft often is the next step.

Similarly, no retailer deserves to be stolen from whether by a shoplifter an employee or a returnaholic; yet, every retailer must take some responsibility for the reality that there are people who will steal or take advantage of the system. We don’t have to tempt even the average Joe (or Jane) with lax or non-existent security or return policies. Taking a strong stand against theft and retunaholism goes a long way at nipping pattern and habitual behavior in the bud. For many, getting a wake-up call might be the best thing that happens to them (so long as the wakeup call handled professionally).

In a changing world, we need to keep thinking outside the box and looking at the big picture which, in part, may include new and progressive ways in which we imagine the duties and responsibilities retailers (and loss prevention folk) have toward their customers.  $

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