Holiday Retailers Beware! Consumers are Abusing Retun Policies in New Ways

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Retailers who believe their return policies create customer satisfaction and loyalty should think again. Recent research shows at least 20% of all consumer merchandise returns may be fraudulent.

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"Many retailers who think that their liberal return policies create customer satisfaction, should think again."

A recent study reveals that about 20% of American consumers have practiced "unethical retail disposition," or URD, at least once. Mark Rosenbaum, Professor of Marketing at Northern Illinois University and lead researcher for the study states, "URD means that customers actually purchase merchandise with the intent to use and to return the merchandise at a future point in time." However, Rosenbaum explains that consumers never disclose this fraudulent intent to retail associates.

Although URD is has been researched in American since the early 1970's, Rosenbaum and colleagues from the University of Tampa and the University of Texas, reveal new reasons why Americans practice URD. First, many consumers want to rent merchandise for temporary ownership as opposed to purchasing it for permanent ownership. "Many Americans are abusing retail policies because they don't want to truly purchase a product, such as a designer handbag or jewelry item for long-term ownership, they merely want to own the item for a day or so, similar to a car rental," explains Rosenbaum. Unfortunately, traditional retailers cannot accommodate legitimate merchandise rentals, and therefore, are likely to become victims of this type of abuse.

The second reason for practicing URD is what Rosenbaum and his colleagues term, "first-time, only-time crime." Rosenbaum said, "Several consumers actually believe that they are entitled to a one-time fraudulent return. Perhaps, this is part of the sense of entitlement that prevails among many Americans. In any case, the costs to retailers of a first-time, only-time crime are enormous. Imagine consumers actually believing that they have a right to purchase a Louis Vuitton handbag from a retailer like Neiman-Marcus, use it, and then return it for a full refund. It's profoundly pathetic."

The study identifies the third reason as "outsmart the system." In this example, consumers express enjoyment in abusing retail return policies because they enjoy doing so. Rosenbaum says, "We actually found consumers who state that they find enjoyment in being able to abuse retail return policies. They realize they are committing a crime; yet, they rationalize that if retailers permit them to do so, then it is fair game to take advantage of these policies." Rosenbaum further points out that the fact that customers often consider how they can outsmart a retailer by abusing their return policies almost nullifies the benefits that retailers believe they can obtain by offering customers such policies.

Rosenbaum and his colleagues hypothesize that consumer abuse of retail return policies will continue to escalate in the future. They suggest that the decline of the local and regional department store and the growth of large, organizational retailers such as Macy's, Nordstrom's, Saks, and Neiman-Marcus set the stage for abuse. "History shows us that consumers who view retailers as strangers or as anonymous entities who supposedly charge unfairly high prices, will place their ethics by the wayside to take revenge against the retailers," explains Rosenbaum. Perhaps, consumer abuse of liberal returns policies represents a legitimate way that consumers can engage in retaliation against large retail organizations.

Rosenbaum states, "Marshall Field once said give the lady what she wants! I seriously doubt that he would say such a quote today. After all, the lady may be a well-dressed thief." The study is slated to appear in Psychology & Marketing next year.    


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Dr. Mark S. Rosenbaum
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