Best Buy’s Use of The Retail Equation Compromises Customers’ Trust
There is absolutely no doubt in my mind that a service like the one provided by The Retail Equation is absolutely critical to the retail industry. I just don’t like the way that Best Buy has reportedly been using it. According to multiple reports that have surfaced, Best Buy—along with plenty of other big-name retailers—have been using The Retail Equation’s services to punish customers who return too many items.
On its website, The Retail Equation describes its ‘Verify Return Authorization System” as a way for retailers to offer the “99 percent of consumers” who don’t abuse return policies a “more lenient and flexible” return experience. That other 1 percent of customers whose behaviors mimic return fraud or abuse cost the retail industry anywhere between $10.8 billion and $17.6 billion per year, according to The Retail Equation.
However, rather than leaning on those services to protect themselves from return fraud and create more lenient return policies for the vast majority of consumers, it appears as though Best Buy and other retailers are using the data provided by The Retail Equation to implement even stricter return policies. A Wall Street Journal report cited an incident where a California man was barred from making returns or exchanges for a year after he tried to return three cellphone cases.
“I’m being made to feel like I committed a crime,” the man said. “When you say habitual returner, I’m thinking 27 video games and 14 TVs.”
Granted, situations like the one cited by the Wall Street Journal could be isolated, there are two major red flags with that type of corporate-level approach related to customers’ privacy and transparency around this tactic. The company is using return data on customers to create these profiles of individuals and essentially making judgment calls on whether they should be allowed to return product or not. There appears to be no transparency around the policies—the California man was referred to The Retail Equation, where customers can request to see their “return activity report”—and in an era when data protection and privacy are two hot-button issues with the general public, this is not the type of story any retailer would want their name attached to.
A Best Buy spokesperson, through the Wall Street Journal, apologized to customers “inappropriately affected” by the policy. “On very rare occasions—less than one tenth of one percent of returns—we stop what we believe is a fraudulent return,” Jeff Haydock said. “Fraud is a real problem in retail, but if our systems aren't as good as they can be, we apologize to anyone inappropriately affected.”
What’s particularly difficult about this situation, though, is that I can whole-heartedly understand where Best Buy and other retailers are coming from. Consumers have been conditioned by the likes of Amazon to be able to buy multiple products—say, clothes in different sizes—and try them out and return the ones the don’t like or that don’t fit with no penalties or complaints from the company. That’s 21st century, online shopping. Those products can be repackaged and sold as new without the customer seeing an already-opened box and expecting a used-product discount. Brick-and-mortar can’t afford to continue to lose margins on already-owned items—and they can’t continue to see their bottom lines impacted by loose return policies that open the door for return fraud.
It’s a tough spot to be in, and the answer to those challenges isn’t going to be easy to uncover. But one way to not answer it incorrectly is by twisting The Retail Equation’s services and undermining consumers’ personal information.