In Depth

The Naughty And Nice Of Holiday Return Policies

Did you get everything you wanted this year for Christmas? Did you get everything you wanted and more? Did you get some things that you actually didn’t want at all? Then you’re not alone.

Unwanted holiday gifts account for as much as 15 percent of all holiday sales, which this year are estimated to top $630.5 billion (the official numbers have not come in yet), according to the National Retail Federation. Research by Optoro estimates that about $70 billion worth of merchandise will be returned during the holiday season. The most commonly returned item? Clothes, with a report from MarketTools estimating clothing returns accounted for 62 percent of all holiday returns in 2014.

So, when a consumer heads to the mall to return that wool turtleneck sweater depicting a quaint woodland tableau, which maybe shouldn’t have been given in the first place, what exactly is he or she up against? And how are retailers handling the barrage of items flooding back into stores nearly as quickly as they were flying off the shelves on Christmas Eve?

As a consumer, knowing the return policies of various retailers will help navigate the post-holiday rush more adeptly. Took that gift out of the package, in a show of feigned enthusiasm? That could mean a restocking fee. Past the 30-, 60- or 90-day return window that many retailers, including Sears, still impose? That might result in store credit only. Don’t have a gift receipt? One might be out of luck all together at some retail locations.

And even if consumers think they've got a store’s regular return policy mastered, they find themselves facing a brand new set of (seemingly arbitrary) “holiday return policy” rules all together. A closer look at Sears’ holiday return policy reveals the following items excluded: floor care equipment, vacuums, major home appliances, sewing machines, water treatment, plumbing, heating equipment and items with return policy periods less than 30 days, including mobile phones. A 15 percent restocking fee will be assessed for furniture, grills, space heaters, opened electronics and a long list of other items. There are no exchanges or refunds without receipts on any items. And those Christmas decorations bought on a whim? They aren't returnable at all after Dec. 25.

Not all stores get stingier post-holidays. According to an article from Time, StellaService — a retail return policy watchdog group — says some of the retailers with the most generous return policies actually keep them intact post-holiday. Consumers that received gifts from L.L. Bean, Estee Lauder, Neiman Marcus, Nordstrom or Zappos are in luck; they’ll have up to a year or more to decide if they’d like to keep your gift or shop around.

Some retailers go even further to find a way to make holiday returns a winning proposition for them. According to USA Today, online retailer Zappos will be accepting returns for items not even bought on its site this year. Starting Dec. 26, the first 500 people who called Zappos' customer service from 11 a.m. to 11 p.m. ET, told them about an unwanted gift and sent it in to Zappos — using the prepaid return label that Zappos provided and ensuring that the gift still was in its box and had its tags intact — received a $100 Zappos gift card. In exchange Zappos will be donating the returned merchandise to charity. Good on 'em; that’s what we call making diamonds out of lumps of coal.

While retailers want to be as hospitable as possible to any customer who comes in their store, they also need to weed out the fraudulent and serial returners. According to a recent article by Spend Matters, the National Retail Federation estimates that fraudulent returns will cost the retail industry $2.2 billion this year, up from $1.9 billion last year.

“Retailers have the difficult task of providing superior customer service by always giving the benefit of the doubt to their shoppers when it comes to returns, while simultaneously working to make sure they protect their business assets,” Bob Moraca, the National Retail Federation vice president of loss prevention, said in a recent statement. The NRF also estimates that retailers expect 3.5 percent (up from 3 percent in 2014) of the returns made this holiday season will be fraudulent.

The fastest form of fraudulent returns? E-receipts. Approximately 34 percent of merchants polled in a recent NRF survey said they had experienced a fraudulent return with the use of e-receipts, which is up from 18.2 percent last year.



Banks, corporates and even regulators now recognize the imperative to modernize — not just digitize —the infrastructures and workflows that move money and data between businesses domestically and cross-border.

Together with Visa, PYMNTS invites you to a month-long series of livestreamed programs on these issues as they reshape B2B payments. Masters of modernization share insights and answer questions during a mix of intimate fireside chats and vibrant virtual roundtables.