Retailers crack down on serial returns
Short-term 'owners' costing firms billions
Jimmy Deignan's first time was with a $500 portable DVD player.
He bought it a few years ago at Best Buy for a Boston-to-Los Angeles flight, knowing he would return it for a full refund when he got back. More recently, in November, rather than spending $600 to rent a LCD projector for a business presentation, the Holden resident purchased one at Staples, then returned it a few days later and got his money back.
The way Deignan sees it, he is just a smart shopper: He gets the things he needs, uses them for as long as he wants, and saves money. But to retailers, this is wardrobing, a practice they say is unethical, damaging to their bottom line, and increasingly common.
Nearly two-thirds of merchants had items wardrobed in 2007, up from 56 percent the year before, the first year the National Retail Federation started tracking the trend. Merchants blame tough economic times and a "customer-is-always right" mentality gone too far. They say a growing number of shoppers feel entitled to return used items they no longer want, and probably could not afford in the first place - from costly cocktail dresses for big events to pricey plasma televisions bought exclusively to watch the Super Bowl. So, they are striking back, instituting more restrictive return policies, imposing restocking fees, and keeping a blacklist of serial wardrobers.
"The economy drives people into this behavior - going through their closets and looking for things they can return, regardless of when they bought it or how many times they've worn it," said Dan Doyle, vice president of loss prevention at Bealls Department Stores, a retailer based in Florida with stores across the Sun Belt. "We've seen people bringing back things that are a year old. There's nothing you can do with that merchandise. It's pretty much a loss."
Bealls has tightened its policies, reducing the time to 60 days that customers can return items for cash refunds at the outlet stores, a change it is now considering implementing at its department stores. The business is also keeping databases of suspected wardrobers and reserving the right to refuse their returns. Some merchants, such as JC Penney, are requiring special occasion clothing items to be returned with tags still in place. Other apparel retailers have started placing the tags in visible places to make it more difficult for wardrobers to hide them and still wear the outfit.
"I bought a $400 outfit at a Dillard's in Florida, for the sole purpose to look outstanding at my daughter's graduation," said Mary, a Leominster woman who was too embarrassed to give her full name. "I wore it for three hours, knowing full well I'd never put it on my body again. Dillard's not only gave me my full refund, but the sales associate accomplished it with a smile on her face and a sincere 'thank you for shopping with us!' "
A small segment of shoppers has always leased, rented, or wardrobed. But the increasing visibility of celebrities and other VIPs at red carpet events like the Grammy Awards, enjoying the privilege of temporary ownership of marquis items such as gowns and jewelry, has helped embolden consumers, especially when times get tough, according to retail analysts.
Wardrobers want to rent the things they want or need for free, which amounts to fraud, said Richard Hollinger, a criminology professor at the University of Florida who specializes in retail theft. He said return fraud, which includes wardrobing, fake receipts, and other practices, cost retailers an estimated $10.8 billion last year, up from $9.6 billion in 2006.
Hollinger said merchants need to be vigilant to avoid suffering losses as a result of wardrobing. Often, retailers have to discard returned merchandise, or if they can resell it they usually need to attach a hefty discount. Out-of-season clothing usually goes to the sale rack after being returned, and retailers lose restocking time, the time sales associates could be spending with a consumer on a new sale, Hollinger said. "The Neiman Marcuses and Talbots realize they're running a cocktail dress rental store in which people come in, buy merchandise, wear it back and hopefully not damaged," he said. "But sometimes it comes back with God knows what spilled on it."
Neiman Marcus and Talbots both declined to comment.
Some shoppers who wardrobe do not think they are doing anything wrong. Deignan refers to the way he buys as renting. To see him through the NFL playoffs, Deignan planned to wardrobe a plasma TV after his set broke in December. But it got fixed in time, just before the first Patriots playoff game.
"There's lots of times when I buy stuff that someone's bought before. When I rent something, I'm taking good care of it," said Deignan, who works as an event coordinator. "And, it made me look good when I saved my company $600 in rental fees for the projector."
Some wardrobers take it further, bragging about their exploits. Numerous bloggers have featured posts about the generous return policy at Costco, which previously allowed anything but computers to be returned for a full refund, no questions asked. Some shoppers have told of their feats of returning TVs two years later, and using the money to upgrade to newer models.
But last year, evidently tired of getting stuck with the bill, Costco tightened its return policy, limiting returns to 90 days for TVs, computers, cameras, and other electronics.
Some retailers, including Sports Authority and The Limited are using a computer database to track customer returns. When shoppers make a return, cashiers at these stores swipe their drivers licenses, which allows them to see how often shoppers return items and dollar amounts of their returns.
The Retail Equation, which maintains these databases for many merchants, says on its website that the database is intended to identify consumers whose behavior indicates return fraud or abuse, including wardrobing, and alerts the shops when the store's return limit is exceeded. For example, The Limited only allows five returns within 90 days with a receipt, and reimburses customers for only up to $300 without a receipt.
Other companies have decided to embrace wardrobing rather than fight it. At BagBorrowOrSteal.com, an online shop often referred to as the Netflix for handbags, customers can borrow or rent luxury handbags and accessories by the week or month, with the option to purchase the merchandise. For example, a patent leather blue Fendi B bag that retails for $1,750 costs renters about $143 per week and $379 per month.
"Women will do anything to keep up with the latest trends and fashion. We've seen celebrities are always borrowing, going down the red carpet with gowns and jewels that aren't theirs," said Patricia Hambrick, a spokeswoman for Bag Borrow or Steal. "We know other people are borrowing. There's a change of behavior - people used to buy things and keep them forever. Now people want to trade it."
Jenn Abelson can be reached at abelson@globe.com. 