How Retailers Like T.J. Maxx And Home Depot Quietly Target 'Problem' Returners

Clarification: Best Buy ended its relationship with The Retail Equation in 2019, according to the company.

It's no secret that retailers are cracking down on returns.

In 2023, 81% of U.S. retailers implemented pay-to-return policies in some capacity. Amazon, Macy's, T.J.Maxx, Walmart and Staples all rolled out changes to their established return policies. That may look like shrinking return windows, charging for some returns, or in some cases simply telling shoppers to "keep it"

Shoppers racked up more than $5 trillion worth of retail sales in the U.S. last year, according to the National Retail Federation. About 14.5% of those sales were returned. That equates to an enormous value in returned goods: $743 billion in 2023 alone.

"Most of the returns that come back cost up to 40% of the original retail price to put that item back on the shelf," said Robert Overstreet, Iowa State assistant professor of supply chain management. "There's no guarantee they can sell it for what they originally asked for it, so they're losing money on both ends."

The recent changes are just the latest effort to tamp down on return losses. Many large retailers in the U.S. have long been engaged in the practice of quietly tracking and targeting return behavior. According to a report by The Wall Street Journal, U.S. retailers use third-party loss-prevention services to track risky return behavior. This doesn't outright mean fraudulent activity, but rather behavior that "mimics" or could be linked to such behavior.

The most notable third-party loss-prevention service is The Retail Equation, a software provider that tracks return behavior that retailers deem potentially fraudulent. It then assigns a return score to shoppers based on the data provided by retailers, giving the software the ability to override a store's return policy, leaving shoppers with no refund and a printed notice directing them to The Retail Equation's website to explain why their return was blocked.

The problem is, many shoppers are unaware this type of tracking is even happening, leaving many feeling blindsided when they get to a return counter and are told they are not getting their money back. Or, even worse, they get banned from the practice of returning products to the store altogether.

According to several now-dismissed lawsuits and Better Business Bureau complaints, customers reported they were following a store's return policy and were still issued a warning. Some customers complained the information found on their report given by The Retail Equation was incorrect and that they were left with no way of knowing or remedying the information until after their return was rebuffed.

Watch the video above to hear more about how this tracking works and what types of behaviors might get a shopper flagged as a 'problem returner'.

Producer: Devan Burris
Editor: Tim Hurt
Animation: Jason Reginato, Christina Locopo
Senior Producer: Jeff Morganteen
Additional footage: Getty Images

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How Retailers Like T.J. Maxx And Home Depot Quietly Target 'Problem' Returners

[watomb]

I hate when retailers put returned items back into inventory without making sure the item works or has all the parts.

[costaht]

One day I overheard a guy saying he bought a snow blower the day before a storm and returned it two days later. People like these ruin everything for us.

[xtnuser]

My wife used to shop at Costco a lot. Let's say she wanted a new vacuum cleaner. She would buy like four of them, bring them all home, decide which one she wanted to keep, and then return the other three. She didn't do this much for groceries of course, but she did it for other product categories all the time. I kept warning her that Costco would cancel her membership if she kept doing it. I explained that she's going to be a net-loss customer returning such a high percentage of purchases. She said they wouldn't even know. I told her that was naive, because every transaction is linked to her membership account number or whatever. I said it's pretty silly to think they wouldn't keep such records, and have some sort of algorithm that flagged excessive returners. I didn't realize it might be a third party doing the analysis, but the concept seems pretty obvious. She argued that she was just following their policies, and wasn't doing anything sketchy.

She wouldn't listen to me, and continued the behavior. Six months after that conversation, she got the membership cancellation letter in the mail.

[presagemtrix]

My brother in law bought a leaf blower at Home Depot just to find that someone replaced it with an old one. Employees don’t check they just put it back on the shelf.

[nolan_]

Interesting how they blame everything except for the fact that their inventory is increasingly being filled with made-to-fail and cheap products that rarely live up to the descriptions, expectations, and information listed on their websites.

[MessyPointedBlob]

They'll refuse to process your return, but not refuse to process your purchase without telling you that you are banned from returns. Something a state AG should look into pursuing.

[kevinmontgomery]

I used to work for a Walmart in Ohio. I was helping in the return department one day. I opened a box to make sure it had what it was supposed to have in ot. It didn't. People will buy a tv, keep the tv and put something in the box that feels and weighs about the same, like a piece of plywood. Return it to the store in the hopes that the persin working the counter doesn't open the box. This was the problem at the store I worked at. I brought it to the managers attention and cut our losses by 75%. I saved the store tons of money and never got any recognition for it. The manger took all the credit

[wayneyessir]

I am actually happy to hear retailers are doing this. Too many people treat retailers like rent-a centers or worse, borrow-a-center. Take responsibility for your spending habits, do your research, and make informed decisions.

[covfefemaga]

🤔 I've had to request a refund on items recently that were being sent to me broken in padded envelopes. I specifically called customer service, told them the items arrived broken and requested for them to please send them in boxes next time instead of padded envelopes. They said they'd change the mailing method. They sent them again in padded envelopes broken again. I reached out to customer service for a second time to request my money back and they offered to send the items again instead. I had to insist on a cash refund instead. I was done playing this game with them. At some point there are process issues with the retailers that are reducing their profits. If they had sent the item in the correct type of packaging originally, they'd have gotten their money and we'd have all been happy. There are definitely people who are returning things fraudulently, but frequent returns doesn't necessarily indicate fraud.

[ThoolooExpress]

A classic case of enshittification. Online retailers had to implement very permissive return policies to get people comfortable with online shopping and put local shops out of business. These policies were never sustainable. Now that they have the market share they're walking them back.

[tossedpenny]

I remember working retail years ago and the absolute worst was luggage. People would purchase premium 5-piece sets to go on the occasional vacation and they'd always return them a few weeks later packed neatly in their pristine boxes and the damn airline flight tags would still be on all the handles. It got to the point that we basically considered our luggage section a free rental service.

[emilyfox]

"consumers have a right to a report from any particular store, by going to our website you were never aware of in the 1st place" such transparency, much honesty 🙄

[joelk]

If The Retail Equation told the reporter, as stated, that consumers have the ability to request their data related to a retailer, they were lying. The data can only be requested AFTER a particular retailer has rejected or "warned" a return. TRE's website explicitly states this. Congress should provide that consumers have the right to view information collected about them, just as the Fair Credit Reporting Act does for credit reporting bureaus.

[laowaistudieschina]

Simple fix for me, might not be for everyone: curtail shopping as much as possible and be really finicky about the quality of what I do buy in store. More money in my pocket, that much less in those of participating retailers.

[chert]

It would be nice if retailers would go after the people who are actually brazenly walking out of the store with stolen items. My husband works big box retail and they lose thousands of dollars weekly due to thieves who know there will be no one going after them. Employees are not allowed to intervene. Police are never called no matter how expensive the item. It makes everything cost more for the rest of us.

[phyllisarrington]

Way back in 1990, I had a friend buy a $300 cam-quarter at Kmart.
I said, "Don't you talk to Steve (her husband) before making a big purchase on an unnecessary item?"
She said, "Oh, I'm just going to record Stephanie's tumbling routine. Then I'll return the camera."
I was floored!

[rwdplz]

I've encountered FAR more retail fraud by RETAILERS. Knowingly sending broken items, outright junk, delivering liquid items that have leaked out visibly in the package, etc. If a retailer has a restocking fee, I'm not shopping there.

[bruxi]

Used to work at an electronics retailer. We had a couple that would come in frequently and talk to salespeople for hours about some fancy tech product. Invariably they returned it within 3 days. The sales manager printed out their transaction history and they had never actually held on to anything. Next time the couple showed up, the manager told them we would be unable to sell him anything ever. They never came back.

[joshm]

When ordering large, heavy items like window air conditioners, I pay online and have them shipped to store (Lowes or Home Depot). When picking up, I get the store employees to remove the heavy item from the box for my inspection, because there is often hidden damage from boxes being dropped, but the box itself does not appear damaged.

[ethereal]

I remember in the 90s, you could return items to several stores, without a receipt- for CASH.