Set Return Policies That Work for You and the Customer

Hassle a customer when he or she tries to return a purchase, and you'll likely lose a customer for good. On the other hand, there are situations where you may cut off a customer's returns privileges entirely.

Establishing return policies for a retail establishment can be difficult. Your

To begin, put yourself in the mindset of your customers. They want to feel that they can return a purchase without having to jump over hurdles or feel intimidated. As soon as the process becomes cumbersome or complicated, you risk losing that customer.

Concerns to address when creating a return policy include:

• Whether to give cash back or store credit
• The time allowed for returns
• How to handle broken or damaged merchandise
  Note: It helps to determine the condition in which merchandise must be received; consider assessing a 5 to 25 percent restocking fee for opened items, unless they're defective or such a fee is prohibited by law.
• Which items, if any, cannot be returned or can only be exchanged for the same item
  Note: This is often done for computers, televisions, cameras and other high-end, popular items.
• Whether to accept items without a store receipt
  Note: This can depend largely on your industry and merchandise. Gift receipts should be provided for all purchases.

Columnist Carol Carter writes about how JC Penney handles returns in Retailers Pay Huge Price for Return Fraud.

Once you establish your guidelines and write up your policy, review and post it clearly near the cash register. You should also have an abbreviated version of the policy printed on your receipts.

It is important to have your employees stick to the policies. However, and this is very important, how your staff responds to customers making returns can win or lose many customers. Everyone needs to be as cordial as possible; tact and diplomacy should come into play.

You will also need to track returns on items sold via your Web site. Code the merchandise and maintain data on the buyer and date of purchase.

Return Fraud

Return fraud is another area of concern, with surveys showing that more than 95 percent of retailers experienced return fraud in the past year. This occurs when someone returns stolen merchandise for cash. Other forms of return fraud include returning merchandise purchased by counterfeit money or stolen credit cards, or returning used merchandise. Return Fraud to Cost Retailers $3.5 Billion discusses just how huge this issue is.

Coding all purchased items to match a purchase number or code lets you know whether it was purchased at your store. Many stores also keep track of serial returners. This can be done by entering the driver's license or credit card number into the computer when someone returns an item and keeping track of how often the person returns goods. Have a limit on how often someone may return items. Post the limit in the store.

Finally, remember that consumer rights vary from state to state. Review the laws in your state.