I WAS IN AN AIRPORT BAR IN SACRAMENTO WHEN NEIL PATRICK-HARRIS CAME ON THE T.V. The beloved thespian and How I Met Your Mother star promised that Heineken would give me my money back if I didn’t like their light beer. How could I distrust that heartwarming smile, those twinkling eyes, that boyish Broadway-ready face?
Maybe it was that I’d just spent twice as much as I should’ve on an airport beer or that this very blunt promise of NPH and Heineken’s had raised some old questions I had while working retail jobs, but it got me wondering; how exactly does a money-back guarantee work?
What inspired a bunch of Heineken executives to sit down and agree that that was how they were going to sell their product, and more generally - why does anyone allow for returns? Why not keep the money and run?
Also known as the 'satisfaction guarantee,' the money-back guarantee was first coined by marketing expert, prominent abolitionist, and Charles Darwin’s grandfather, Josiah Wedgwood. An Englishmen, Wedgwood used the guarantee as a way to send products from his pottery line across Europe without solicitation. But the tactic soon caught on in the states and would become a staple among the country's marketing ideologies.
“The risks are few and the rewards are many,” Kathleen Kusek emphasized to me over the phone, “categorically, never more so than it is now.” Kusek, a consumer goods writer for Forbes and a consultant, says that retailers look at refunds as “…a way to create trust.” Kusek continued, it’s a company’s way of saying “you’re not being tricked, this is a mutual relationship. You’ll have the opportunity to change your mind.” Again, heartwarming.
Guarantees like these have started showing up all over the place. From weight loss pills to mattress companies (bedbugs, much?), even grocery stores as both Trader Joe’s and Walmart have refund policies for the food they sell.
For the most part, though, refund policies for food come across as a weird attempt to add value to the store or the product. When I asked Dr. David Just, Behavioral Economist at Cornell, and Ms. Kusek their opinion on how likely it was that anyone would ever try and get a refund on something like a Heineken Light, both said they saw it as extremely unlikely.
What was the most ridiculous thing you’ve seen someone try return?
4-month-old cheese ‘because it was moldy.'
— Trader Joe’s Employee
Somebody returned a bunch of stuff they bought when they were drunk online on St. Patrick's Day, I think it was a couple thousand dollars worth of clothing.
— Patagonia Employee
All you need to get a refund on your beer is to keep the receipt, go to the returns website, and choose between making a ‘suggested donation’ to Charity: Water (to provide clean drinking water to countries that need it, you’d have to be a monster not to) or receive a check for your money back. While it seems like a simple process, it’s hard to imagine too many people going through the effort of finding the website, taking a photo of their receipt, and then waiting for their money to come back. Plus - the most you could get back is $8.99, and certain states (including California, where I happen to reside) don’t allow refunds on alcoholic beverages.
Kusek sees Heineken Light’s campaign as the result of, “Confluence between having a millennial target and probably not having a more motivating differentiating message.” Which is essentially a really nice way of saying that Heineken just didn’t have anything better to say about their beer. Their light beer.
For a market full of millennials generally considered to be more cynical by market analysts, the idea of setting up transactions as less hierarchical is an appealing one for retailers. As for the money lost in fraudulent returns, Kusek says, “it’s basically become a cost of doing business.”
That cost, according to a 2014 report, is estimated to be as high as 284 billion dollars for the entire retail industry in the U.S., with 10.8 billion being solely from fraudulent returns.
Retailers in the U.S. made 3.2 trillion dollars last year, but even so, 10.8 billion dollars in lost revenue is a big deal, and it’s something that retailers have been trying to whittle down by both trying to get their own store policies right, and by looking for outside help.
Some retailers go about that in really simple ways like only allowing store credit for returned purchases, as Nordstroms has recently done, or by adjusting the window of time in which a person can return a purchase so as to make the process a little more difficult, but not impossible.
What’s the last thing you returned?
DR DAVID JUST
DR. LISA ORDONEZ
A white sweater
Ways to game the system
Walmart’s return policy is pretty lax. Customers can return up to three items without a receipt for 45 days. After that, transactions will be flagged, and must be approved by a manager.
Guitar Center does not require a receipt for 30-day refunds, but items must be in their original condition. This does not apply to Dj Equipment, vintage instruments, Apple products, or opened packages for headphones or other accessories.
REI, or previously dubbed Return Everything Inc. for its’ incredibly lax return policies, has just curbed their time limit to one year. Customers can still return any item regardless of wear within this time period. In one notable instance, a man returned a snow suit he bought in 1970 to climb Mount Rainier just several years ago.
CUSTOMERS CAN RETURN ANYTHING from Costco at any time for a full refund. Electronics are the only exception, with a deadline of 90 days after purchase.
CVS accepts unconditional returns for beauty products with a receipt, either opened or unopened.
Kohl’s gives customers a year to return an item, but requires a receipt. If no receipt is present, customers can receive store credit or a refund check in the mail.
L.L. Bean imposes absolutely no time limits on refunds regardless of item condition, but without a receipt, customers will be issued a gift card with the item amount.
Doctors Narayan Janakiraman and Lisa Ordóñez of the University of Texas, Arlington and the University of Arizona, respectively, found in their study that contrary to what one would think - a smaller window of time given to consumers resulted in a higher rate of returned purchases. As Dr. Narayan put it in an email, “for certain kinds of products, offering more time actually leads to lower return rates, because consumers put off making the keep/return decision.” The further away something is, the more abstract it becomes, and in the case of returns - the more likely someone is going to miss a return deadline. Despite these findings, retailers have kept a tight window on returns, especially for ‘higher risk’ products like consumer electronics.
When it comes down to - there is only so much a retailer can do to stop people intentionally abusing return policies. For that - a lot end up going to The Retail Equation.
A Southern California company, The Retail Equation sells software that tracks suspicious return patterns and makes the judgment call on whether or not a return should be processed. They boast that this software doesn’t take into account race, sex, or age, but only purchasing history - which can out the possibility of discriminatory practices. While that all sounds well and good, in essence, they’re just another company with a database full of information on people, and even though that’s gotten increasingly common, it's not any less unsettling, even though that information, according to an FAQ sheet, is limited to “Frequency of returns, return dollar amounts, whether the return is receipted, and their purchase history.”
October and November
*2010 Customer Returns Survey, 2012 Customer Returns Survey, 2014 Customer Returns Survey
TRE allows for people to check and see what kind of restrictions have been put on them because of return behavior by just calling up the company with your drivers license ID and the return number. So how thorough is their equation?
For about 4 months, I had a job delivering orders of roasted coffee to cafes and restaurants around San Diego. My first stop every day was Office Depot, where I would drop mail orders of coffee in big UPS and US Mail bins. Most times, I could carry the packages in with a few milk crates, but sometimes the packages were too large to carry from the car without any help. While an Office Depot employee would go to get a cart to help wheel the deliveries in, I’d wander around the store.
After a few weeks of wandering, I was led to the Logitech Performance MX Mouse and ended up buying it on a whim. It had Bluetooth connectivity, a really nice design, and three little lights that told you how much charge was left. It was the fanciest mouse I’d ever seen, and it was half off. $50 is still a lot for a mouse though.
Precent of Returns
were made without a receipt
Plus, I already had a mouse that worked just fine. It pointed, right clicked, left clicked, and scrolled - and for no really good reason the Logitech Performance MX Mouse ended up sitting in my drawer for a month, just about the amount of time it took for me to admit my mistake. Even though it was far past Office Depot’s 14-day return window for electronics, I thought I’d give a shot at returning it.
I told Sandy, the Office Depot employee on the other side of a screen somewhere a sob story about how I shouldn’t have bought it in the first place (Stupid JD! You’ll never live this one down!), and how I’d just had to quit my job. Just like that, she agreed to take it back. A few days later someone showed up at my door and picked it up.
None of what I said to Sandy was a lie, but it still felt really manipulative. After researching for this story, I figured I’d find out if The Retail Equation had anything on me for returning that mouse. There is an email address you can reach to request a report on you. So I shot them an email, they gave me a number to call, and I called it.
After reading off my license number and enduring keyboard clicks and a few requests for ‘one moment,’ they came back to me saying I was all clear. So maybe it wasn’t that bad? Either way, I still kind of feel like I owe Sandy one. She heard my pain and took retail mercy on my soul.
Maybe I’ll head to Office Depot next time I need pens.
States with the highest amount of fraudulent returns
*2014 Customer Returns Survey