The biggest surprise of the holidays for Kimberly Moreland did not come when she opened her gifts, but when she tried to return one.
A month before Christmas, Ms. Moreland learned that an Xbox video game console she had bought on the Amazon.com website in September did not include the system's most up-to-date controllers.
The one-month period Amazon normally allows for returns had expired a few weeks earlier, but the mother of four assumed the company would at least allow her to exchange the system.
Instead, says Moreland, Amazon came off looking like a humbug. The company refused to budge on its policy, causing the Marlboro, Conn., resident to feel she was being penalized for shopping early.
"It was only a month and a half after I bought it.... It was under a month over the deadline," explains Moreland.
Many shoppers are finding themselves in a similar boat. Return problems also arise when the giver uses a credit card to buy a gift, the packaging has been opened, or the receipt has been lost.
"Some retailers have tightened their policies," says Ellen Tolley, spokeswoman for the National Retail Federation (NRF) in Washington. But, "there are as many return policies as there are retailers," so some are more accommodating than others.
The upshot is this: Make doubly sure you know what the return policy is before you buy and always keep your receipt.
Efforts to tighten return policies reflect the need of some retailers to protect themselves from being taken advantage of by consumers. Ms. Tolley explains that the tougher policies aim to combat "return fraud." That happens when people return shoplifted or used products.
Shoplifting reached a staggering $10.2 billion in 2001 and accounted for one-third of all inventory shrinkage, according to the NRF. The group expects shoplifting related losses to rise in 2002, regardless of how much of that was due to return fraud.
"The crime that occurs in retail stores is actually larger than motor theft, bank robbery, and household burglary all put together," says Amanda Nicholson, a professor of retail studies at Syracuse University. "I don't think people realize what retailers are facing a lot of the time."
Ms. Nicholson, however, is not surprised that some retailers have cut back on the "very, very liberal" returns policies that Americans have become accustomed to in recent years. "I can understand why [retailers] are tightening up a bit," she says.
An early sign of tightening standards emerged in November 2001 when Target announced a "no receipt, no return" policy. The company stuck with the policy, despite receiving significant criticism from customers, says Sue MacDonald, a spokeswoman for PlanetFeedback, a Cincinnati firm that channels consumer feedback to companies.
"That triggered a higher-than-normal complaint flow to Target through all of the shopping season in 2001, and people are still complaining about it," Ms. MacDonald says.
Asking for receipts eliminates the possibility of making refunds for shoplifted goods. Moreover, in the current economic environment - with sales being held more frequently and prices shifting more dramatically - retailers have had more difficulty determining how much money they should give back to the consumer.
Amanda Murray of Fairview Park, Ohio, ran into the no-receipt wall at Target the day after Christmas when she tried to return the shower curtain she received from her sister. Without a receipt, store officials would only allow her to exchange the item for something from the same department, valued at the same price or more.
This policy, says Ms. Murray, is unfair. She expressed her sentiments in a letter to the company vowing to "never shop at Target again."
Eugene Fram, a marketing professor at the Rochester Institute of Technology in New York, says retailers are justified in penalizing customers who break contracts. But in the long run, the risk to retailers might be too great. Two recent studies Mr. Fram and a colleague conducted on the effects of penalties on consumers show that people vote with their feet.
"People will accept penalties if they feel they're fair, and also if they feel that the seller will be lenient with them in times of personal stress," says Fram. "That's the American ethic of fair play."
On the other hand, "If a retailer angers a consumer through unfair treatment, they will not buy there again, and they will also tell others," he says.
Another penalty consumers may face is a restocking fee, often in the range of 15 percent. This is specifically relevant when it comes to big-ticket electronics items.
Minnesota-based Best Buy, for instance, charges a 15 percent fee when computers, camcorders, digital cameras or radar detectors are returned, unless they are defective.
The reason for the policy, explains Best Buy spokeswoman Donna Beadle, is that "these are the products we find are the most borrowed in our stores." That means they're bought, used, and then returned.
Ms. Beadle adds the fee also covers labor costs associated with inspecting returned products and the cost of marking down an opened product.
Circuit City, however, eliminated its restocking fee this past April, in response to negative customer feedback. A company spokesman said the fee led to confusion and frustration, two things the company didn't want.
Complaints channeled through PlanetFeedback indicate another issue as well. Some stores, including clothing retailers like Gap, Banana Republic, and Old Navy now refuse to give cash back immediately. Instead, they provide in-store credit or mail out a refund check a few weeks after the return.
Overall, though, notes the NRF's Tolley, retailers are very accommodating. Taking into account the special needs of the holiday season, companies with 30-day return limits, including Amazon.com, make special provisions, such as extending the time for returns to the end of January. This normally applies to products bought in November and December, but sometimes as early as the beginning of October. Other retailers, including Target and Kmart, keep their generous 90-day policies in place.
In the end, "companies need to ask themselves if the cost of implementing penalties is worth the benefit," says Fram.
The risks have grown seismically over the past decade, say experts, as consumer loyalty to specific stores has wilted significantly. "People go wherever they believe that they get the best deal," says Nicholson.
Consumers are also more sensitive to the return policies of stores that only operate online. Eighty-nine percent of online buyers say return policies influence their decision to shop with an "e-retailer," according to a recent survey of online buyers by BizRate.com. Many online shoppers expect a money-back guarantee and no restocking fees. The main reason: buying products online remains an act of faith.
"Because you can't touch the merchandise, you're uncertain when making purchases," says Ed Fox, a marketing professor at Southern Methodist University in Dallas. "It's different from being in a store where you can sample the merchandise."
Even as incidents of Internet fraud skyrocket, online retailers are unlikely to tighten their return policies. "If online shopping is to continue the promise of convenience, merchants will need to pay close attention to building return policies that are customer friendly," says Paul Bates of BizRate.com.
But whether online or in stores, returns are not all bad for retailers. They contain a wealth of information about products and consumers' expectations.
"The majority of consumers making returns are not trying to steal or deceive, and how you deal with them will help build customer loyalty," says Mr. Bates. "Doing it well, doing it nicely, with some good grace and courtesy is important."