The Washington Post today reported that retailers are using outside companies, such as The Retail Equation (TRE), to track store returns by customers. The purpose is to identify patterns in order to fight theft. For example, organized groups of criminals "make a living from the large-scale theft of merchandise. They might switch the UPC code on a $600 faucet with a lower-cost code that rings up at $50. They buy the faucet, then replace the fake UPC tag with the original, higher-priced code, and return the faucet to the store without the receipt for a $600 store credit, which can be sold online."
While consumer advocates oppose this data collection based on privacy issues, I see it as a way to protect honest customers. Reducing theft of any kind in a retail environment will help prevent companies from raising their prices in order to remain profitable. According to industry estimates, consumers return almost 9 percent of store sales, or $264 billion worth of merchandise. If the fraction of these returns that are fraudulent can be eliminated, the consumer will ultimately benefit.
