The Retail Equation and how it protects merchants against serial returners


When Mahitha Sadhanala heads to CVS to make some returns, he isn’t expecting any problems — after all, he has done this many times before. So it comes as a shock when the cashier firmly refuses to accept the items. When he asks for an explanation, she refers him to something called The Retail Equation.

Like Sadhanala, you may have never heard of The Retail Equation. But if you frequently make retail returns, your name and information about your shopping patterns may already be stored in this nationwide database.

“My receipt had a 90-day return policy and I still had several weeks left to return the items,” Sadhanala complained. “The things I was trying to return were not opened and not used. Why should CVS be permitted to refuse my returns?”

The answer: because it can.

Sadhanala was under the mistaken impression that it is a consumer right to be able to return any item as long as it is returned within the period of time noted on the receipt.

Not true.

In fact, there are no federal or state laws that require merchants to accept returned items, unless the particular item is defective. Changing one’s mind about a purchase does not guarantee that the transaction can be reversed.

Of course, most companies have determined that it makes good business sense to have a flexible and generous return policy.

Most customers do not abuse retail return policies, but there is a small percentage of customers who are “serial returners.”

Some of these customers are intentionally involved in fraudulent activity (returning items that have been stolen) while the intent of others may be categorized as a type of “friendly fraud” (someone who buys an expensive dress for an event with no plans of keeping the garment).

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These “customers” end up costing retailers billions of dollars each year. Ultimately, that cost is factored into higher prices on consumer products.

So we all pay.

The Retail Equation was developed to identify these serial returners and to create a warning system for merchants.

Here’s how it works: When a merchant uses The Retail Equation and a consumer shows up to return an item, their driver’s license is scanned. The system then does an instant check of this shopper’s return history and then gives an approval, a warning or a do-not-accept message.

The Retail Equation (TRE) website points out that it approves “99 percent” of the requests.

The other 1 percent?

TRE states that the customers who are denied “exhibit behaviors that mimic fraud or abuse or exhibit habits that are inconsistent with the retailer’s return policy.”


When a customer is denied a return, the merchant provides instructions to the customer as to how to request a copy of his (or her) own personalized Return Activity Report (RAR). This is a record of all the return and exchange transactions that are associated with the consumer.

Sadhanala did receive a copy of his RAR which he forwarded to me.

His shopping history at CVS was a bit unusual, to say the least. In one month, it listed four shopping trips to CVS. The receipts included various household merchandise, paid for with a mixture of coupons, rewards and cash. The RAR highlighted four additional trips to CVS. These visits noted Sadhanala’s returns of the majority of his purchases.

It was during his fifth return when he attempted to take back products totaling $72, that the brakes were put on his transactions.

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I asked Sadhanala why he would return such items and so frequently.

“I bought some stuff which I thought was a good deal or something like that. Then they change the price of some items and I return the items that I bought,” Sadhanala told me. “With a valid receipt, CVS must take my returns.”

CVS disagreed.

I reached out to the company on Sadhanala’s behalf and our executive contact explained:

CVS has partnered with The Retail Equation (TRE), the industry leader for return management services, to provide a consistent, customer-focused return policy while leveraging their expertise to mitigate potentially fraudulent return activity in our stores. TRE’s return management services are utilized by several major retailers representing more than 34,000 retail locations in the U.S. Since implementing TRE’s solution earlier this year, approximately .003 percent (or one-third of 1 percent) of returns have been declined at our stores.

Our return policies are posted in stores at the point of sale and are available online or as requested by our customers. In our return policy, similar to other major retailers, we reserve the right to decline to accept a return even if accompanied by a receipt if it does not pass our third-party verification.

He went on to say that every customer who is declined is given a number to call to dispute the rejection and that Sadhanala had not initiated this process.

We could not help Sadhanala. CVS is within its legal rights to reject his request and it has provided him the means to dispute the decision. But his story does serve as a warning to others who may be developing their own questionable shopping patterns — be careful, or you, too, may be surprised at the return counter.

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Michelle Couch-Friedman

Michelle is a Licensed Clinical Social Worker, consumer advocate, writer and photographer who spends as much time as possible exploring the world with her family. She is Advocacy & Editorial Director at Elliott.org.

  • finance_tony

    Wow, this sounds like some sort of a scam, but I hesitate to call it that, because it might be a mental illness. I hope the OP finds resolution if that’s the case.

  • Chriscfrn

    I believe the flags on this are the fact that he used coupons and rewards and then apparently returned them for cash all within a short period of time. I can see where something like that would be questionable.

  • The Original Joe S

    Where’s it say he got cash back? He had a receipt. They can give him his cash, coupons, points back.

    Stuff was un-opened, so not used like clothing.

    They are being hard-nosed in this case, I suspect.

  • Bob Curtis

    Buying a dress, wearing it, and then returning it, is not “friendly fraud”. It is fraud.

  • Alan Gore

    Why would anyone repeatedly return unopened items? Generally you return something because it doesn’t work or is not what you ordered.

  • Altosk

    Serial Returners are a problem, but CVS is crazy, too. I went there to buy two $25 Amazon gift cards for some employee rewards. They wanted me to pay in cash. I refused, went across the street to Kroger, bought the same two gift cards on the company credit card.

    Stupid CVS.

  • ArizonaRoadWarrior

    The reason could be two reasons: 1) the store managerthe company management doesn’t want to pay the credit card processing (i.e. a $ 25 gift card ends up costing them $ 26) or 2) credit card fraud. I am not a fan of CVS but it is my guess the reason is the latter.

    I consult with retailers (both online and brick & mortar). One issue is credit card fraud on gift cards. People will buy gift cards with stolen credit cards and the store ends up losing money on the transaction. We shop at Fry’s Food (the Kroger brand in Arizona) and for several years, if we purchased gift cards totaling over $ 100, they will ask us for our driver licenses to check against the name on the credit card. This practice has ended once they installed chip-readers (at least the store that we go to).

    There are gas stations that will require your zip code when purchasing gas…again, it is credit card fraud (i.e. a person found a credit card on the street…it is probably unlikely that person will know the zip code).

    Credit card fraud is a big problem but I agree with you about CVS.

  • SirWIred

    My local grocery store also will not sell gift cards for anything but cash. The level of fraud by using stolen credit cards to purchase the gift cards is high enough that it’s just not worth the hassle.

  • SirWIred

    I’m gonna guess there’s something about CVS’s returns system that results in a bigger actual credit being issued than the amount of money that was paid in. Certainly his explanation on the returns makes no sense at all.

  • ArizonaRoadWarrior

    Coupons are not handed back to the customer unless the customer was still at the cash register or etc.

    If the coupon is a manufacturer’s coupon (i.e. Procter & Gamble), the retailer will usually process the coupon within a week (if not sooner…so do daily); therefore, it is long gone plus I am not aware of any retailers that segregated their coupons and/or put customers’ names on them.

    Also, a lot of frequent customer programs are not capable of subtracting and/or adding points from the customer’s account in a refund transaction.

    Here is an example of a “scam”: The customer purchased items with coupons and/or a sales price; etc. A later date, the customer return the items when the sale is over without a receipt (which is NOT the case in this story). A person purchased a pair of pants for $ 50 and the normal price is $ 100. Most retailers will process a refund or return when the tags are still on and etc…they will either refund in cash or a store gift card. Regardless if it is cash or store gift card, the customer just made $ 50.

    Some stores will not restock an “un-opened” item because of the nature of the item. Also, there are some people that will open up the package…remove the item and replace the item with an empty item, an used item, another item from another manufacturer, etc. and re-seal the package to the point that it looks “un-opened”.

  • ArizonaRoadWarrior

    One reason is to scam the retailer.

  • ArizonaRoadWarrior

    I work with companies with their ‘excess’ merchandise such as overstock, shelf pulls, close-outs, customer returns, etc. and companies that buy ‘excess’ merchandise. In regards to customer returns, there are legitimate warranty issues (i.e. item not working, item is defective, etc.) but there are lot of ‘fraudulent’ returns. Here are some examples:

    1. Customers that returnsend back the old, used broken item in the new item packaging. Example: people will send back old shoes in the shoe box expecting the company not to open the box.

    2. Customers that use an item for a job (a day, a week, etc.) then returning it to the store stating that it doesn’t work, it is too large or small, etc. Example: trades people will go to Home Depot to buy a tool for a specific job and return it to Home Depot after they are done with it stating that it doesn’t work.

    3. Customers purchase an item with multiple items (i.e. 12 batteries)…use one (or whatever they need) and return the package stating that the item doesn’t workdoesn’t do the jobetc.

    In regards to clothing, I advise companies not to purchase ‘shelf-pull’ clothing because they are generally worn customer returns since most retailers will send their shelf-pulls (i.e. last yearseason model, slow selling lines, etc.) to off-price retailers like TJ Maxx, Ross Dress for Less, Tuesday Morning, etc.

  • ArizonaRoadWarrior

    Amazon keep track of their returners and they do refuse returns from certain customers. There are websites and blogs out there that tell people how to scam Amazon and the third-party sellers that sells through Amazon.

    A fraud example: There are some items that Amazon that will automatically refund the return without returning the item. People will request a return via phone and the CSR will grant the return and refund and tell the customer to keep the item.

  • KanExplore

    Could be someone trying to meet a credit card bonus spending requirement. After getting his bonus maybe he spends it right away then goes back for returns. This probably won’t work for long and may even end his relationship with the bank. That’s apparently not what happened here, but I wouldn’t be surprised if there’s a scam in it.

  • y_p_w

    .003 would be about one-third of 1 percent. .003 percent would be .00003, or about one three-hundredths of 1 percent.

  • cscasi

    I don’t see where it says either way; did or did not, so it’s hard to tell. But, for someone to be returning stuff from almost every trip made to the store does make me wonder. And, it is just more work for the store, as well.

  • cscasi

    I am not sure how one could scam a retailer when returning unopened items along with the store receipt showing the items were purchased there.

  • cscasi

    I believe the credit card company has rules that cover such. If you buy a hundred dollars worth product and get points on your credit card spend and then return the items, the bank or card issuer almost always takes the points or bonus back. So, I do not see any gains that way.

  • y_p_w

    It may get complicated with introductory bonuses. I’ve seen returns from previous statement purchases deduct from my current statement points.

  • y_p_w

    The coupons are kind of a giveaway. Most retailers don’t have the means to get that back.

  • The Original Joe S

    Maybe he’s a type “B” indecisive personality. Maybe he has no life but to go to the CVS and spend lots of time there. Maybe he’s just ditzy. Maybe he’s got buyer’s remorse, especially when he spends his time reading the latest ads and finds that the price has dropped 5¢. I find it difficult to argue with the store’s position. Maybe this might cure him. In any case, if they won’t take anything back, he can simply go jump in the lake……..

  • The Original Joe S

    /rant on/
    I bought a chain saw at Costco after a storm. Followed the instructions for mixing gas/oil 50:1. Cut up some trees. Saw wouldn’t start. Why: EPA mandates 50:1 to “save the environment”. However, the engine was designed to run on 30:1 or 25:1; they simply changed the instructions. Costco takes most stuff back, even 2 years later [ as in the instance of my Panasonic microwave – a great oven – but it decided to go to that great microwave heaven in the sky. ] If you bought it from a dealer who won’t take it back, you are stuck. However you enhance the economy by purchasing another one, which will also burn up. And so on. Green economics at its exemplar……

    I burned up several saws and leaf blowers before I figured out that it’s the dirtbags at EPA causing the problem, as described above. Me, I now “shift my externalities” on to the environment [ as they taught us in my Econ classes at Commie Martyrs Gulag University ] by mixing 25:1, and let it smoke. Spark plugs are $1. When they blacken up, put in a new one. New saws are $150. I am not rich. DUH?

    Chain saw motors are set to run lean. Too lean. After a few hours of use, they won’t start. The EPA devils [ who likely NEVER did an honest day’s hard work in their lives; probably went to Commie Martyrs and then to the EPA with no real work experience ] expect you to go to a repair shop which has the special wrenches to back the screws out a tad, and they hit you for $25 to turn two screws. The screws are in an aluminum trough cast into the block, so you can’t grab them with needle-nose. Option 1: buy the wrenches on eBay. Option 2: Use a dremel thin cutting wheel to cut a slot across the heads of the screws [ and cutting some of the trough as well, no problem ]. NOW you have the screws marked at the factory position, and can back ’em out a ¼ turn or so such that the saw starts and runs properly. When you get it running, adjust for max power and speed. Unless you are totally deaf, you’ll know.

    Additionally, running lean creates nitrogen oxides instead of running rich’s creating carbon monoxide, so you get pollution either way unless you TUNE the engine properly with the mixture screws. Of course, the govt doesn’t trust you to do that………

    /rant off/

  • The Original Joe S

    If they get cash back for the coupons, then they are scamming the store, and the store is not wisely managing its sales and returns. Solution: give back the money he paid, less the “value” of the coupons, and of course, the sale price on the receipt; not today’s higher price. After all, one usually gets coupons for free. Groupons: give him the money he paid for the groupons, not the full value the groupons saved him. Give him the 1/100th of a cent that the coupons each are worth. Problem solved?

  • The Original Joe S

    and if the store gives back cash? The credit card company has been scammed.

  • The Original Joe S

    agree w u

  • The Original Joe S

    Probably costs more to re-stock than the amount for which they can re-sell it.

    Bought a log splitter from Home Desperate. Opened it up, and found it full of sawdust. Some toad had bought it and used it and returned it. I tried it. Worked fine. Called the manager and told him it was used. He told me to come in with receipt, and returned half the price. Probably not worth sending it back to factory to be checked out for refurb. Home Despot was happy with that, and I was extremely pleased. I didn’t expect to get half back. Home Destitute is, IMHO, a good gang with which to do business. Once you get past the min wage first liners, they help you out. Of course, their website was written by Gunga Din in the Punjab on low-bid, so you can’t use boolean logic to sort / retrieve very well. AND, their new, improved phone ap is marginal……… I pointed it at an item in the store for a price, and it said that they didn’t have that item. Kinda like the guy declared dead by National Socialistic Security Ponzi, and they won’t budge when the live guy is standing in front of them. Ha ha. [ Hey, if you’re dead, can you kill somebody and beat the rap? ]

  • The Original Joe S

    You’d think the store would look at it. Hard to tell. “Factory – sealed” might go back on the shelf, until the next customer gets it and finds an unpleasant surprise when he opens it.

  • y_p_w

    Technically a store giving a full refund on an item and then cashing in the coupon doesn’t specifically violate the terms of the coupon. The fine print always says that the consumer is liable for sales tax, and that the seller needs to demonstrate that they had enough inventory of the product(s) to cover the number of coupons redeemed. It would be extremely rare for there to be more than a small fraction of any product to be purchased with coupons anyways, so that’s rarely an obstacle.

    Still – even if the store doesn’t get penalized for it, they do have an incentive to keep serial returners from doing over and over. It costs them extra time and effort to take it back and restock something. Also – the possibility of out and out fraud was mentioned.

    Now if it’s a CVS instant coupon, then they can and do refunds minus the coupon. That’s more like a discount than anything else. I’ve returned items at Costco, and they always account for the “instant coupon” specifics by treating them as discounts.

  • Barthel

    If the return is rejected, ask a friend to return it instead. Pay for items in cash so that there will be no record of who actually made the purchase.

  • Mel LeCompte Jr.

    Unless he/she is a member of CVS’s rewards program, in which case all purchases would be tracked.

  • Barthel

    I quit shopping at CVS. The rewards program never did anything for me.

  • Mel LeCompte Jr.

    Two things I did not like about CVS’ response:

    1/ “…a customer-focused return policy…” You can skip the PR-BS. This is all about saving the company money; this policy was made to benefit the corporation. Not that it’s a bad thing in this case, but I’m not quite sure there was a boardroom meeting where some suit bellows out, “You know what would be great for customers? Let’s make it harder to return things!”

    2/ The fact that the TRE product prevents .003% of all sales merchandise from being returned. How much is CVS’ contract with TRE. Is it worth the amount of money CVS is shelling out in its contract with TRE, considering the miniscule benefit to them?

    I’m not taking up for the consumer (something shady is going on), but I still love these corporate PR-BS responses to situations.

  • Maxwell Smart

    many retailers in Australia now offer no refunds only credits & many now don’t even offer that. Fraud especially online fraud is on the increase. With the massive recession, when retailers have sales(that’s price reduction sales) they might offer a credit, but they might not be around next week/month/year.

  • pauletteb

    I worked with a woman whose husband was a professional photographer. She frequently “bought” expensive pillows and other decorative items for his glamour shoots, only to return them a couple days later. Neither of them thought there was anything wrong with using other companies’ property to make money without paying for it.

  • pauletteb

    Without a receipt, many large retailers will provide a merchandise credit, but for the lowest sale price of that item within a certain period, not the price on the tag.

  • pauletteb

    I worked part-time at Jordan Marsh/Macy’s for several years and saw it all.

  • Kristiana Lee

    Wow. I hope people “borrow” his images and use them for their own purposes.

  • Dutchess

    Certainly not a scam. I exchanged ONE item to Target for the exact same item because the original was defective. When the second was defective they refused the refund on the second because “their system declined it” I had to call a store manager and a district manager to return the defective item. The only scam is retailers not honoring their posted refund policy

  • Mel65

    When I worked at Kohl’s if you returned something without a receipt we looked in the computer for the lowest sale price of that item and that is the price you got back; you did not get full retail price unless that item had never been on sale.

  • Mel65

    We used to get this all the time at Kohl’s and years before that when I worked on an Air Force Base Exchange. And oddly enough it was almost always women who had plenty of money it seems like who returned them because they (officer’s wives Etc) had a lot of functions to go to and they didn’t want to buy a dress that they couldn’t wear multiple times, so they would buy the dress tuck the tags in and bring it back reeking of deodorant or sweat or perfume and look innocent when you asked if it had been worn. I’m so glad I don’t work in customer service anymore.

  • Mel65

    Perhaps to scam the retailer somehow into getting cash back for items purchased not with cash semicolon however, I’ve also seen people that I think literally have a disorder. By which I mean they actually get some sort of high purchasing a lot of stuff– it makes them feel good to go shopping and buy the stuff and have the pretty things or whatever and then there is remorse afterwards and they return it.

  • Mel65

    They give you the amount of the item less the coupon so if the item was $15 and you had a dollar off coupon you don’t get $15 back you get $14 back. That’s the way any return I’ve ever done on a discounted purchase worked anyway.

  • ArizonaRoadWarrior

    1) there are customers that opens up the package (you can’t do it with all)…removed the item…put an empty product; an used product; another brand; dirt; etc. into the package…reseal the package to the point that it looks real.

    2) another scam (it is rare) is that someone will send people to the store to buy items then they send back these people with ‘pirated’ products or stolen products.

    3) while it is not a scam, money laundering.

  • ArizonaRoadWarrior

    There are some people that will return items because they found the same item across town selling for 5 cents cheaper…they usually don’t take into the effect the gas to drive to the store and they put no value on their time. There is a lady at our church that keep all of their receipts in a ziploc bag…when she sees a lower price, she will ask the store for a price adjustment refund.

  • ArizonaRoadWarrior

    Maybe he’s a type “C” cheapo personality…he returned the item because he found the item 5 cents cheaper somewhere else. Of course, he doesn’t put a value on his time nor does he figure the depreciation of this vehicle or the cost of public transportation in the equation.

  • ArizonaRoadWarrior

    This is why we have budget deficits and government debt because people don’t want to pay for the services and/or products that they receive.

  • BrianInPVD

    .003 percent = 0.00003
    One third of one percent = 0.003

  • Fishplate

    1/ If it keeps prices down (by not subsidizing fraud), then it’s customer-friendly.

    2/ I would assume it’s worth the money, or they wouldn’t do it. At least, not for long.

  • Lindabator

    his wasn’t a case of ONE return – his pattern is clearly one that thy are in the right here with

  • Lindabator

    I remember th ones who brought back items REAKING of smoke, who then claimed they never got to use it – yeah, riigghhttttt

  • Lindabator

    not stupid — people can have a fraudulent card that is not detected immediately – but when it is, THEY are out the money. But I do know most will accept debit cards with a chip for purchases

  • finance_tony

    That sounds nothing like the OP

    His shopping history at CVS was a bit unusual, to say the least. In one
    month, it listed four shopping trips to CVS. The receipts included
    various household merchandise, paid for with a mixture of coupons,
    rewards and cash. The RAR highlighted four additional trips to CVS.
    These visits noted Sadhanala’s returns of the majority of his purchases.

  • SirWIred

    I’m chuckling at the idea of an item at Kohl’s “never” being on sale. Is it even POSSIBLE to pay “full price” for something there?

  • Mel65

    It’s been a long time (I was in college in 94 when I was working there) but I remember during orientation being told that at any given time 80% of the store was on sale…

  • Alan Gore

    I thought of that, but manufactured spending is now enough of a problem for credit card companies that they now routinely subtract merchandise returns from spend.

  • joycexyz

    I’m wondering if the OP was attempting to get cash for the returned merchandise that had been purchased with coupons and rewards?

  • jsn55

    Wow, where do you find these guys, Michelle? There’s gotta be some emotional/mental issues at work here. It would be fascinating to find out what makes this guy tick.

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