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.

A consumer right to make returns?

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.

Serial returners

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

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.”

A personalized Return Activity Report 

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.

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

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.”

Official response from CVS

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. These are also 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. But Sadhanala had not initiated this process.

The final word

We could not help Sadhanala. CVS is within its legal rights to reject his request. He has been provided 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 the executive director of She is a consumer advocate, writer and licensed clinical social worker who spends as much time as possible exploring the world with her family. Contact her at Michelle Friedman Read more of Michelle's articles here.

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