09/01/2005
Returning retail purchases can bring unexpected surprises that aren't sure to please. We previously reported to you [Business Link, January 2005] that some merchants use software to gather personal information (such as name, birth date, address) about an individual and information (such as date, store location, merchandise description, etc.) about the transaction so as to track types of transactions and number of refunds and exchanges the customer makes. When the software detects unusual return or exchange activity, the store may decline to accept the return or exchange.
Mao Nguyen, who bought a sweater from Express Women's Clothing in Costa Mesa in November and then returned it in early December, filed the first complaint we've received against a store tracking such transactions.
First, Nguyen says she returned the sweater with her original receipt and price tags intact. The cashier asked to swipe her driver's license; she responded that she would show it but wasn't comfortable having it swiped. He insisted upon swiping it before making the refund. Why? "For tracking purposes" was his answer.
Without consent to swipe the license, the clerk refused to make the return, even when Nguyen asked him to override the store's policy. The store manager was summoned and maintained the same position.
Nguyen finally handed over her driver's license "simply to end the argument and get my refund."
As we reported last January, Bureau president Bill Mitchell doubts the legality of refusing a refund or exchange based upon these "tracking" practices, since arbitrary refusal would breach the contract that was formed at the time of the transaction. He believes the merchant could avoid this breach only by informing the customer, in writing, either at the time of the purchase or at the time of the refund or exchange, that they are not willing to make future refunds or exchanges.
Nevertheless, Nguyen's complaint was not that her refund was denied, but that she was required to have her driver's license swiped, and her personal information thus captured and retained, in order to receive it.
California's provisions that allow a business to swipe a driver's license or DMV-issued identification card are part of legislation enacted to prevent and punish identity theft. Yet whether they prevent or facilitate identity theft may remain in question with some customers. When introduced early in 2003, the bill prohibited "record[ing], store[ing], or retain[ing]" the information by businesses. By the time it was enacted, it had evolved to where businesses could swipe the license or card, to, among other reasons, "collect or disclose personal information . . . for reporting, investigating or preventing fraud, abuse, or material representation" and to "retain or use" it for only those purposes "provided herein."
Thus, it is in the interest of their investigation of fraud and abuse, it would seem, that retailers may require you to let them swipe your driver?s license if you want your refund or exchange.
While such detection of fraud and abuse may have some benefit for consumers as well as the business (no one would likely dispute the idea that retailers' losses through fraud and abuse are passed along to consumers), some customers are still incensed that they must divulge personal information to get the refund to which they feel they're entitled. And while a Wall Street Journal article last November reported one retailer's speculation that the software his store used may be a deterrent to fraud, because a number of customers had abandoned their return or exchange requests once they learned of the swiping requirement, the possibility exists that some customers might abandon their refund requests rather than disclose information they feel puts them at risk for identity theft. And even those who comply and are told, as was Nguyen, that their information is "secure and will not be shared," may respond as Nguyen did: "I?ll never shop there again, and I?ll spread the word."
According to website of The Return Exchange, the company whose Verify1 software was the subject of the Wall Street Journal's article, the data they collect is stored within a "state-of-the-art, secure data center." They maintain their system provides "far greater security than [with common retail store] practices such as collecting consumer information on hard copy return slips or saving [it] on paper logs." Although the company declined to give us names of retailers using their software because of "confidentiality agreements with their clients," they say that their clients do post signs to inform customers that they use TRE's services.
We remind our readers that any condition, such as production of identification, required for a refund or exchange must be conspicuously posted in the establishment or noted on your sales slip or the tags on the merchandise. (Nguyen's receipt stated, on the back, that ID may be required, although Nguyen says it didn't specify the type of ID, why required, or how it was to be handled.) If you don't want your driver's license or ID card to be swiped during a return or exchange transaction, shop carefully so as to avoid returns or exchanges, and be especially observant of any posted policies.
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