Many shoppers don’t think twice about heading back to a store to return an item. Maybe it didn’t fit quite right, there was a defect in the item or you simply experienced buyer’s remorse. But the person behind the counter may cringe as they take the item back and hand the shopper a fistful of cash.

Retailers are dealing with an increasing number of fraudulent, abusive and careless returners, which has led some large retailers to invest in pricey customer tracking systems and induced small boutiques to tighten their return policies.

“We’re out to help our customers in any way we can, but we have to put those return policies in place to make sure we can get to our bottom line,” said Katie Kitterman, manager of The Halltree in Urbandale.

Fraudulent and abusive returns drain $16 billion annually from retailers, through such schemes as receipt or check fraud or price arbitrage. “Wardrobing,” in which an item is purchased, worn once or twice and then returned as new, accounts for more than half of fraudulent returns. Dave Lemons, co-owner of Midwest Clothiers Inc., said retailers ultimately recoup those financial losses through higher prices.

To deter fraudulent or excessive returns, The Halltree has implemented a policy that allows customers to exchange purchased merchandise for a like item or for store credit, not for cash, and all returns must be accompanied by a receipt.

Kitterman said many other small specialty boutiques have begun to implement stricter return policies. They face not only tighter budgets than big stores, but a constantly rotating inventory. Even within a month or two of a purchase, the item may no longer be in stock. If it is returned, the sale becomes a total loss to the store. But educating customers to those facts can be difficult.

“Small businesses are more affected just for the fact that they’re smaller and every dollar counts,” she said. “If we have a $400 sale that is returned, that’s a considerable amount. It’s kind of a pinch (to large retailers), where to us it can be more of a punch.”

But some small stores have chosen to adopt a more liberal return policy in the hope of attracting more customers.

“If someone brings something back six months after they made the purchase, I cringe when I take it back, because I can’t resell it,” Lemons said. “But we look at it and say it’s one of the reasons they come to this store.”

At G & L Clothing Inc., owner Jim Marcovis not only has a lenient return policy, but he also has a computer system capable of tracking each customer’s purchases back to 1998. That eases the return process for customers, and in addition helps employees spot questionable returns. Several national retail chains have adopted systems to store customers’ identification and payment information.

“We can see if someone has a pattern of returning items constantly,” Marcovis said. “We’ll nicely say, ‘Maybe you’d be better off trying another store that fits your size and needs better.’ And that’s a rare instance, but sometimes you have to do that.”

G & L does not encounter inventory difficulties similar to those faced by specialty stores, as it’s been selling many of its products for years. Marcovis said if a Christmas gift were returned to the store today, having not been worn, the customer wouldn’t get cash refunded, but could exchange the item or receive store credit for use at a later date.

“It comes down to leniency,” Kitterman said. “They can go to a mass merchant and get their money back, and then they come into a small store and think it’s like that, but it’s hitting us right in the belt.”

Store owners and managers emphasize the importance of maintaining a strong relationship with customers in combating return fraud. Kitterman and Lemons say they know their most of their customers and are able to work one-on-one with them. In some instances, they will even allow regular customers to take an item home to decide if they want to purchase it.

“It happens every day, and that’s the level of trust that goes back and forth with a longtime customer,” Lemons said. “That’s kind of how business has evolved over the years.”

WAR OF THE RETURNS

Large national retail chains have gone high-tech to prevent fraudulent and abusive returns, which account for 9 percent of all returns in the United States. But retailers are also trying to maintain a balance between their tracking capabilities and the evolving system of return fraud.

“Wardrobing” schemes account for more than half of all fraudulent returns. For example, a shopper may purchase a pricey dress to wear once for a special event and then return it the next day for a full refund. Some thieves steal merchandise and then return it to the store with a forged, found or purchased receipt, or with no receipt at all. Store employees occasionally engage in fraud schemes as well.

Those losses accrue over time, as employees must process the return transaction, evaluate the merchandise’s resale potential and then restock the item. When returned merchandise must be discarded after a return, the loss is compounded.