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Amazon bans chronic returners
Amazon.com is known for its generous return policy. Customers expect that Amazon will make the wrong purchase right — every time. But according to a Wall Street Journal report, even Amazon has its limits. The e-tailer is banning customers it believes are taking advantage of its largesse.
The Journal reported on the experience of a 20-year-old from Israel who received notice that he had been banned by Amazon even as he held a $450 gift card from the site. The reason given was that the customer, Nir Nissim, had violated the conditions of Amazon’s use agreement.
In the end, Mr. Nissim was able to have his ban overturned, something that Amazon says it encourages its customers to do if they believe the company is in error.
“We want everyone to be able to use Amazon, but there are rare occasions where someone abuses our service over an extended period of time,” an Amazon spokesman told the Journal. “We never take these decisions lightly, but with over 300 million customers around the world, we take action when appropriate to protect the experience for all our customers.”
Amazon is not the only retailer that has sought to dissuade consumers from engaging in excessive return activity, particularly of the fraudulent kind. According to the National Retail Federation, 11 percent of sales are returned and 11 percent of those are fraudulent.
Earlier this year, L.L.Bean rolled back its lifetime guarantee on the products it sells to one-year.
“A small, but growing number of customers has been interpreting our guarantee well beyond its original intent,” wrote Shawn Gorman, L.L.Bean’s executive chairman, on the company’s Facebook page. “Some view it as a lifetime product replacement program, expecting refunds for heavily worn products used over many years. Others seek refunds for products that have been purchased through third parties, such as at yard sales.”
While Amazon appears to handle its bans in-house, many retailers, including Best Buy, Home Depot, J.C. Penney, Sephora, Victoria’s Secret and others, are working with third-party vendors to identify customers who abuse their return policies. Here too, customers have been issued bans with some mistakes being made.
Discussion Questions
DISCUSSION QUESTIONS: How important is Amazon’s liberal return policy to its sales success? Do bans placed by retailers on customers have a significant effect on fraudulent returns? Do press reports about bans have a dampening effect on consumer purchasing activity?
Poll
BrainTrust
Jennifer McDermott
Consumer Advocate, finder.com
Mohamed Amer, PhD
Independent Board Member, Investor and Startup Advisor
Returns are a real — not imagined — problem for all retailers. Fraudulent returns are an even bigger pain point. Retailers have the right to identify and discourage chronic returners from taking advantage. How this is done is the trick. It should not be highly publicized but done subtlety and one-on-one with the culprits. Retailers don’t want to alienate everyone with big negative publicity, especially when they are trying to solve a problem with a specific group.
There will always be a small number who push the “long tail” of any group far to the right. Like a good statistician eliminates the “long tail” from the data set to get a more accurate result, so too must retailers eliminate this group of policy abusers. It won’t hurt one bit.
Amazon’s return policy is one of the reasons why it has seen incredible sales growth and success. Banning people, or threatening to do this, especially in the face of errors in making these decisions is not a good move for any retailer. Amazon’s 1 percent of sales (11 percent of 11 percent) being fraudulent returns is nothing excessive in the retail environment, especially the online environment where things are not as they appear, including fit of clothes, taste of food or performance of product. Most importantly, it is not Amazon who pays for these returns, but the vendors who supply Amazon along with the consumer. Amazon charges more than 1 percent for its returns, and suppliers expect this as they calculate their selling price to Amazon. For Amazon’s model to work, and continue working, it should not change this part of their retail formula. Why change a winning strategy?
Generous return policies are there to make life easier for genuine customers. They are not there for the benefit of fraudsters or serial abusers. As such, retailers have a right to review returns levels and ban those who they believe are taking advantage of the system.
However, care needs to be taken in doing this and common sense applied. I have seen rather a lot of cases (especially at Best Buy) where algorithms have banned or restricted returns from customers who are using the system in a reasonable way.
I guess it’s tough out there, even for Amazon. That said, the returns policy is a big deal for customers and the vast majority will need to feel they can buy without being penalized. So long as the vast majority of users know they won’t be blackballed this should not be all that bad for Amazon. Perhaps some transparency before users are cut off would help customer concerns — there’s no need to be all-or-nothing with these things.
I’m with Amazon on this one. Retailers have to have common-sense policies that allow returns, but stop fraudsters and abusers from gaming the system. If you’ve used a frying pan for 30 years, you shouldn’t get to return it for a new one, no questions asked.
Amazon’s liberal return policy certainly plays a part in its success but not more so than its convenience. The bans have actually been happening for some time, and likely only represent a tiny amount of users. Ones that not only don’t make them money but are consistently costing them money. If this behavior is repeated, I think it’s a fair assessment to ban the user from their platform.
During its history and huge growth, the assurance of returns is an important contract between Amazon and buyers. This is especially true with categories where “fit” or “taste” is important. The assurance that we can return things drives additional purchases we might not otherwise make. These situations don’t impact most shoppers and are a little overblown via media reports. However, this can make shoppers think twice and create a negative halo.
If anything, this does open the door a little bit more for other e-commerce folks to compete by offering more lenient return policies — though this dark accursed list of over-returners doesn’t seem like any retailer’s dream customer base! The answer to any question with the theme “Will this hurt Amazon?” can invariably be answered with a “probably not.” And yet. This ban (yikes! What a loaded word today) does starkly give non-Amazon retailers a way to differentiate by providing better service, more grace and more humanity in interactions, in a way a returns-limit-calculating algorithm never can.
In order to succeed as an online retailer, Amazon must have a liberal return policy. `It’s essential to the customer equation.
That makes this announcement a bit of a shock. Or at least confirms that Amazon is struggling to make its retail-like business profitable. We’ve known that from several years of putting the screws on sellers. We know that from their grab for advertising revenue. We know that from their purchases of brick-and-mortar stores as well as their deals with brick-and-mortar stores like Kohl’s.
Returns are a problem Amazon has carefully ignored in its press. From these press reports, it sounds like Amazon is finally having to confront the dark side of high online sales — very high online returns and high risk of fraud.
Amazon’s liberal return policy has definitely been a strong accelerator of its sales growth over the past years. I strongly support a potential ban on customers who try to abuse it. The retailer can quite easily detect shoppers making suspicious returns. And any public reporting about misusing the liberal return policy will absolutely make “smart” people think twice.
Even Amazon is tired of the folks who abuse the return policy, and for those who think they should not ban them, I’m wondering why. Customers who pull this stuff do not deserve the right to buy from anyone, and that is how many businesses view this since we have to eat the cost and that is simply wrong. The folks who continue to buy in good faith will have no problems when the need for a credit is justified, and Amazon will be careful in the way they handle this I’m sure.
One of the benefits of shopping on Amazon is its generous return policy. Here’s the thing: consumers who order online cannot be sure of what they will receive. Will it look like the photo? Will the quality be the same as featured? Will it fit? In order to purchase online shoppers need to be able to return or exchange the things they do not like.
I remember a focus group that veered off into a discussion on returns, and one woman being upset because in spite of QVC’s unconditional 30-day return policy she was banned from shopping at the retailer. She was told she had returned too many items.
There is a difference between theft, those who abuse the policy, and someone who just wants to return a bad purchase. Retailers definitely have a right to draw the line, but consumers shouldn’t be blindsided by a retailer that suddenly labels them a “chronic returner.” Where’s the line and how do customers know it’s there?
I’m with you on this Georganne. Perhaps before getting privileges taken away, a very professional note of potential action if such and such activities continue to occur.
I do side with Amazon on this very tender issue. The problem is not with a large population of Amazon faithfuls, but with those few who choose to abuse the system. One Amazon customer told us she buys apparel from Amazon, and orders four to five different sizes of each item to try on – and then returns the balance. And she is consistent. And she is a retailer! And she brags about it to her friends. Here’s the point: In my department store past, we walked tenderly on our return policies, but we called out the abusers. It is a shame that a few can have such an impact on policy. Every seller has to be very careful not to reach knee-jerk reactions because of these abuses, but still must take control away from abusers.
The balance in satisfaction is the key. Return policies suitably applied are offset by the number of times a customer is not fully satisfied but keeps the item. We have homes and closets full of such examples. The retailer policy has to focus on a range of customer satisfaction issues and then be a stakeholder in making that happen. When customers return purchases too often they show abuse of the relationship. Why spend the resources to try to satisfy such a person over serving many others? Some customers are not worth the investment.
I suspect this is much less “news” than it may appear to be. I gather from the article that this is not a new policy for Amazon, rather a long-standing policy that recently garnered attention because of the customer with the $450 gift card having trouble. As long as these “banning” incidents remain isolated while the vast majority of shoppers continue to enjoy liberal return privileges, I suspect this will be a non-issue. I would, however, caution Amazon to do everything possible to be very careful about banning shoppers so that news of these incidents does in fact remain isolated.
Amazon’s return policy is part of the trust and confidence the company has built into their model. Returns are a natural element of any retail operation and can easily erode margins, so it’s understandable to see Amazon focus on this large number. My only suggestion is to err on the side of caution so that customers making legitimate returns are not thrown out with the bathwater.
While generous return policies have long been a significant advantage for Amazon, L.L. Bean and others, it does not justify a policy with no limits or constraints. Yes, there is a downside to firing innocent customers, however, that is not an excuse for turning a blind eye to customers who abuse the system. The fact that Amazon and others are shining the light on such abuses, by itself, may deter others from taking advantage of the system. Even 11 percent of the 11 percent returned that is deemed fraudulent has an impact on the bottom line.
I am with Amazon on this. Sure they are the largest retailer in the world. But that does not give anyone the right to abuse the liberal return policy. Too often people will buy an item for a specific occasion and return it the day after. Amazon is not our personal closet to go to get an item and then discard it. As with L.L. Bean, Amazon is in the right when it comes to protecting the meaning of the policy and not allowing the abusers to interpret it differently.
It’s definitely a controversial issue.
Here’s one example:
Merchants who sell on Amazon but don’t have reviews yet will do this. Friends will buy their products, leave reviews, and then return those products. It’s not technically illegal, but it’s not transparent. Which is a bigger problem in my opinion.
Large retailers do not take to banning customers lightly. After all, they have invested in acquiring and serving these customer. The difference is that retailers now have the tools to accurately calculate returns costs into the customer lifetime value equation. With this clarity comes the ability to know exactly how profitable a customer is, and find opportunities among underperforming cohorts. However, when it becomes clear that specific customers will never be profitable and are actually a negative ROI, well that’s where retailers need to make tough decisions.
Customer centric return policies come at a cost. But the increase in sales, as Amazon has proven, and an efficient reverse supply chain can pave the way for data centric retailers to set themselves apart.
The noted bans may spark interesting discussions like this thread and perhaps catch the attention of the media as it always seems unfair for the consumer. But again, retailers have already made this calculation and press awareness may very well be part of the tactics.
If a customer is not profitable, and never will be because of specific returns behavior, is it really unreasonable for a retailer to fire that customer?
My assumption is that those who make fraudulent returns expect they may be caught at some time and probably move on to another source. Announcing and publicizing a changed return policy with limits calls attention to the issue and may be a concern for some customers and/or product purchases. People who purchas online because of limitations that make shopping in stores difficult may rely on the return option because they can not go to a store to make the return. People ordering big and bulky products appreciate the return policy.
Someone needs to examine the returns of a specific customer. If it’s someone who has moved and is trying to set up a new home and decorate, it may take a lot of returns for a time period and then will settle down to their normal rate. Cutting that customer off is likely to alienate what would have remained a loyal long-term customer. The decision to cut off a customer just because of a large number of items within a specific time period needs to be balanced with other information about that customer.
I fully understand and support the need to curb excessive returns. I work in an office with just over 100 people. Almost every Monday morning there is a fairly big stack of outbound Amazon or other online shopping returns. When I ask coworkers it is usually things like that wasn’t the shade of red I wanted or the sleeves/legs are too long, or this brand of shoes doesn’t fit right in my size or I guess my kid had a growth spurt … etc. Rarely is it because it was a completely wrong item.
Just as banks and other financial institutions have rights to hold and authenticate payments for fraud verification, the exact same actions are rightfully reserved for retailers. Returns have a very real cost, and like in anything, the actions of a few bad apples can have massive impact on the actions of many honorable customers. It drives up price and fulfillment costs to the majority of customers. I don’t anticipate these types of reports to have any effect on the majority of consumers who consume and return with best intentions with Amazon.
I don’t know that I would call Amazon’s policy “liberal,” or at least any more liberal than industry norms: “no questions asked” has become standard (for good or bad).
What effect the tightening of policies by Amazon — and others — will have will have to be seen (I suspect it will be small); there will of course be false positives, and they will be the subject of social media blather and (otherwise) over reported, but thoughtful responses from retailers being criticized will do much to convince the public the changes are necessary … and ultimately to their benefit.
This isn’t about Amazon’s liberal return policies. It’s about creating some guidelines and boundaries that allow Amazon to continue its liberal and easy return policies for honest customers. If there are 11% returns, and 11% of those are “fraudulent,” that means that just over 1% of returns are bad returns. What Amazon is doing is protecting 99% of the people who return items from being punished for the sins of a very few. Even L.L.Bean said that if a customer has a receipt, they will consider exchanges outside of the one year guarantee.
No doubt the some publications will take advantage of the negative side of the news. It is a little “sensational,” but the reasons behind limiting returns in certain situations are vital to the overall customer experience.
Amazon is stellar at serving customers and they have every right to ban bad customers. Good customers — those that do not game or abuse policies including those affecting returns — have no reason to go anywhere else.
LP, including fraud — through returns, loyalty programs or promotions — is a real problem and when you have the right approach to data, it’s increasingly easy to spot.
I’m with Amazon on this one, and here’s why: Any business has right and reason to curb abuse of return privileges, if for no other reason than to protect the majority of shoppers from the cost impact of abusers.
Amazon’s sophisticated AI is certainly capable of flagging bad actors based on informed criteria, such as customer LTV or product category. For example, a very profitable, frequent customer should not be punished just because of the sheer number of returns. Someone who buys and returns hard goods excessively may merit different treatment versus a shopper who regularly buys a dress in several sizes and keeps only the one that fits.
I’d advocate a human element with regard to enforcement, however. When a suspected over-returner is flagged by the system, I think it’s time for the customer service professionals to review and confirm the right action. I know, even 1% of customers is a huge number, but the alternative could lead to a kind of auto-response purgatory that could harm Amazon’s reputation.
Finally, there’s consideration for Amazon 3rd-Party Sellers, those small businesses who are bound by Amazon rules. Returns are hardest on those folks and last summer they were up in arms about a liberalization of the returns policy.
Clamping down on the worst returns abusers may help protect 3rd-party sellers a bit, and I think that’s mostly fair.
A few years ago, Saks 5th Avenue was sued by one of its customers for preventing them from placing any further orders after ordering $150k worth of merchandise and keeping only $5k’s worth. However, frictionless ecommerce almost invites this type of behaviour as was the case with the “Zalando Parties” where a group of people ordered merchandise only to return it after having the “party.” Banning such individuals might be tricky and may even cost more (in PR value) that it saves. But, personalisation tech might make it easier to limit a persons ability to shop … not sure about the legalities of such measures though….
Liberal return policies are great perks for customers, but those who take advantage of them in the wrong way are ruining it for everyone else. I don’t see Amazon doing away with their return policy (as it is one of many points of differentiation), so cracking down on those who are abusing the system is a much better alternative. Making mistakes in terms of identifying fraudulent returners is unfortunate, but it is bound to happen from time to time. Overall, this is a smart move for Amazon and shouldn’t have any negative impact on sales.