Best Buy Scanning Driver’s Licenses to Curb Returns Fraud

    April 11, 2012

Best Buy, the big box electronics retailer, has been looking for all the help it can get as of late, and has been scanning customer driver’s licenses while making decisions on whether to honor certain merchandise returns. The company has been struggling a bit – Best Buy plans to close 50 stores in the U.S., laying off 400 employees in the process, and it’s recently been revealed that CEO Brian Dunn has resigned.

To better curb merchandise returns fraud, Best Buy has been using the services of The Retail Equation, a California company that processes return authorizations by logging consumers’ return/exchange behavior at stores in its network. And, it’s legal, if not a bit invasive. Best Buy spokeswoman Kelly Groehler states, “Our system is compliant with all state and federal laws regarding the security and privacy of the information, and provides far greater security than more traditional retail return practices, such as collecting consumer information on hard-copy return slips or saving consumer information on paper logs.” The Retail Equation also accepts U.S. passports. Yeah, I’m going to give some kid my passport to return an ethernet cable.

Still, Best Buy isn’t cutting any corners. The company loses money over consumers using their stores to check products out in-person, only to go home and buy them elsewhere for cheaper online. Also, all sorts of petty fraud can be achieved using the returns policies of retail chains. People can essentially “rent” items from big box retailers – a customer can purchase surround sound for the Superbowl, and then return everything the next day. Best Buy seeks to cut down on this sort of thing.

The Retail Equation, who tracks 20,000 U.S. stores, says that returns fraud accounts for $14.3 billion to $18.4 billion annually. This includes price switching, returning of stolen items, receipt counterfeiting, etc. Though, the company asserts that 99% of return requests in tis network go through. As for the 1% that do not – customers who are flagged for having displayed possible fraudulent behavior are put on Best Buy’s no-returns-or-exchanges-for-90-days list. And, it doesn’t matter if a shopper has a valid receipt – the only thing a blacklisted customer can do is request an activity report from The Retail Equation, and wait. Or shop/defraud elsewhere.