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January 15, 2022

Is 'buy and return' smart shopping? Or is it simply theft?

After enjoying a decent holiday shopping, North American retailers are once again another headache: merchandise returns and the con games that accompany them.

SaleAccording to a National Retail Federation survey, return fraud cost merchants an estimated $8.9 billion in 2012, with nearly 30% coming during the holiday season. Overall, the survey shows that something like 4.6% of holiday returns are fraudulent.

Virtually every retailer (97%) reported being stung by crooks who collected refunds for stolen items, and almost half (47%) said they’d received fake receipts.

Equally common is the practice of "renting'' electronics for a few days or wearing an item for a special occasion then returning it — a practice called "wardrobing.'' Nearly two-thirds (65%) claim they've been stung this way within the last year.

Recently, a group of men used counterfeit checques and stolen credit cards to purchase gift cards that were then used to purchase expensive gowns from high-end retailer Nordstrom.

After the gowns had been to a few gatherings, the group would return them to Nordstrom for a full refund. In total, they reportedly stole $150,000 using this scheme.

Ok, that's fraud. But what about using something for a day or two and then bringing it back?

Just as bad, says NRF's Joe LaRocca, who argues that it's often unsuspecting buyers who get stung in the end.

"In these cases, dishonest shoppers bring back used, non-defective merchandise for a complete refund. In most cases, the retailers are able to detect that the holiday dress has make-up on the neckline or the laptop computer includes someone’s term paper, and are forced to take a loss on the item completely or discount it substantially to move it out the door. On occasion, though, these items slip through the cracks and are returned to store shelves, enabling unsuspecting shoppers to literally purchase someone else’s leftovers. That doesn’t sound too “harmless” to me."

Do you see anything wrong with the practice of temporary ownership? Are you practioner? Have you ever been stuck with someone else's returns?

By Gordon Powers, MSN Money

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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...