Retailers clamp down on return fraud

WAYNE, N.J., Feb. 1 (UPI) -- U.S. retailers are tightening return policies to battle alleged consumer fraud, estimated to be $3.7 billion for the 2007 holiday shopping season.

Consumer fraud that includes returning items as defective when they work fine and returning items stolen or purchased with stolen credit cards, was estimated to be $3.5 billion for the 2006 holiday season, USA Today reported Friday.

Toys R Us, Costco and other retailers have tightened return policies in recent years, requiring a receipt and cutting back on the time limit for returns.

With a lenient policy, customers could legitimately exchange electronic goods that worked for an updated item or one in which the price may have dropped.

"We would get returns for TVs purchased a year earlier for $2,500 and customers could return a perfectly good item, find something a little better for $2,000 and walk out with a new TV and $500 cash," said Costco's Chief Financial Officer Richard Galanti.

In response, Costco has limited return of computers and other electronics to 90 days.

Galanti estimated the previous policy cost the company about $100 million a year, USA Today said.