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FOR IMMEDIATE RELEASE: December 12, 2004

Schumer Warns Nyers: New Secret Store Policies Block Shoppers From Returning Gifts - Could Create Havoc This Christmas

At least 200 stores in NYC, LI, Hudson Valley and North Jersey have adopted new unwritten policies this season that prevent shoppers from returning any more purchases

Senator seeks FTC investigation and also will introduce new legislation to require stores that limit the number of returns to clearly warn buyers of their new rules before purchasing More than 41 stores in NYC, 43 on LI,

US Senator Charles E. Schumer today revealed that more than 200 stores in Metropolitan New York have adopted secret new store “blacklists” that were never announced and have unpublished rules, yet nonetheless stop people who make so-called “excessive returns” from returning extra goods. These unwritten policies could unknowingly prevent shoppers from returning gifts, wreaking havoc on the Christmas gift giving season.

Schumer asked the Federal Trade Commission to investigate this blacklisting practice, and proposed new legislation to require any stores that use lists like these to clearly warn customers before taking their money for purchases.

“There’s a familiar saying this time of year ‘many happy returns’ but sadly in some stores that just isn’t the policy,” Schumer said. “We all know the disappointment of buying a friend or family member a gift only to find out they already have one or don’t want it. But some of us aren’t being extended the right to return any more gifts – and the least the stores can do is tell us why.”

This holiday season, there have been numerous reports by customers who have been barred from returning items to stores, including Express, KayBee Toys, The Sports Authority, and Guess stores from which they regularly make purchases. These stores and others like them have been rejecting returns from certain customers based on information from a new database that collects purchase and return data from customers without their knowledge.

The systems require customers returning merchandise to provide drivers licences whose numbers are scanned or entered into a computer or cash register. The computer immediately weighs the number of returns and exchanges a person has made, the dollar value of the items, and the dates of the transactions to decide whether a consumer should be granted another return.

When a customer reaches the store’s unpublished threshold for too many returns, the database run by companies such as The Return Exchange tells the retail store and the retail store in turn rejects that customer’s return. If the database decides against the return, the return is simply rejected by the cash register, similar to how a maxed out credit card is rejected.

Schumer noted that among the chain stores that subscribe to The Return Exchange are over200 locations in and around metropolitan New York including 41 in New York City, 43 on Long Island, 22 in the Hudson Valley, and 96 in Northern New Jersey suburbs where New Yorkers may be shopping this holiday season.

The stores that engage in this practice and the companies that help them do it in an effort to cut down on shoplifters, those who purchase an item, use it once, and then return it. Retail experts also say that some people regularly purchase two similar items, switch the contents, and return the lower-priced item in the higher-price-marked boxes.

But Schumer said today that not all of these explanations make sense – for instance, shoplifters don’t typically have receipts for their purchases – and don’t account for situations like New York City commuters who might purchase clothing items after work, catch a train home, try them on and match them to other garments, and return the rejects the next day. And perhaps most important, these policies actually punish many honest shoppers who give these stores a high volume of repeat business, which is usually the real reason behind a high return rate.

Because these systems penalize many honest shoppers and also raise privacy concerns, Schumer has urged the Federal Trade Commission to study what consumer information these companies are gathering, what they are telling consumers about the information they are gathering, and whether the companies are disclosing the criteria that consumers would need to meet in order to lose their right to return clothing.

And Schumer also said today that when Congress returns to Washington in January, he will introduce legislation to require stores to explicitly warm customers in writing and in signs about their excessive return policies, so that customers aren’t stuck with goods they don’t want and cannot afford.

Schumer was joined today outside an East Side Sports Authority store by Rebecca Weber, Executive Director of the New York Public Interest Research Group (NYPIRG), the state’s largest consumer protection organization.

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