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What is going on with Best Buy's returns policy?

The Richfield-based retailer is getting some bad press.
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What's happening?

Best Buy has been in the news this week following a report by the Wall Street Journal that reveals some customers are being unfairly turned away when they make a genuine attempt to return a purchase.

How is it doing this?

Turns out, Best Buy uses a third-party company, The Retail Equation, that keeps a database of shoppers who have returned products to certain retailers, with Home Depot and Victoria's Secret among its other clients.

If a customer has too many returns on their record, retailers can ban them from making any returns in the future.

This happened to Jake Zakhar in January, when he learned from his Retail Equation record he was banned from making returns at Best Buy for a year because three exchanges totaling a little over $87 had seen him flagged as a possible fraudster.

Attempts to get this ban lifted at Best Buy were just referred back to The Retail Equation.

As The Retail Equation's website explains, it keeps "return activity reports" about customers, that details their history of returns and exchanges.

Their system is designed to identify the 1 percent of consumers who try to game the system, costing retailers between $10-$17 billion-a-year.

This is why stores might want to scan your driver's license when you return an item, so they can access your return activity report and see if you're a fraud risk.

What is Best Buy doing?

As Zakhar's example above shows, the system is not working as well as it should be, as genuine Best Buy customers are being flagged as dodgy and having their returns denied.

Best Buy told MPR that its systems prevent barely 0.1 percent of returns from happening, but nonetheless is now setting up a hotline to field complaints.

"Fraud is a real problem in retail, but if our systems aren't as good as they can be, we apologize to anyone inappropriately affected and we will take a hard look at what we're doing and determine how we can make it better," a spokesman said.

NBC News notes that returns fraud is a real issue, and can happen when fraudsters switch UPC codes from a lower price item onto a higher price one and cash in on the difference.

Another method is scouring parking lots and garbage for high-value receipts, then shoplift them off the shelf to return it.

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