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Security & privacy

Exposed! Secret database tracks everything you’ve ever returned

If you believe it’s just online companies that track your shopping behavior, better think again. Retail companies secretly track your behavior too, particularly with how often you return merchandise.

It’s all in the name of stopping fraud, of course. Companies are cracking down on people who regularly buy high-ticket items, only to return them later to get their money back. Tracking returns is also a way to stop thieves who attempt to cash in stolen merchandise by exploiting a store’s return policy.

Honestly, when was the last time you returned an item to a store? Relax. Everyone has legitimate reasons for returning merchandise. Maybe it’s truly defective or simply unsatisfactory. Maybe it didn’t fit or you found something cheaper elsewhere.

For most people, returning a product is a hassle and feeling guilty is a normal emotional reaction.

We understand that a store’s often generous return policy is enforced generally to serve you, the honest, hard-working customer who just wants to get the most out of a purchase. Most of us just avoid returning merchandise if we can. I would rather believe that the majority of customers still do shop and buy things that they plan on keeping.

But of course, there will always be bad apples that ruin the party, forcing companies to enforce tracking systems to cut their losses.

But are these secret tracking practices an invasion of privacy?

The Retail Equation

One third-party company is doing exactly that – tracking customer return patterns.  According to a report from The Wall Street Journal, retailers are turning to a firm called The Retail Equation to track customer returns.

Retail Equation is headquartered in Irvine, California. The firm uses an algorithm to track a customer’s returns and calculates a “risk score.” This risk score can then be used by retailers to secretly flag specific high return rate customers and ban them from making future returns if they suspect fraudulent activity.

For example, per store policy, when you hand over your driver’s license to purchase or return an item at Best Buy, do you think it’s just for confirmation of identity? It’s actually more than that.

When the cashier swipes your driver’s license on the register, the information captured from the ID (name, address, ID number, date of birth, and expiration date) is electronically sent to The Retail Equation and the data is added to your “Return Activity Report.”

And the retailer still has the final say on the return limit and whether to ban a customer, not The Retail Equation. The company just catalogs the data. In most cases, the company said that 99 percent of all store returns are accepted.

Here’s a list of the major retailers that are known to use The Retail Equation’s services:

  • Home Depot
  • CVS Pharmacy
  • Sephora
  • Dick’s Sporting Goods
  • JCPenney
  • Victoria’s Secret
  • Toys R Us (sadly closing soon)
  • Best Buy

If you’ve ever been denied a return at these stores, then it’s most likely due to The Retail Equation’s report on you. If you want to review your return profile, you can request a copy of your Return Activity Report at The Retail Equation’s website.

Is return tracking needed or is it an invasion of privacy?

Each year, The Retail Equation says retailers lose from $9 up to $17 billion due to fraudulent and abusive returns. And return tracking is nothing new, The Retail Equation’s service was launched 10 years ago.

According to the firm’s website, retail return authorizations were launched to stop the following:

Return Fraud – when an offender returns or exchanges stolen goods for cash, or steals receipts to falsify a return.

Return Abuse – when someone buys a product without any intention of keeping it.

So rather than forcing stricter return rules or shorter return window dates for everyone, The Retail Equation’s return tracking system allows retailers to have more lenient return policies for 99 percent of consumers.

Privacy concerns

But consumer and privacy advocates are saying that there should be more transparency about this practice. They are saying that most consumers are not aware that a “return activity report” even exists.

Privacy groups are also saying that consumers should know about everything that’s being collected about them and there shouldn’t be any secret databases.

It’s all about the customer

For retailers, however, the “return activity report” is not about monitoring customers. It’s all about fighting fraud and abuse. In most stores, it’s a case-to-case basis and false flags certainly could happen, but it’s more akin to sorting the few bad apples from the honest majority rather than curtailing legitimate returns.

But what do you think? Is the “return ” database a good thing for consumers? Or is it another corporate tool that violates our privacies? Drop us a comment!

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