Retailers Face Customer Backlash for Complicated Return Policies

In 2018, L.L. Bean made headlines by terminating its century-old “lifetime” return policy. The new rules now restrict returns to one year post-purchase and mandate receipts, sparking backlash from customers, some of whom have filed lawsuits.

This shift prompted a research team in operations management to explore customer reactions to stricter retail return policies. Findings revealed that consumer dissatisfaction arises when retailers tighten return policies, unless there’s a clear explanation provided.

The research encompassed experiments with 1,500 U.S. participants, all playing the role of loyal customers for a fictional retailer. The scenarios presented included various policy alterations, such as imposing a 15% restocking fee and limiting return periods to 30, 180, or 365 days.

Results indicated a significant decline in the willingness of customers to make future purchases from the fictional retailer after restrictive changes. Notably, recommendations to others also plummeted, with consumer trust in the retailer diminishing as the severity of the return policy increased.

Interestingly, even consumers who rarely return items expressed negative feelings about the policy changes. However, when this fictional retailer communicated its new guidelines through official channels and justified them by citing increased “return abuse” or processing costs, customer backlash decreased.

The implications of these findings are important, especially as Americans returned an estimated $890 billion worth of products in 2024. It typically costs retailers between $21 and $46 to process a single return, and a significant portion of these items ultimately ends up in landfills.

Technological advancements have further fueled this trend, coupled with consumers’ ability to return items long after their initial purchase for a full refund. Other retailers have followed suit, adopting more stringent return policies. For instance, Macy’s reduced its open-ended return window significantly over recent years, while Kohl’s introduced a 180-day limit in 2019.

Despite these changes, research reveals customers have a preference for lenient, no-questions-asked return policies, viewing them as indicators of quality service. As such, retailers may risk upsetting customers when they fail to uphold what has become an industry norm.

Moreover, the manner in which these policy shifts have been communicated is notable. Many retailers opted for discreet updates through websites or in-store signage rather than direct customer notifications. However, discussions on platforms like Reddit suggest that customers have taken notice of these changes regardless.

Further inquiry is warranted, particularly regarding refund restrictions and return eligibility for heavily discounted items, as these factors may also impact consumer behavior.