Many shoppers are unaware their returns are being tracked.
The third-party company, The Retail Equation, keeps "return activity reports" on customers dating back several years.
Best Buy has used The Retail Equation to ban customers from making returns or exchanges.
Best Buy, Home Depot, Victoria's Secret, and a host of other retailers are discreetly tracking how often shoppers return purchases, and in some cases, punishing people who are suspected of abusing their return policies.
Most customers, like Jake Zakhar, don't know their returns are being tracked.
After returning three cell phone cases to a Best Buy store in California, Zakhar was told that Best Buy had banned him from making any returns or exchanges for a year, The Wall Street Journal reports. A Best Buy employee referred him to a company called The Retail Equation for further details.
"I’m being made to feel like I committed a crime," Zakhar told the Journal. "When you say habitual returner, I’m thinking 27 video games and 14 TVs."
RELATED: Retailers with extremely generous return policies
Retailers with extremely generous return policies
Retailers with extremely generous return policies
Costco has one of the most generous return policies of any store. Any product can be returned to Costco warehouses for any reason. The only restrictions are on electronics, which must be returned within 90 days.
Ikea gives customers a 365-day return window for a full refund unless the product in question is a mattress, which can only be exchanged once.
Given that a year is a long time to hold onto a receipt, the store can also help you out by searching for an order using your credit- or debit-card number.
L.L.Bean previously offered an almost unbelievably generous return policy - customers could bring back any items bought at L.L.Bean if they felt it didn't live up to their expectations. The guarantee covered the item's full lifetime.
In February, the store reduced the return window to one year, which is still considerably better than a lot of stores.
(Photo by John Greim/LightRocket via Getty Images)
REI also used to offer a no-questions-asked return policy where customers could return used items for cash. The return window has now been reduced to one year, but customers are still able to trial the products during that time.
Outdoor products have to be returned within 90 days.
Mattress startup Casper offers a 100-day window to trial its mattresses. The best part of the return policy is that it imposes no hassle on the customer. The company will come and collect the product from your home and donate it to a charity.
(Photo by Rachel Murray/Getty Images for Casper Sleep Inc.)
Athleta has its own return policy that far outshines its sister companies Gap and Old Navy.
Customers here are given the chance to work out in products, and if they don't like them, they can return them anytime after.
(Photo by Mike Pont/WireImage)
Trader Joe's will give a full refund on its private-label products.
"If a customer purchases a product and is dissatisfied with the purchase, we encourage them to return the product to the store in exchange for a full refund," a spokesperson for the company told Business Insider.
Nordstrom doesn't have a return policy, per se. Each return is settled on a case-by-case basis, and there are no time limits on when you can return a product.
Kohl's will take back any item at any time. Customers can make returns in-store or via mail. If you lose the receipt but paid with a store card or credit card, they can look up your order directly.
CVS beauty products
CVS will take back any beauty product purchase, even if it's opened, no questions asked. It has the same policy in place for CVS/pharmacy brand products.
"All merchandise — with the exception of Unlimited Furniture Delivery items — may be returned at any time by mail or to our stores in the US and Canada," the retailer writes online.
Anthropologie's furniture has to be returned within 30 days of the date of delivery.
(Photo by: Jeffrey Greenberg/UIG via Getty Images)
The concept was created by its founder many years ago and has stuck to this day.
Bed Bath & Beyond
Provided it's within a year, you don't even need a receipt to return products at Bed Bath & Beyond. The store will track down your item using credit-card details or order numbers.
Online shoe store Zappos gives its customers plenty of time to make a decision. Its return policy allows customers to get a full refund within 365 days, providing the product has not been worn and is still in its original packaging.
To prevent customers from draining a tube of foundation in a month and then trying to return it in-store, Sephora stipulates that returns must be in "new or gently used condition."
You can get a full refund on your card if you return the item within 60 days, and if it reaches up to 90 days, then you can get a refund in store credit.
Land's End's return policy is as good as it gets. You can return any item at any time, provided you have the receipt.
(Photo by Tim Boyle/Getty Images)
Macy's has toughened up its return policy recently. What was a 365-day return window has been cut down to 180 days, which still gives customers ample time to get a refund if they so choose.
There's one exception to the rule: the department store does not allow customers to return products from its "Last Act" clearance sections beyond 30 days.
"We just want you to love it," the company writes on Facebook. You can return or exchange any of its products at any time.
(Photo by Roberto Machado Noa/LightRocket via Getty Images)
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The Retail Equation, which is based in Irvine, California, keeps a running list of customers' returns, called "return activity reports," to help "detect and deter potentially fraudulent consumers, while not impacting any others," the company says on its website.
It says fraud costs retailers up to $17 billion annually in the US.
Some "return activity reports" date back many years. One report obtained last year revealed returns dating back to 2011, a customer said on Yelp. Another report that customer pulled in 2013 turned up returns dating back to 2004, according to the Associated Press.
Customers can contact The Retail Equation to obtain their return activity reports.
The company says its services enable retailers to offer more lenient return policies by targeting the 1% of shoppers who abuse return policies.
"Rather than forcing retailers to impose stricter return policies such as 'no receipt, no return' or 14-day limits on returns, the system actually allows retailers to offer the other 99 percent of consumers more lenient and flexible return policies," The Retail Equation says on its website.
But its services have also raised some privacy concerns among customers.
@BestBuy I was just reading article in WSJ about your use of The Retail Equation to track returns. I rarely return anything but am very incensed about your whole approach to this. I will be buying my electronics elsewhere.
A Best Buy spokesman apologized to anyone "inappropriately affected" by the policy in a statement to the Journal.
"On very rare occasions — less than one-tenth of one percent of returns — we stop what we believe is a fraudulent return," Jeff Haydock said. "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."