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More retailers doing away with free returns

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If you're thinking of sending back a disappointing gift you just received over the holidays, the return may bring even more disappointment.

Americans have grown accustomed to free returns, but a growing number of retailers are charging fees as returns squeeze retailers' bottom lines.

Macy's, Abercrombie, J. Crew, H&M and other companies have all added shipping fees for mail-in returns.

And it's not just the big mall brands, either. Eighty-one percent of merchants are now charging a fee for at least some methods of returns, according to Happy Returns, a logistics company specializing in returns.

Amazon has started charging customers a $1 fee if they return items to a UPS store when there is a Whole Foods, Amazon Fresh grocery store or Kohl's closer to their delivery address. (Amazon owns Whole Foods and Fresh, and has a partnership deal with Kohl's.)

Amazon also recently started flagging "frequently returned" products on its website. Amazon is adding the badge to product listings on items with "significantly higher return rates for their product category," a spokesperson said.

Return rates have spiked in recent years as shoppers buy more online. Shoppers are likelier to return purchases they haven't seen or tried on in person, experts say.

Customers sent back nearly 17% of the total merchandise they purchased in 2022, totaling $816 billion, according to data from the National Retail Federation. That was up from 8% in 2019.

Companies must cover costly shipping fees for customers to return their products. Those items sometimes wind up back in retailers' warehouses or on shelves. Stores then have to mark down returned goods to sell them, further squeezing their profit. All of that hurts companies' profits.

More often, returned products can end up in liquidation warehouses or even landfills, which are an environmental threat.

In some cases, stores are letting customers keep their returns instead of sending them back – low-priced bulky items like furniture, kitchen appliances, home decor, baby chairs, walkers, strollers and other items where it's costly for the retailer to cover the shipping cost for the return.

Americans increased their spending this holiday season, but at a slower pace than last year. Retail sales increased 3.1% from Nov. 1 to Dec. 24 compared with the same period a year earlier, according to data released Tuesday from Mastercard SpendingPulse, which measures in-store and online retail sales across all forms of payment.

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