As retailers get a handle on return fraud, many are softening return policies this holiday season as a way to provide good customer service. According to the National Retail Federation's (NRF) third annual Return Fraud Survey, completed by 82 retail loss-prevention executives last month, more than half of retailers (52 percent) say their holiday return policies will be more lenient than the policy for the rest of the year, up from 35 percent who said so in 2007.

In addition, the number of retailers who plan to loosen this year's holiday return policy, as compared to last season, will triple from 3.4 percent of retailers to 11.0 percent. Common changes may include retailers extending the amount of time for returns to be made and also being more flexible to customers without a receipt. In comparison, 17.1 percent of retailers said their return policy will tighten this holiday season, up slightly from 15.3 percent last year. The majority of retailers, 71.9 percent, say their policies will remain the same.

"In a year where practicality is paramount, many retailers are making return policies more flexible for customers who need to bring back duplicate or unwanted gifts after the holidays," said NRF's vice president of loss prevention, Joe LaRocca. "Retailers seem to be finding a balance between providing good customer service to shoppers while preventing criminals from taking advantage of lenient policies."

The survey also provided more evidence of a weak economy, as retailers said that returns as a percentage of sales are on the rise. This year, return rates are estimated to reach 8.7 percent of sales, up from 7.3 percent one year ago. The amount of merchandise returned to stores this year is estimated to reach $219.1 billion, with $47.1 billion of those returns coming from holiday purchases. A fact that LaRocca attributes, at least in part, to buyer's remorse.

Retailers know the decision to make return policies more lenient may come at a cost. According to the survey, return fraud continues to plague the industry and will cost retailers an estimated $3.54 billion this holiday season, down slightly from $3.6 billion last year. (Retailers will lose $11.8 billion to return fraud in 2008.) However, retailers seem to be tackling the problem, as return fraud is expected to decrease to 7.5 percent of holiday returns from 8.9 percent last year.