Wal-Mart’s Gift Receipt POS Headache: Weak Associate Training Brings FTC Investigation

Written by Frank Hayes
May 25th, 2011

Wal-Mart’s gift-receipt troubles may be just beginning. A string of television news reports established that Wal-Mart was short-changing customers who returned items with gift receipts. On Tuesday (May 24), a U.S. Senator demanded a federal probe to see if the errors—all in Wal-Mart’s financial favor—were intentional. Wal-Mart’s explanation—which seems almost certainly the truth, given the evidence unearthed in the reports, a simple examination of a current gift receipt and interviews with various Wal-Mart employees—is that it all stemmed from weak training and employees simply hitting the wrong key.

The suggestion that Wal-Mart deliberately orchestrated employees doing this to boost profits simply makes little sense. Wal-Mart’s gift receipts are stuffed with data for identifying where, when and for how much each item was purchased, and Wal-Mart has systems for slicing and dicing all that data—data that’s crucial to keeping the chain dominant in a low-margin, cutthroat business. Why would Wal-Mart sabotage its own CRM and inventory-management efforts by intentionally mishandling returns?

The errors came about when a customer purchased an item for, say, $50, and then gave it as a gift to a friend with a gift receipt. A few days after the customer completes the purchase, the price of the item may drop. When the customer’s friend returns the item for store credit two weeks later, the associate looks up the item’s price and only credits the lower price. This could work, because of the nature of a gift. The friend wouldn’t have known the cost of the item so she/he would have no reason to complain.

If the employee followed proper procedure and hit the correct key, the system would display—and credit—the price paid at the time of purchase. That’s the essence of the promised retraining.

U.S. Senator Barbara Boxer (D-Calif.) asked the Federal Trade Commission to investigate whether the retail giant was intentionally refunding less than the original purchase price. Boxer’s letter to the FTC recapped a report by a Sacramento TV station, which bought items at local Wal-Mart stores for a total of $51.82 and then returned them later with gift receipts and was refunded only $26.99. “Wal-Mart blamed staff for the errors, but similar results occurred at their stores in other areas of the country, raising the possibility that this practice is common,” Boxer wrote.

Actually, the news reports were based on stings by TV stations in only two cities, Sacramento and Philadelphia, where reporters specifically bought holiday items in those regions at full price and then waited until the items went on sale before returning them with gift receipts. And because Wal-Mart’s gift receipts include a barcode containing the price, it seems likely that the training of customer-service associates would be to blame.


2 Comments | Read Wal-Mart’s Gift Receipt POS Headache: Weak Associate Training Brings FTC Investigation

  1. Michael Webster Says:

    This is not an isolated incident, and blaming the training procedures is not going to fly. Very interesting story. My guess is that a number of large retail/franchise chains are carefully reviewing their procedures on “gift” returns.

  2. Evan Schuman Says:

    Editor’s Note: Interesting comment. To clarify, when you say “blaming the training procedures is not going to fly,” do you mean that it’s not true or that it is true, but consumers won’t tend to believe it? We were skeptical initially, but after reviewing the receipts themselves and interviewing quite a few Wal-Mart people–plus reviewing the video taken by the TV stations–their explanation seemed to make sense. When we drilled down a bit, it’s quite easy to see how associates could have hit the wrong button. It really does seem to have been a training issue.


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