Federated Department: No Longer Getting My Shopping or Investment Business

My wife and I received a Macy’s gift card as a holiday present. Like many of you, I really find gift cards to be annoying. They force me to shop at a particular store within a few months (since some of them expire), and I always end up spending money to cover the costs of my purchase that exceed the gift card value.

We decided that we could both use a new pair of jeans. After pouting a bit, I reluctantly agree to accompany my wife to our local Hecht’s, which was recently rebranded a Macy’s after Federated Department Stores (FD) acquired the franchise from May Department Stores.

After searching around the store for a half hour, my wife discovered that this new Macy’s had a pathetic petites section. It had a dismally small selection of jeans for her to choose from and none of them appealed to her.

That left us with the only viable option, visit the Macy’s online store. After browsing the site for a while, my wife chose a nice pair of Ralph Lauren Polo (RL) jeans and I selected my usual boring pair of Levi’s. My wife was a little unsure of her size, but Macy’s advertised “Easy Returns” on their homepage. She figured if she got the size wrong, we could return it to the brick and mortar store. Surprise surprise, returns were anything but easy.

The jeans took about a week to arrive (kind of slow given how much shipping cost). My wife discovered that her jeans were too short. I shook my head. She assured me that it wouldn’t be any problem with Macy’s return policy. The “Easy Returns” policy states:

Returns are easy and convenient at macys.com. You can exchange or return your purchase to any Macy’s store (find the one nearest you). You can also return purchases directly to macys.com by mail. It’s up to you!

RETURNING TO A STORE
Inside your package you’ll find an invoice like the one shown here. Simply take your purchase, this invoice (make sure the bar code is attached) and the original packing materials to any Sales Associate to process your exchange or return - it’s that easy! You will receive a credit to the original tender (e.g. major credit card).

So we headed back off to our local Macy’s store. When we got to the store, we looked around again for the Ralph Lauren jeans to do an exchange, but we did not find any. While we finished looking, we spotted an employee heading to a service desk. It looked liked she just finished helping a customer. We stood right in front of the cash register, items in hand, when a store employee walked by. We briefly made eye contact, to no avail. The employee kept walking, not bothering to tell us that that particular register was closed, and/or pointing us to the closest operating customer service desk. A simple acknowledgment of our presence would have made all the difference.

We then walked around until we found the service desk in the front with several people in line. We waited in line while our kids started to fuss. You know how young kids get in lines (heck, I get that way too). When it was finally our turn, my wife handed over her jeans still in the original plastic shipping pouch with the invoice and all the other paper work it came with. The cashier started punching all sorts of buttons (Why does it always take so many keystrokes for clothing store employees to ring up an order?).

She then asked my wife for her drivers license. It seemed like a semi-reasonable request to verify her identity and help avoid return fraud, so my wife dug our her drivers license. After some more serious key mashing, the cashier pointed to the credit card terminal and asked my wife for her Social Security Number. Wait a minute! Time out! There is no way we are giving my wife’s Social Security Number after this sales associate just took down my wife’s driver’s license info (full name, address, eye color, etc.). The thought of this employee opening a home equity line of credit with this info flashed through my mind.

I responded that there is no way they need a Social Security number for a return. We only wanted store credit anyways so my wife could order the larger size online. The line we heard parroted to us: “it’s the store policy.” Fine, but that doesn’t make it right.

Another employee who approached the counter during this exchange actually tried to justify the policy by stating that she enters her social security number every time she clocks into work at Macy’s and to access her employee information via the computer terminal. I told her that I understand that you have to supply an employer your Social Security number for tax purposes but that does not justify putting it out there for a simple transaction like a store return. She tries to even say that using the keypad is secure, which she is watching closely in addition to the actual cashier, and the keypad will protect my Social Security number from being heard or seen. (Professional con artists can watch your fingers and determine what numbers you are punching in at ATMs I’ve read.) I totally disagreed with her and she finally backed down when I recounted how a waiter stole our credit card number a few years ago.

They finally pulled the dreaded, “I need a manager approval.” My kids are now entering full meltdown mode and for once I decided not even to hold them back. The other shoppers in line gave up and left. (At least maybe I hurt the store’s sales for the day after they decided to rob me of my time.)

When the manager came, she did not even speak to us. I indicated that I wanted to complain about this dangerous and horrible policy of asking for Social Security numbers for returns. She just shrugged and the cashier then defensively parroted back again, “It’s the store policy.” Neither the manager nor the cashier wanted to document or hear anything about my complaint about this “corporate headquarters” policy that they could do nothing about. The manager tapped some keys, twisted a key, and then typed some more keys. We then finally got credit added back to our gift card. Did this really have to be so hard? In the end, my wife never gave up her Social Security number but we still got credit on the gift card.

It looks like Federated Department Stores has the same attitude toward customers that Home Depot (HD) has had. CEO Nardelli recently and abruptly left Home Depot. I wonder what the future holds for Federated Department Stores’ CEO Terry J. Lundgren. Federated Department Stores might be trying to build a wide moat in the mall anchor store niche, but with this kind of attitude, I see them losing customers to smaller stores if they don’t make major changes in the way they treat customers.

Federated Department Stores is now on my pass pile for both my future shopping and investing. Is Federated alone in this abysmal policy of asking for Social Security numbers for returns? I invite corporate staff from Federated Department Stores or Macy’s to use the comments section below to explain to us here how they justify the collection of Social Security numbers for store returns.

* UPDATE: See response from Jim Sluzewski, Vice President - Corporate Communications & External Affairs at Federated Department Stores in the comments below:

Comments

[Paul Meisel]

I was astonished that a store would request a social security number for merchandise return, so I checked this out with a well-informed authority on Macy's store practices. As it turns out, this is "store policy", although apparently now store personnel will allow you to key in the SSN yourself.

Seems stupid to me. My authority, no stranger to temper tantrums, described some monumental freak-outs she has seen as a result of this.

It was telling to me, though, that after agreeing that the policy was stupid, she segued to the high amount of returns that she suspects are fraudulent in some way. That may be why but it doesn't make the policy work.

Can't wait to hear from Macy's myself.

[CrossProfit]

Not to mention the 9 - 11 million illegal immigrants and millions of tourists (in NY alone about a million potential customers annually) without SSN’s that probably won’t shop at Macy’s or FD if this continues.

I wonder how long it will take to get a response. Paul, is your source aware of how many prominent people read SA? More important, the SA community consists largely of investors and both sell & buy side analysts. If the above is perceived as an ill-fated policy with substantial financial repercussion this could be devastating to the share price.

Perhaps Macy’s should hang a shingle displaying “No Returns for Illegal Aliens and Tourists”. If that works for them, they could then try “No Petite Females or Picky Customers Please”. After all “it’s the store policy”.

As for the legal aspect, see www.cpsr.org/prevsite/...


Here is an excerpt;

• Is it illegal for someone to ask for my SSN?

The short answer is that there are many restrictions on government agencies asking for your number, but few on individuals or companies. When someone from a government agency asks for your number, they are required to provide a Privacy Act Disclosure Notice, which is required to tell you what law allows them to ask, whether you have to provide your number, and what will happen if you don't provide the number.
Private companies aren't required to follow this law, and in general your recourse is to find another company to do business with if you don't like their policies.

• Why Should I Care Whether Anyone Knows my SSN?

There are two problem with the way SSNs are used these days. The first is that they are used (by different parties) as if they were both a representation of identity and a secure password. The second problem is that they have become a widely used identifier which can be used to tie multiple records together about a single individual.
Many institutions, including hospitals and some banks and brokerages use client's SSNs as a secure representation of their identity. This seems a good idea, since you aren't allowed to change your SSN, even though you might change your address, your name, or your phone number. Other institutions, notably banks, use SSNs as if they were secret passwords that only the owner would know. If someone knows the name and the SSN, and is willing to say they have forgotten the account number, they will usually be allowed to transfer funds, or make other changes to an account with serious repercussions.

The problem is that these uses are incompatible. As SSNs are widely used representations of people's identities, appearing on driver's licenses, mailing labels, and publicly-posted progress reports at universities, their broad availability becomes more apparent.

• Didn't the government promise that SSNs wouldn't be used for ID?

For the first few decades that SSN cards were issued, they carried the admonition: "Not to be used for Identification." Unfortunately there was never any law passed instituting this as a policy. The Social Security Agency was apparently attempting to instill good values in the citizens, but was apparently unsuccessful in preventing government encroachment into this territory.

[Paul Meisel]

Well, for what it's worth, my source works for an independent supplier to Macy's, not as a Macy's employee. However, she doesn't care much for the policy. However, I am not clear on how much use this information is to Macy's -- if you already have driver's license and credit card information how much more good can it do them?

[BarbaraFried]

You DID send a copy of this to Federated CEO and members of the Board?!? (a copy to Home Depot wouldn't hurt either.)

I don't shop department stores (for the [lack of] customer service you experienced) so don't know about SS# policy; my cable company wanted mine a couple of years ago. Fat Chance -- but it took my time and several layers of their people to get my cable deal without it.

[Paul Meisel]

Another shoe drops -- the following is from a Macy's employee that I know:

"First of all you don't generally need to provide your social for an exchange or return. I do a billion exchanges and returns a week and very rarely have any problem with any of my customers. The only time you need to provide a social is when you want to use your macys charge card without the card being present.

The customer probably wanted the difference of the gift card credited to their macys account which makes sense because the interest is so high. However if they card isn't present we have to do an account look up on the computer terminal which is normally no problem because customers understand that they have to go the extra mile to prove their identity when we don't have the card in front of us. That is all the cashier was trying to do.

The cashier had to call a manager because a cashier can not put a balance back onto a gift card without an override operation in the computer. Only managers have override codes. Had this customer not been so paranoid and just put their ss# into the pinpad (which by the way is on the other side of the counter with the customer and they put the numbers in themselves so the cashier never has to see the #s being punched in) it would have gone back onto their charge automatically and been no big deal. The other option would have been to as for a merchandise document which is a credit that can be used anywhere in the store and never expires and doesn't require a social security number and wouldn't have required a manager to do.

Sounds like a paranoid customer dealing with an apathetic employee."

[JimSluzewski]

On behalf of Macy’s, I want to sincerely apologize for your experience in our store. Clearly, we did not meet your expectation for an easy return.

Making your return should have been as easy as scanning the barcode on the packing slip from your online order. And there was no reason for you to be asked for your Social Security Number.

We are continuing to work on improving our policies, systems and training to enhance the shopping experience and provide fast and efficient transactions.

The executive in charge of this area of our company would like to talk to you directly to explain what happened and to apologize. If you will email your contact information offline, I will have him call you at a time that is convenient to you.

Again, thanks for shopping Macy’s and please accept our apologies for the inconvenience and concern you were caused.

We appreciate you taking time to post your concerns.

Jim Sluzewski
Vice President - Corporate Communications & External Affairs
Federated Department Stores, Inc.
email: [e-mail]