Easier Record Return Policy Has a Flip Side

In an unusual “customer service” policy that has reignited record industry concern over home taping, several California-based music store chains have begun allowing patrons to return any recordings that they don’t like--no questions asked.

The Wherehouse, a 280-store music chain based in Torrance, in the past month has begun advertising that “if for any reason you are not happy with your purchase, bring it back in 10 days and we’ll exchange it.” Although they have not previously promoted such a program, the 83-store Music Plus chain, owned by Show Industries of Burbank, and Sacramento-based Tower Records, with 59 stores, say they have similar no-questions-asked return policies.

For years, most music stores have allowed customers to return defective recordings. More recently, some stores have experimented with a limited return policy on records by new artists to encourage consumers to buy unfamiliar acts.

Although the stores have not been overwhelmed by returns so far, some record industry officials fear that the more liberal return policies will encourage consumers to tape and return records they buy. Industry concern about home taping, officials noted, is already high in the wake of the introduction of digital audio tape (DAT) recorders, which allow consumer to make nearly exact copies of compact discs and other high-quality music sources.

“I think the (stores’) policy raises deep concerns about home taping,” said Jay Berman, president of the Recording Industry Assn. of America in Washington. “We are absolutely interested in looking into (the practice). If there’s not a legal problem here, there is certainly an ethical issue.”

“This is even worse than DAT; consumers don’t even have to spend money to copy a record,” said a spokeswoman with the Songwriters Guild of America in New York, who declined to be identified. “I can’t imagine who would profit from this.”

The Wherehouse, Music Plus and Tower Records say they adopted liberal return policies to promote customer satisfaction.

“The customer ought to be satisfied,” added Russ Solomon, president of Tower Records. “If someone is really abusing the policy . . . using us as a rental store--we take care of it.”

The emphasis on satisfying customers comes as music stores across the country face an increasingly more difficult retail environment because of the slowing economy, a dearth of music acts with staying power and rising overhead.

As retailers have become squeezed, they have tried to shift the focus of competition from low prices to factors such as customer service and product selection.

“The cheaper-is-better mentality has changed,” said Angela Diehl, director of advertising for Music Plus. “Building a relationship with the customer is the key.”

“When you run a business and the margins get squeezed, you have to do things” to stimulate sales, said Scott Young, president and chief executive of the Wherehouse.

But a liberal return policy may not be the financial or public relations panacea that the three retailers hope.

Unsold and returned records, tapes and CDs are sent back to the manufacturer for credit. But the record companies normally charge a 5% to 10% fee on returned music. And in recent months, record labels have been discouraging returns altogether by not accepting unsold merchandise in some formats--such as vinyl LPs or 45s.

What’s more, while Young says the Wherehouse adopted its customer satisfaction policy last month in part because “we didn’t want our store clerks fighting with customers,” the no-questions-asked program seems destined to put retailers on a collision course with consumers intent on abusing the program, some observers say.

“We don’t have that policy for that very reason,” said Howard Applebaum, vice president of Kemp Mill, a music store chain in suburban Washington. “It is very costly to send product back to the manufacturer. You have to collect it from all of your stores, package it and send it back.”

Even the Washington-based Home Recording Rights Coalition, which for years has championed consumers’ rights to record music for their personal use, has reservations.

“A flexible return policy is not such a terrible thing,” said Gary Shapiro, chairman of the coalition and a vice president at the Electronic Industries Assn. in Washington. But he added that a no-questions-asked policy might promote a revolving door of returned records, “which is wrong.”