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Dallas Man Helps Nordstrom's Famous Return Policy Finally Reach Its Breaking Point

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As the always fashionable friends of Unfair Park are surely aware, Nordstrom stands firmly on a reputation as the fairy godmother of customer satisfaction. If you've had a dress for a while and it no longer fits, they'll likely accept the return. If you used lipstick and decided you don't like the color (or if it only matched the dress you already returned), they'll likely take that back too. It takes a lot to piss these people off -- something like the plan hatched by two brothers you're about to meet, who managed to swindle millions from the always accommodating retailer.

The alleged scheme begins when Allen Chiu, from Dallas, and his California-based brother Andrew began making "excessive claims for refunds purportedly due to lost of undelivered merchandise," according to an FBI release first reported by Courthouse News. Eventually Nordstrom had had enough and blocked the brothers from making purchases on Nordstrom.com.

Which, the feds say, is exactly what the brothers needed to happen to pull off their plan.

The brothers, it turns out, were members of FatWallet.com, a shopping community that provides coupons and cash-back incentives. Nordstrom paid FatWallet, its affiliate, seven percent of purchases made by its members. FatWallet passed along half of that to the customer, according to court documents.

Tha relationship provided the Chiu brothers a window for exploitation. Knowing they were blocked from buying on Nordstrom.com, the brothers attempted to purchase millions of dollars worth of Nordstrom goods, only to have their purchases blocked. But they still received their cash-back through Fat Wallet. So from approximately January 2010 to December 2011, the brothers received more than $650,000 in cash back, which amounted to losses of about $1.4 million for Nordstrom, including commissions and rebates, according to case filings.

The brothers pleaded guilty last week in the U.S. District Court in Seattle and are scheduled for sentencing on July 13, 2012. Under the terms of the agreement, prosecutors will recommend a sentence of no more than 30 months, and the brothers can request no less than 24 months. The judge can impose any sentence allowed by law of up to 20 years in prison and a fine of about $250,000, hopefully with no cash-back.

Clearly, this case is far more severe and exploitative than the time someone famously (maybe) returned tires to Nordstrom, which the retailer refunded despite not selling any automotive goods at all. Now that's service.

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