SAKS MOVE SHOWS SEC SCRUTINIZING CHARGEBACK ABUSE.Byline: Barbara Thau
BIRMINGHAM, Ala.-Merchants beware: Saks Inc. is ousting executives for improper markdown allowances, as retail chargeback abuses have come under the watchful eye of the Securities and Exchange Commission and now the federal government.
Saks is firing three senior executives and penalizing Brad Martin, its chairman and chief executive officer, as a result of its internal investigation of alleged improper vendor markdown allowances at its upscale Saks Fifth Avenue Saks Fifth Avenue is a chain of upscale American department stores that is owned and operated by Saks Fifth Avenue Enterprises (SFAE), a subsidiary of Saks Incorporated. It competes in the elite luxury department store market with Neiman Marcus, Bergdorf Goodman and Barneys New chain.
The case could finally set a precedent for the way retailers process chargebacks and curtail bogus ones -- a chronic complaint by vendors.
In March, Saks revealed that it was investigating alleged overcollection of vendor markdown money of about $20 million between 1999 and 2003
An investigation by the Securities and Exchange Commission is under way, and the office of the U.S. Attorney for the Southern District of New York is now looking into the matter.
Donald Watros, the chief administrative officer A chief administrative officer (CAO) is responsible for administrative management of private, public or governmental corporations. The CAO is one of the highest ranking members of an organization, managing daily operations and usually reporting directly to the chief executive ; Brian Martin, the brother of CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Brad Martin and general counsel of the company at the time of the 2002 investigation; and Donald Wright, chief accounting officer, were asked to resign.
As previously reported, the company plans to reimburse or compensate affected vendors for improper allowances. And management has been asked to develop an "action plan" for enhanced ethics training.
"This [investigation] has led to firings, return of money, plus a lot of embarrassment," Maggie Gilliam, president of Gilliam & Co., a business advisement firm, told HFN HFN Human Factors North, Inc.
HFN Human-Friendly Naming
HFN Hastily Formed Network (Naval Postgraduate School, Monterey, CA)
HFN Hyper Frame Number . "Retailers will be looking more closely at their chargeback practices. I would be extremely surprised if Saks is the only one [with improper chargeback practices.]"