SAN FRANCISCO (CBS 5) — It used to be to return or exchange an item you simply had to provide your receipt. Now many retailers are not only requiring a photo ID, they scan the ID and store the information in a database.

Leslie, who made an exchange at The Children’s Place, said she came across this practice a few months ago. “The cashier said I need to see your driver’s license and I thought that was weird,” she said.

But under The Children’s Place return policy customers are required to present a photo ID which will be retained in a database. “Oh my gosh they now have my name, address, date of birth, phone number, drivers license number and maybe even a photo,” said Leslie.

Law Professor Susan Freiwald from The University of San Francisco said it’s not surprising to see more retailers carry this policy. “Stores are trying to reduce the losses,” Freiwald said.

In fact, the National Retail Federation reports retailers are expected to lose about $3.7 billion to fraudulent returns this holiday season.

While consumers are concerned, under the DMV civil code businesses may swipe a driver’s license to prevent fraudulent activity. But where is this information stored? “Apparently there is a third party called The Return Exchange which is a company that contracts with retailers,” Freiwald said.

CBS 5 ConsumerWatch confirmed Finish Line and The Children’s place use The Retail Equation formally known as The Return Exchange to track a consumer’s return history. The Retail Equation told CBS 5 they are not worried about hackers because they use the same type of security as credit card companies.

Still, internet security expert Rob Rachwald questions how safe it is. “I would not be comfortable until see some auditing in placement,” Rachwald said.

Rachwald also said retailers who store information are not subjected to third party audits. Rachwald also worries the more information retailers gather, the more attractive it is for identity thieves to hack. To track some of your returns visit The Retail Equation and click on get my return activity report.

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