Tax (VAT) Refund is Less Than Promised - Italy

This is standard. Global handles it for you for a cut. Its in the fine print. I'm sure the Italian authorities know about it and don't care. And the Italian authorities probably get a cut of their cut (called taxes).
The Italian authorities are happy.
Global is happy.
And you should be happy too. You paid less for something than an EU resident. Just not as much as you thought. You did not have to study all the tax rules and know the ins and outs of navigating the system, knowing where to send your paper work. Global took care of that for you.

What Sam wrote is correct.

You paid less tax than a EU resident. Maybe not as much as you thought after the commissions paid to the various intermediaries, but you received something.

But here is another point. In America we have no VAT, we have State Sales Tax. In California it's nearly 10%.

Guess how much of the California (or any state) Sales Tax on purchases is refunded to foreign visitors when they depart?

Nothing, nichts, niente, nada, rien, 何も

The Italian authorities have no reason to investigate. The charges are in the small print, if you paid by credit card the refund has to go on the same credit card. You are not a citizen, you have no vote, there is no reason your opinion should count.
Many shops just over the border from Switzerland offer VAT refunds for (non-EU) Swiss residents. In these cases you have to return to the shop to get your refund, and they pay the full amount to the Euro-cent, as a discount for your next week's shopping. They value the repeat business.
Sorry, but that is the practicalities of consumer capitalism.

I understand and appreciate the need for Global to take 3 euros per transaction.
What got me going was the additional 10% to provide the refund, and to force me to take US Dollars (instead of Euros) at a rate that took another 12% off the refund.
The reason I wrote about this is for travellers to be aware that the 12% promised refund will be reduced by about 30% due to processing fees.

Fair enough, but also keep in mind that Global, a private company, has to rent its space at Venice airport and pay the employee you spoke with a living wage.

Global's main business, as far as the public is concerned, is retail currency exchange. That business has gone down a lot since the advent of the Euro and ATMs. So they picked up this nifty little tax-refund business as a sideline. They cannot refund you in EUR because you have USD (I assume) denominated credit card. Their rates are lousy, but they are there if you need them, providing a useful service. If it was not for dinging you on the exchange rate, they would not be in the business.

I've used them in the past, knowing they take a 25% to 35% cut. I am just happy when the credit shows up on my statement. Free money!

Excellent point by Roberto:

"In America we have no VAT, we have State Sales Tax. In California it's nearly 10%. Guess how much of the California (or any state) Sales Tax on purchases is refunded to foreign visitors when they depart?Nothing, nichts, niente, nada, rien, 何も"

Everyone here pays the same taxes, tourist or not. It drives tourists from abroad crazy that the price listed for dinner, drinks, hotels rooms, souvenirs, etc. isn't the bill they're eventually expected to pay. We've never bothered with VAT as we don't feel it's a fair advantage, and don't buy that much to claim anyway.

I don't begrudge Italy the tax money or the private company handling it either. I've never purchased enough to bother with the refund. But it's good to know it won't be the whole amount when deciding whether to purchase.

By the way, Washington state allows visitors from Colorado, Oregon, Alberta Canada, and a few other places to avoid sales tax for items purchased for use or consumption outside the state. All it takes is a driver's license. Not a refund, you just aren't charged in the first place.

The VAT refund exists to benefit merchants. They pushed that with legislators because that way they could be more competitive with prices applied for the same product overseas.

For example if you buy an item for €1000, the actual price is actually ~820, while the reminder 180 is VAT. (820 + 22% VAT = 1000).

By selling the product at €820 to a foreigner, basically the foreign buyer gets a discount, while the merchants loses no money, while his price is more competitive compared to the scenario where the foreign visitor buys the same item in his own country.

This scheme was lobbied by the retail industry to give an incentive to buy to foreign tourists through a discount the cost of which is not borne by the seller, but by the Italian Treasury (i.e. by the Italian taxpayers).

Personally I agree with the American way (no sales tax refund). No discounts to anybody borne by the taxpayers.

Thanks for all the comments.
For accuracy's sake, below are some clarifications:
1. Even though the VAT tax in Italy is 22%, the refund is only around 12% (based on a table given to merchants for ranges of values)
2. Global-Blue is the company processing the refunds. It is not based in Venice, its centralized Service Center is in Bratislava, Slovakia.
3. Even though the credit card I used to pay the purchases is US Dollar denominated, the credit was not given on my credit card. A cash credit was offered, and being in Italy, I see no reason to convert Euros to USD -- other than to take a cut on the exchange rate.
4. The company that provided the cash refund at the Milan-Linate airport was not part of Global-Blue. The company is called Forexchange (could be a subsidiary of Global).
5. One more thing: be aware that it is necessary to validate the VAT refund vouchers at Customs. In our case, the customs official requested to physically see the purchased merchandise to stamp/validate the vouchers. So, do not check your bags before going to the Customs office to validate the vouchers.

Again, to summarize the whole story: on a Euro 1,000 purchase, if you follow all procedures correctly, expect to receive 8,5% back, or Euro 85.