The Guardian recently reported that return fraud costs American retailers $10.9bn a year (losing $3.58bn in the festive period alone). Almost all retailers can expect to have stolen goods returned for a ‘refund’ at some point but how can they protect themselves, their profits and their genuine customers?
Organised retail crime is still a large threat despite attempts by retailers to improve their security technology. The technology on offer today undoubtedly deters many would-be fraudsters, but it often isn’t sophisticated enough to stop organised attacks and individual fraud occurrences. We have seen ‘return fraud’ become a growing trend in retail, as a direct result of thieves taking advantage of retailers’ generous return policies and benefitting from the cash or store credit on offer.
Fraudsters’ techniques include exploiting e-receipts and returning goods purchased using a fraudulent or stolen payment method. IMRG, the UK’s industry organisation for online retail, estimates that 18% to 25% of goods sold online are returned, making it difficult to filter genuine returns from fraudulent ones. Retailers need to recognise the damaging impact that this type of fraud has not only on their bottom-line, but on their most valuable asset: their reputation.
The problem lies in the lack of stringent identification checks conducted by retailers. The first simple step for retailers is to check consumer credentials when they are returning unwanted items and stop fraudsters in their tracks.
