The British Retail Consortium’s annual crime survey, which came out this week, always has the power to shock with its findings.

This year was no exception.  The research, based on a broad cross-section of UK retailers, both high street and online, has shown fraud growing at an alarming rate.  Last year’s report revealed that fraud was up 12%, this year it is up a staggering 55%.

The research registered 209,000 cases of fraud reported in 2015 amongst respondents, up from 135,000 just 12 months before.

When applied to the sector as a whole, the number of fraud cases across the industry for 2015 is estimated to surpass 600,000.

While burglary, robbery and criminal damage might make better news grabbing headlines, combined they account for 1% of incidents and less than 2% of financial losses.

“Customer” crime makes up the majority of retail crime, with 83% of all incidents being from this category.

Fraud and e-crime make up 16% of all retail crimes by number of incidents, but are 36% of the direct cost to the retailer for 2015.  It adds up to £222m in losses for retailers.

Refund fraud, including chargebacks, is 7% of all the methods of fraud by reported incident.  However, it accounts for 36% in financial losses to the retailer of all the methods of fraud surveyed.

Departing from the BRC’s figures for a moment, Financial Fraud Action found that chargeback fraud, reported as Card Not Present (CNP) fraud losses in the UK reached £331.5 million in 2014 – a rise of 10% compared to 2013 research. Based on value, CNP fraud accounted for almost 70% of all card fraud in the UK.

It all adds up to a bleak picture, but we as an industry can turn these figures round.

Taking action to reduce fraud

Retail is essential to the UK economy’s well-being, the sector contributes 20% of the country’s GDP.

Retail crime needs to be tackled with robust action.  It costs retailers more than £600m annually, three times higher than 2007-08.  It is the equivalent of 50,000 jobs being lost in the sector each year.

The past levels of shrinkage are no longer tolerable.

The effects of a long recession and greater competition, including the emergence of discount retailers such as B&M Bargains, have changed merchants’ minds.  Increasing losses from retail crime have undoubtedly played their part: the average customer theft has gone up from £45 in 2008-09 to £325 in 2015.

The survey revealed that the retail sector has not been inactive on the issue; on average respondents spent £3.1 m annually on crime and loss prevention.

However, it looks like retailers will have to do even more themselves to tackle crime as 89% of respondents reported that there has been no improvement in the response from the Police when a fraud is reported.  The BRC identifies that there is a lack of capacity, skills and knowledge within local police forces to progress fraud investigations.

There are reasons to be positive while acknowledging that the BRC’s research is far from encouraging.

The BRC further noted: “Respondents to our survey reported 50,118 incidents of attempted fraud in 2014-15, which would have cost retailers in our sample £57 million had the attempts been successful. This shows the value of the robust controls put in place by retailers to stop such crime.”

Simple actions, in the case of chargebacks asking for Card Security Code numbers (CVC) and cross checking IP addresses to physical addresses, can substantially reduce fraud.

Innovative and effective security software is available and new upgrades and solutions are coming onto the market all the time.  These can be complemented by consultancy to take effective action to reduce fraud.

Many retailers are starting to fight harder in the long hard battle against fraud.  If we as an industry refuse to tolerate fraud and are proactive in our struggle we will see more encouragement from future surveys.

Whether its chargeback, cyber fraud or simple theft, I believe the retail industry can fight back.