Holiday Brings Many Unhappy Returns…
Posted January 9, 2015
…to Retailers. Estimates Are That Holiday Return Fraud Will Cost Merchants $3.8 Billion
Wrong size, wrong color, wrong item, wrong choice by the aunt who can’t remember the giftee hasn’t been ten for over ten years are all the right reasons for returning items to a retailer. The wrong reasons? Fraud.
Close to 93 percent of retailers suffered stolen merchandise returns
A National Retail Federation survey revealed 92.7 percent of retailers experienced stolen merchandise returns. The survey, reported by pymnts.com (link to article), observed that of the retailers polled, 78.2 percent said organized retail crime groups hit their stores, a jump of 18 percent from the previous year.
NRF Vice President of Loss Prevention Bob Moraca observed, “Today’s sophisticated technology does well keeping criminals at arm’s length but often isn’t enough to completely stop the unethical practices of organized and individual retail fraud occurrences. Return fraud has become an unfortunate trend in retail thanks to thieves taking advantage of retailers’ return policies to benefit from the cash or store credit they don’t deserve. Additionally, many of these return fraud instances are a direct result of larger, more experienced crime rings that continue to pose serious threats to retailers’ operations and their bottom lines.”
E-receipt fraud jumped from 69 to 81.8 percent
The survey cited a number of reasons for the increase in fraudulent returns. E-receipt fraud, where returned merchandise was purchased via fraudulent or stolen payment methods, jumped from 69 percent to 81.8 percent. Counterfeit receipts, though dropping from 29.4 percent in 2013 to 25.5 percent in 2014, remain a significant factor.
Gift cards/store merchandise credit fraud up
While security measures were strengthened, there was still a rise in gift cards/store merchandise credit fraud in the past year with roughly 38 percent of those polled saying they’ve seen an increase in credit card fraud returns.
Return policies getting tougher
The NRF survey observed that “the problem of return fraud has forced many retailers to adopt policies that require customers who are returning merchandise to show identification. Retailers estimate that 14.1 percent of the returns made throughout the year without a receipt are fraudulent and as a result, 70.9 percent now require customers returning items without a receipt to show identification. Even when a receipt is present, more retailers polled this year say they ask for identification.”