Return fraud costs American retailers $14 billion annually. It includes theft, “wardrobing,” and counterfeiting. Retailers must balance protecting against fraud with not alienating legitimate customers. Stricter policies for high-value items and expedited returns for smaller purchases can help.
Return fraud is a crime that occurs when a person attempts to return fraudulently purchased products to a store for a refund. According to retail experts, return fraud cost American retailers nearly 14 billion US dollars (USD) in the year 2010. Retailers often try to protect themselves from return fraud by imposing strict return guidelines, which can making returning goods a frustrating process for many legal customers.
One of the most common methods of committing returns fraud is theft. Items are stolen from a store then taken back and returned for a refund. This is beneficial to thieves because it saves them the trouble of having to fence off the stolen material, instead simply exchanging the product for cash at the retail store. The most common ways to combat theft fraud are by requiring receipts with all returns or by placing anti-theft devices on products that will set off store alarms if they are brought through doors.
A more shady means of returns fraud is known as “wardrobing” by retail experts. This type of fraud involves buying an item with the intention of using it once and returning it. This can be common with items that may only be needed once, such as a formal dress for a prom or wedding. While this type of fraud isn’t technically theft and usually involves returning the product in pristine condition, it is still frowned upon by both retailers and the law. Retailers may try to bypass the cloakroom by insisting that returned items have all tags attached or are in the original packaging.
Counterfeiting can sometimes be implicated in return theft. Purchases can be made using counterfeit funds, then returned in cash. Sometimes, scammers can even produce fake receipts to be used for the purpose of returning an item. Counterfeit currency can be difficult to spot, especially with low-value notes and coins. Cashiers simply don’t have the time to check every bill a customer hands them, but stores can help prevent counterfeiting by requiring clerks to examine high-value bills for telltale watermarks and other security features. Fraudulent receipts can be avoided by including security measures in receipts, such as purchase numbers or employee ID numbers.
Retailers have to walk a fine line between protecting against returns fraud and instituting complicated returns procedures. While scammers may avoid a store with good security and strict return policies, legitimate customers may be turned away if the return policies are too strict or confusing. Some companies try to reduce return fraud by instituting stricter policies for higher value items, while smaller purchases may go through an expedited return process. Unfortunately, returns fraud appears to be an ongoing concern of the retail industry causing numerous problems for both business and the law abiding public.
Protect your devices with Threat Protection by NordVPN
