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Return Fraud Cost $3 Billion During Holidays [AUDIO]

From returning stolen merchandise to the use of counterfeit receipts to bringing back items already worn or used that are not defective, return fraud is expected to cost retailers $8.9 billion this year and $2.9 billion during the holiday season alone.

Allison Joyce, Getty Images

That’s according to the National Retail Federation’s 2012 Return Fraud Survey completed by loss prevention executives at 60 retail companies. Retailers estimate 4.6 percent of holiday returns are fraudulent.

“Return fraud comes in a variety of forms and continues to present challenges for retailers trying to grapple with the sophisticated methods criminals are using to rip off retailers,” said NRF Vice President of Loss Prevention Rich Mellor. “Even more troubling is the fact that innocent consumers often suffer because companies have to look for ways to prevent and detect all types of crime and fraud in their stores, often times resorting to shorter return windows and limitations on the types of products that can be returned.”

The survey found that nearly all retailers polled, 96.5 percent, said they have experienced the return of stolen merchandise in the last year while 84.2 percent have experienced the return of merchandise that was purchased with fraudulent or stolen money, credit cards or checks.

Nearly two-thirds, 64.9 percent, have been victims of wardrobing which is the return of used, non-defective merchandise like special occasion apparel and certain electronics. Additionally, 45.6 percent have found criminals using counterfeit receipts to return merchandise.

“With the availability of very, very accurate printers to reproduce receipts, this has been a growing problem for retailers,” said Mellor. “More and more retailers have been e-mailing receipts. The ability for people to reproduce those receipts, steal merchandise and return that merchandise more than one time is a troubling thing for retailers. Many shoppers love the convenience and flexibility that digital receipts offer them and unfortunately criminals are finding ways to manipulate them.”

“Retailers are getting better at perfecting their strategies and software programs and analytics behind the scenes,” said Mellor. “I think eventually, they’ll get a better handle on the problem but the bad guys learn tricks every day and it’s a constant battle for retailers to be one step ahead of them.”


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