With the rise of online shopping throughout recent years, brick-and-mortar stores must adapt to current trends in order to keep up. One of those adaptations being extended and lenient return policies. While these tactics might win shoppers and drive income to the stores, they come at a slight cost. The rise of return fraud has been alarming in recent years fueled by the pandemic as around 13.7% of returns in 2023 were fraudulent or abusive to businesses, which accounts for around $102 billion dollars of product (National Retail Foundation, 2023). This new issue has forced retailers to respond in different ways to curb fraud.
Fraudsters use many methods to scam retailers. For example, one way scammers get money in their pockets is by picking up old receipts left by previous customers and grabbing items off the shelf. “We see everything on the cameras. But there’s nothing much we can do” says AP officer Matthew Alvarez, who works at a popular retailer. This type of return fraud, known as receipt fraud, is one of the many methods used to scam stores. Consumer Mark Cademcian says he sees this often when shopping at wholesale stores like Costco and states how “it’s kind of ridiculous how they do this and get away with it".
How can stores identify this problem? Well, there are multiple red flags employees and security can be trained on to identify fraudulent return attempts. For one, if an individual comes back on a regular basis returning high-value items. On top of that, increased return fraud security and identity verification during busy times can help curb fake returns with “25% of annual product returns occur[ing] between Thanksgiving and New Year’s Day” (Fraud.net, 2024).
So, the question then arises of how businesses can combat this exponentially growing problem? Well, for one, stores can use identity verification to fight identity fraud and repeated return attempts. With this, stores can identify loyal customers and tell the difference. Besides, when identity verification is included within the return policy, people intending to commit fraud turn away as soon as they see the requirement. Combating this issue and further preventing it will help stores last longer.
List Sources:
Interviewees:
Mark Cademcian - Student at Mather High School
Matthew Alvarez - Asset Protection Officer at Retail Store
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