Losses Mount as Returns Fraud Stings Online Merchants, Report Says
By: Multichannel Merchant April 12, 2013
The National Retail Federation estimates that nearly $9bn was lost by merchants in returns fraud in 2012. And according to a report from ThreatMetrix, online fraud resulted in about $3.5bn in lost revenue in North America last year.
It is imperative, and now more than ever, that retailers step up and strengthen their cybersecurity.
According to the LexisNexis 2012 The Cost of Fraud study, retailers in 2011 were paying, on average, $2.30 per every $1 lost in fraud. In 2012, retailers paid $2.70 for every $1 lost. The study also found that for mobile retailers, the cost is even higher. In 2012, mobile merchants paid $2.83 for every $1 lost, compared to just $2 in 2011.
The increase, according to the study, is due to several factors, including the impact of lost and/or stolen merchandise on the company's bottom line and post-fraud costs from customer attrition.
In its report, LexisNexis defined fraud as fraudulent/unauthorized transactions, fraudulent requests for a refund/returned or bounced checks, lost or stolen merchandise, and redistribution costs associated with redelivering purchased items.