Executive Briefings

Return Fraud to Cost Retailers $3.5Bn This Holiday Season, Survey Finds

The retail industry will lose an estimated $3.48bn to return fraud this holiday season, down from $3.73bn last year, according to the National Retail Federation's annual Return Fraud Survey, completed by loss prevention executives at 103 retail companies. Annual return fraud will cost retailers an estimated $14.37bn in 2011, up slightly from $13.66bn in 2010.

That means that while fraud is still a tremendous problem, fewer retailers are expecting return fraud rates to grow this holiday season, thanks in part to enhanced return policies and requiring identification when receipts are not present during the return process.

"Those who think they will be able to get away with manipulating a company's return policy will be sorely disappointed this holiday season," said Joe LaRocca, senior asset protection advisor for NRF. "Retailers have been putting checks and balances in place to prevent people from taking advantage of stores' return policies, which raises prices for honest shoppers."

According to the survey, nearly nine in 10 (89.1 percent) retailers say they have experienced the return of stolen merchandise in the last year, and just as many (89.1 percent) report that employee return fraud or collusion with external sources has been a problem in the past year. Wardrobing - the return of used, non-defective merchandise like special occasion apparel and certain electronics - also poses a huge issue, as more than six in ten retailers (61.4 percent) say they have been victims of this activity within the last year. Additionally, eight in ten (81.2 percent) say they have experienced the return of merchandise purchased on fraudulent or stolen tender, and 38.6 percent have found criminals using counterfeit receipts to return merchandise.

When asked if their company has ever changed its return policy to specifically address return fraud, nearly two-thirds (64%) said it had.

Read Full Article

That means that while fraud is still a tremendous problem, fewer retailers are expecting return fraud rates to grow this holiday season, thanks in part to enhanced return policies and requiring identification when receipts are not present during the return process.

"Those who think they will be able to get away with manipulating a company's return policy will be sorely disappointed this holiday season," said Joe LaRocca, senior asset protection advisor for NRF. "Retailers have been putting checks and balances in place to prevent people from taking advantage of stores' return policies, which raises prices for honest shoppers."

According to the survey, nearly nine in 10 (89.1 percent) retailers say they have experienced the return of stolen merchandise in the last year, and just as many (89.1 percent) report that employee return fraud or collusion with external sources has been a problem in the past year. Wardrobing - the return of used, non-defective merchandise like special occasion apparel and certain electronics - also poses a huge issue, as more than six in ten retailers (61.4 percent) say they have been victims of this activity within the last year. Additionally, eight in ten (81.2 percent) say they have experienced the return of merchandise purchased on fraudulent or stolen tender, and 38.6 percent have found criminals using counterfeit receipts to return merchandise.

When asked if their company has ever changed its return policy to specifically address return fraud, nearly two-thirds (64%) said it had.

Read Full Article