Fighting Retail Return Fraud

By SATO America, Inc.

Part 3 of a 3 part series. Read part 1 here and part 2 here.

It’s after Christmas and consumers are lined up at stores to return merchandise – the scratchy sweater from Aunt Helen, the toaster oven that doesn’t fit on the counter.  But not all returns are legitimate and return fraud costs Retailers billions of dollars every year- $8.9 billion dollars according to the 2012 Return Fraud survey conducted by the National Retail Federation (NRF).  NRF surveyed senior loss prevention executives at 60 retail companies. Even with less than 5% fraudulent returns at the holidays, this totals $2.9 billion dollars in fraud.

Of the Retailers surveyed, 96.5% of them had stolen merchandise returned to their stores.  This is facilitated by the consumer-friendly policy of not requiring a receipt.  In the NRF study, Retailers estimated that 13.4 percent of the returns made throughout the year without a receipt are fraudulent.   Returning merchandise without a receipt is more convenient for the consumer.  Even though gift-givers ask recipients if they want the receipt, “Yes” is never the preferred response.  Also, many consumers are shopping for so many gifts that they can’t always keep track of the receipts or associate them with the correct items.  In this case convenience for the consumer is a greater risk for the Retailer.

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