Fraudulent Holiday Returns Expected to Rise in 2013
The retail industry will lose an estimated $8.76 billion to return fraud this year, and $3.39 billion during the holiday season alone. Overall, 5.8 percent of holiday returns are fraudulent, up slightly from 4.6 percent last night.
According to the National Retail Federation's 2013 Return Fraud Survey, nearly all (94.8 percent) of retailers polled say they have experienced the return of stolen merchandise in the last year, and 69 percent report that they have experienced the return of merchandise purchased on fraudulent or stolen tender. Also, 29.3 percent have found criminals using counterfeit receipts to return merchandise.
Employee fraud or collusion with external sources is also a problem for 93.1 percent of retailers over the last year. Slightly more than 60 percent of retailers have experienced return fraud in connection to organized retail crime groups this year as well.
“Wardrobing,” or the return of used, non-defective merchandise like special occasion apparel and certain electronics, has been reported by 62.1 percent of retailers, down from 64.9 percent last year as companies have started employing special tactics to curb the practice.
The survey also found that 15.5 percent say they have dealt with e-receipt return fraud. More than 80 percent of retailers say they allow customers to return merchandise purchased online in their stores.
According to the report:
“The problem of return fraud has forced many retailers to adopt policies which require customers returning merchandise to show identification. Retailers estimate that 13.97 percent of the returns made throughout the year without a receipt are fraudulent and, as a result, nearly three-quarters (73.7%) now require customers returning items without a receipt to show identification; 12.3 percent of retailers require customers making returns with a receipt to show ID, and more than one-quarter (26.3%) say they do not require identification during the return process.
“When asked about return fraud and the various types of tender, almost half (49.1%) say they have witnessed an increase in gift cards/store merchandise credit fraud in the past year. One in five (19.6%) say they have seen a decrease in the fraudulent use of cash, but more than a quarter (26.8%) have seen an increase; half report no change (48.2%). Additionally, three in 10 (29.1%) say they’ve witnessed an increase in credit card fraud, 18.2 percent say those incidents have decreased and more than half (52.7%) say there’s no change from last year. This is the first time NRF has asked about tender fraud and changes.”