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Retail Return Woes: Fraud on the Rise as Shoppers Flip-Flop

Generous Policies Bite Back

Retail return woes. Retailers wanted to win over shoppers and boost sales, so they went all-in on lenient return policies. Buy online, return with ease. Sounds good, right? Well, turns out, it’s not all sunshine and rainbows. Those easy-breezy policies have birthed a monster: return fraud.

Numbers Don’t Lie: Fraud on the Loose

With more folks shopping online and sending stuff back like it’s a hobby, retailers are feeling the pinch. Fraudsters are playing the system, sending back different items, claiming deliveries never happened, or straight-up returning stolen goods. The damage? Retailers estimate a whopping 13.7% of returns last year, totaling $101 billion, were fraudulent. The holiday season took the cake with a 16.5% fraud rate, hitting $24.5 billion, according to a survey by Appriss Retail and the National Retail Federation.

Ongoing Return Madness

As retailers deal with a wave of returns, the headache doesn’t end. Many extended their return windows, so the floodgates are still open. And guess what? Fraud is their new arch-nemesis. Vijay Ramachandran from Pitney Bowes says, “Fraud is No. 1, and it’s not even close to No. 2.”

Return Process: A Costly Affair

Processing returns online isn’t a walk in the park. On average, it’s a hefty 21% of an order’s value. Yeah, you heard it right. That’s the cost, my friend. And now, fraud is just pouring salt on the wound. The process is getting pricier, not just because of shipping and processing, but also thanks to rising fraud tactics.

Cracking Down on the Sneaky Business

In the face of growing fraud, retailers are putting their foot down. They’re making it tougher to return items. Because, let’s be real, when the fraud game is strong, someone’s gotta pay the price. Michael Osborne, CEO of Appriss Retail, spills the tea, “In cases where fraud is on the rise, like this year, what we’ve seen in the data, retailers are forced to, at minimum, change their policies slightly to accommodate for that potential fraud and abuse. It does increase their costs and essentially erode their margin.”

Saks CEO Spills the Beans

Saks CEO Marc Metrick dropped a truth bomb at the NRF Big Show. Legit complaints about missing items are old news, but fraudulent “merchandise not received” complaints have doubled over the years. That’s just one trick in the fraudster’s playbook.

Return Fraud 101: The Sneaky Tactics

So, what are these sneaky tactics? Picture this: sending back an empty box or a totally different item. Yep, that’s the classic move. Pitney Bowes’ Ramachandran spills the beans. But wait, there’s more – returning stolen goods, digging through trash for receipts, and even pulling off price arbitrage. It’s like a fraud Olympics out here.

Return Abuse: Not Just Fraud, But Also Shenanigans

Fraud is the heavyweight champion, but there’s also return abuse in the ring. Ever heard of “wardrobing” or “bracketing”? “Bracketing” is when you buy multiple sizes or colors with the plan to return the rejects. Sneaky, right? “Wardrobing” is the bigger baddie – buying, using, and then returning. According to a Forter survey, 56% admit to “wardrobing,” and 25% planned to return holiday buys after a little wear and tear.