Return Fraud To Cost Retailers This Holiday Season
Shoppers taking back a gift item or a duplicate gift will not be the only ones standing in return lines on the day after Christmas. According to the National Retail Federation’s (NRF) inaugural Return Fraud Survey, completed by retail executives, criminals commonly take advantage of companies’ return policies to receive cash for stolen merchandise, launder money or return an item after it has been used.
The losses are staggering: According to the survey, retailers can expect to lose $3.5 billion from return fraud this holiday season. This year the retail industry stands to lose $9.6 billion from this illegal practice.
“Retailers have often viewed lenient return policies as a cost of doing business with honest shoppers,” said Joseph LaRocca, NRF vice president of loss prevention. “Unfortunately, due to an increase in return fraud, retailers are being forced to strike a delicate balance between servicing loyal shoppers and discouraging opportunistic criminals.”
According to the survey, the most popular form of return fraud is the return of stolen merchandise, which 95.2 percent of retailers have experienced in the past year. Retailers say they have also been plagued by returns of merchandise that was originally purchased with fraudulent or counterfeit tender (69.1 percent) and returns using counterfeit receipts (52.4 percent).
Return fraud has become so rampant in the retail industry that more than two-thirds of retailers (69.1 percent) said their companies’ return policies have been changed to specifically address the issue.
Though companies acknowledge changing their policies in the past, most retailers (70.2 percent) surveyed said that their return policies will remain the same this holiday season as last. Some retailers will be tightening their policies this year (25 percent) while others will loosen return policies (4.8 percent), giving customers extra time to return merchandise or being more lenient on returns without a receipt.
Retailers surveyed said the amount of returns typically rises after the holiday season from an annual average of 7.3 percent to a post-holiday rate of 8.8 percent.
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