Retailers take notice: return fraud is still a major issue pervading the holiday season, and it’s only getting bigger. The NRF Return Fraud Survey reveals that 3.5% of 2015 holiday gift returns will be fraudulent, higher than the 3% reported in 2014. In total, holiday return fraud is expected to cost retailers $2.2 billion in 2015.
Fraud issues around returns take several forms. The most prevalent continues to involve the return of stolen merchandise: 91.9% of retailers said they have experienced this type of fraud, similar to last year’s 92.7%. With this being such a common problem, retailers must consider deploying proven security and loss prevention tools such as RFID tags and IoT connected devices within their stores.
Wardrobing, or the return of used, non-defective merchandise, affects 72.6% of retailers, making this the second biggest fraud problem they have to tackle.
“While technology has played a significant role in deterring many in-person fraudulent transactions that would have otherwise gone unseen, there is little that can be done to prevent a determined criminal who will find a loophole one way or another,” said Bob Moraca, VP of Loss Prevention at NRF. “When it comes to retail fraud, retailers can build taller walls, but criminals continue to find taller ladders.”
NRF expects retailers to combat fraud through increased usage of identification verification as well as seeking new and innovative approaches on the back end, according to Moraca. Backing this statement up, 85.2% of retailers said they would require identification when making a return without a receipt, up from 70.9% in 2014.
While the report offers a slightly morbid take on the state of retail holiday returns, it does highlight that merchants have been able to get a better handle on some specific causes of fraud in 2015. The NRF survey indicated that:
75.8% of retailers have experienced the return of merchandise purchased using fraudulent tender, down from 81.8% in 2014;
71% have experienced return fraud made by known organized retail crime groups, declining from 78.2% last year; and
- 77.4% of retailers surveyed have experienced employee return fraud or collusion with external forces, dipping from 81.8% in 2014.