Holiday return fraud may put a dent in earnings

Industry News

The last two months of the year is a peak sales period for most North American retailers, with many making a significant chunk of their annual sales within this time frame. However, it is equally critical that merchants are aware of the potential for retail fraud, which can put a dent in sellers’ holiday earnings.

According to a recent study conducted by the National Retail Federation, holiday return fraud is expected to cost sellers upward of $3.8 billion this year, and will suffer an estimated $10.9 billion in total. The surveyed merchants expect as many as 5.5 percent of holiday returns to be fraudulent, which is down from 5.8 percent last year but still a worrisome figure.

“Today’s sophisticated technology does well keeping criminals at arm’s length but often isn’t enough to completely stop the unethical practices of organized and individual retail fraud occurrences.”

“Today’s sophisticated technology does well keeping criminals at arm’s length but often isn’t enough to completely stop the unethical practices of organized and individual retail fraud occurrences,” said NRF Vice President of Loss Prevention Bob Moraca. “Return fraud has become an unfortunate trend in retail thanks to thieves taking advantage of retailers’ return policies to benefit from the cash or store credit they don’t deserve.”

Many retailers have rolled out new inventory and order management systems in recent years, which give them increased efficiency and capabilities. However, it also opens the door to new opportunities for fraud if sellers are not careful with how they use these solutions. For example, many retailers have begun offering digital receipts that can be emailed straight to customers. However, these digital receipts can be cracked by tenacious cybercriminals and used as part of return fraud ploys.

Merchants always need to be aware of the tools they use to accept returns and ensure these solutions do not leave them exposed to fraudulent activity.

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