This year, retailers expect an average 11 percent of purchases made during the 2018 holiday season to be returned.
Whether it’s a tacky sweater from Grandma or the iPad you already have, now that the holidays have wrapped up, consumers are returning and exchanging their unwanted items. This year, retailers expect an average 11 percent of purchases made during the 2018 holiday season to be returned. Unfortunately, retailers will also see fraudulent returns along with legitimate returns. Here are three key insights around return fraud uncovered from
Return fraud proves to be a continuing problem for retailers
No matter when or where a sale takes place, return fraud continues to pose a serious threat to retailers. Return fraud can come in many forms. On an annual basis, retailers say an average 11 percent of purchases are returned, with an average 8 percent of returns being fraudulent, according to the NRF report.
The annual hit on retailers’ bottom lines from return fraud is significant. According to Appriss, U.S. retailers’ annual losses from merchandise return fraud are estimated at $18.4 billion, and fraud and abuse combined are estimated at $24 billion. With return fraud continuing to cause a challenge, retail loss prevention executives are constantly looking for new ways to battle this issue.
Holiday returns season presents additional challenge for LP teams
The holidays present a particular challenge when it comes to return fraud. According to
Download NRF's Organized Retail Crime 2018 report for more info.
One of the risks retailers face during the holiday returns season is processing returns without a receipt — three-quarters of holiday shoppers opt out of including a receipt with their gifts. NRF’s data shows 21 percent of returns made without a receipt are fraudulent.
Year-round, fraud numbers can be even higher for certain types of transactions. Appriss Vice President of Marketing Tom Rittman noted that NRF found 38 percent of retailers have seen an increase in the number of buy online, return in-store transactions; 29 percent reported an increase in fraudulent returns among those transactions.
“These returns can be complex if multiple systems are required to communicate in real time,” Rittman said. “Often, the retailer is relying on yesterday’s data to make today’s decision.”
Chances of increased fraud over the holiday placed more demands on staff
Techniques that loss prevention teams have honed all year to fight fraud and ORC likely came to the forefront during the holiday season. “The sheer volume of returns at the holidays and the need to keep customer satisfaction high can cause some employees to try to bypass the system controls. In so doing, they inadvertently open the retailer to higher risk,” Rittman said. “That’s the time when store personnel need to be even more vigilant.”
As loss prevention experts prepped for the 2018 holiday season, NRF’s ORC report found that retailers relied on their staff for additional support. Respondents cited everything from increased training and awareness to security infrastructure changes. Across the industry, retailers had solid plans in place for fighting holiday return fraud.
To learn more about this year’s fraud trends, see NRF’s