Return fraud during the holiday season to cost retailers $3.5 billion
Retailers are no stranger to return fraud and other shopping crimes, but retail crime rates grow significantly during the holiday season when stores are bustling with shoppers.
This holiday season, the retail industry is expected to lose $3.48 billion to return fraud, according to a survey by the National Retail Federation. That's down from $3.73 billion in 2010, but up from $2.74 billion in 2009.
The holiday shopping season kicks off in November with Black Friday, and customers will swarm stores through December.
Nathan Bomey | AnnArbor.com
The NRF identifies three common methods of return fraud:
--Returning items like special occasion apparel and electronics after they have been used.
--Returning merchandise purchased on fraudulent or stolen tender.
--Using counterfeit receipts to return merchandise.
To crack down on these shopping crimes, many retailers have adopted stricter return policies in the past few years, such as requiring receipts and making customers show identification when returning items. Other businesses will only allow in-store credit for returns.
The NRF reports that 12.6 percent of retailers will tighten their return policies to combat return fraud during this holiday season.
“Retailers have been putting checks and balances in place to prevent people from taking advantage of stores' return policies, which raises prices for honest shoppers," Joe LaRocca, senior asset protection advisor for NRF, said in a statement.
Although retailers’ return policies are getting stricter, 90.1 percent of people reported that they find return policies to be fair, which is up from 88.4 percent last year.
To help retailers combat the loss in profits due to return fraud, Wren Solutions, a loss-prevention technology provider, is offering businesses crime deterrence tips this holiday season. Among the advice:
--Electronic receipts can be easily manipulated for people to make fraudulent returns.
--Keep customers’ information on file with a history of their activity to help determine legitimate customers.
--Put key return policies in place and consistently enforce them
--Offer store credit instead of cash for returned merchandise or require that purchases be returned within 30 days.
Lizzy Alfs is a business reporter for AnnArbor.com. Reach her at 734-623-2584 or email her at lizzyalfs@annarbor.com. Follow her on Twitter at http://twitter.com/lizzyalfs.
Comments
jrigglem
Sun, Dec 11, 2011 : 6:51 p.m.
There's really a simple answer to this. All returns must have a receipt, electronics cannot be returned unless they are defective and all consumer information will be kept and if it is deemed fine then they will be charged for the electronic and any restocking fees (Manufacturers do this all the time. Verizon, Kodak, etc) Lastly, all special occasion items are final sale and not returnable.
talker
Sun, Dec 11, 2011 : 4:37 a.m.
While retail fraud is a serious problem that costs all of us, I think some of the comments here reflect fraud in the information others gave you. I doubt someone could return nine Halloween costumes the day after halloween. Even stores with generous return policies for ordinary merchandise, post signs about not accepting returns of holiday items after the holiday. Examples are TJ Maxx and Target. I'm guessing other stores do the same. At least on some women's dresses, stores place tags in places where they can't be hidden and would need to be cut off before wearing the dress. If that tag is missing the dress can't be returned. I've seen that on special occasion dresses. There are likely various other forms of fraud that stores can't eliminate and it's also likely that we don't know what they are. Stores likely won't share that information if they think it could lead to more fraud.
Billy Bob Schwartz
Sun, Dec 11, 2011 : 3:06 a.m.
Besides being at least unethical, and probably immoral, these kinds of things (including buying a suit for a wedding and taking it back on Monday, for example) cost you and me money. Does anyone actually believe the companies absorb these losses into their profits? Ha! They hike the prices for the rest of us to make up the loss. Putting it simply...these losers are stealing from you and me. I resent that. How low can you get? Well, these days, pretty low I guess.
Gorc
Sun, Dec 11, 2011 : 4:20 a.m.
Actually they budget for losses like any other expenses at the beginning of their fiscal year. And hopefully throughout the year they can have a positive variance to their initial budget towards losses. If this one particular line item expense, as well as others, comes under budget....than their net income is better for it.
Gorc
Sun, Dec 11, 2011 : 1:17 a.m.
Without retail fraud, how would the 99% have a source of income?
Robert Stone
Sat, Dec 10, 2011 : 8:54 p.m.
Eh, actually I know of a situation ("friend" of a friend) where a guy and his wife were charged with a felony for essentially doing this. They had kept the item for a year or something, or bought it from some other store, or something blatantly fraudulent beyond just returning something to the same store a week after buying it. I think they tried to claim they had just bought the item from the store a week ago or something and were trying to take advantage of the "store credit without receipt policy". Basically what they tried was so ridiculous that it was very easy for the store to immediately identify the age/origin/etc of the item, prove that it wasn't bought last week, and they called the cops. The couple got charged with a felony. The item may have even been broken or something too, which would essentially mean they were trying to trade something worthless for $100 or whatever it was claimed to be worth. They might as well have just tried to grab $100 or something out of a cash drawer as far as loss was concerned.
Robert Granville
Sat, Dec 10, 2011 : 6:31 p.m.
The solution to this problem is customer service. In fact, all of the major retailers know this simple fact. The rise in return fraud can likely be attributed to the diminishing number of employees in the stores. If there were more employees on the sales floor, there would be less opportunities for thieves to steal. I'm sure the major retailers would rather attribute the problem to an increase in criminal behavior among shoppers. This attitude conveniently allows them to ignore the fact that they're asking fewer employees to do more for less pay. I don't condone the behavior, but the retail giants bring it on themselves. Small businesses will get by like they always have, by serving the customer personally. The corporations will just pass on the losses to their employees by cutting hours, withholding bonuses and doling out 5, 10 and 15 cent raises instead of keeping up with the cost of living.
melissa
Sat, Dec 10, 2011 : 5:03 p.m.
While I agree that the second two may actually cost the stores money, I disagree with the first one: "--Returning items like special occasion apparel and electronics after they have been used." So what? Are they used up? They'll be resold and the store gets their money. I don't see how this is "fraud." Is an electronic device no good after you use it? This seems silly.
Robert Granville
Sat, Dec 10, 2011 : 6:11 p.m.
I think you're missing the point. The customers discussed in the article are returning items fraudulently. They are committing a crime. It's easy to rationalize doing it and come up with excuses for why its ok. It may not seem like that big of a deal. Get caught doing it and you'll find out otherwise. Retail fraud of over $1,000 is a felony. You don't have to "see how this is fraud" to go to prison for it.
A2comments
Sat, Dec 10, 2011 : 6:01 p.m.
Actually, that's not quite correct. Many stores will take the item and return it to the manufacturer for a full refund. The manufacturer takes a hit in that case. Other stores will sell it as an "open box", for less money, thereby making less profit. Buying a TV, watching the Super Bowl, and then returning it would be a type of fraud, in that you defrauded the store by never intending to keep the item. It would also be unethical.
ypsijake
Sat, Dec 10, 2011 : 2:30 p.m.
big deal..let 'em send the stuff back to China and have it repackaged and sold again. If there's a way to manipulate the system people will do it. I don't feel sorry for stores that can't deal with loss prevention and security measures. so often I'm in stores and seeing employees talking to themselves and ignoring customers and what's happening in the store.
Commoncents
Sat, Dec 10, 2011 : 2:35 p.m.
I understand that thinking. Still - would YOU do it ?
Commoncents
Sat, Dec 10, 2011 : 12:32 p.m.
I work with a guy who has told me his wife buys 10 halloween outfits for his kid because he changes his mind on what he wants to be so often they don't know what he'll actually want to be until the day of halloween. THEN, the day after she returns the 9 costumes they didn't end up using. Stuff like that makes me SICK but this guy was actually proud/bragging how thrifty his wife is for doing it. Should I send him this article or would that make me a jerk ?
A2comments
Sat, Dec 10, 2011 : 5:59 p.m.
1BlockRadius: I guess you missed where I said "while it may not be ethical"... I don't condone the behavior, I was pointing out that it was not fraud.
Commoncents
Sat, Dec 10, 2011 : 1:11 p.m.
Rob: I doubt he'd brag that they would take back the costume that was actually used - even if they did, however I just remembered another story about the dog getting a hold of some of her Vicky Secret bras and destroying them - YUP she took them back and got a full refund claiming it came that way. Stuff like this raises the cost when honest people like me go into pay full price! Maybe it's because my family started/owns a business, but I'd like to think it's because I was taught to do the right thing. I'm with you though - their kid is going to be a monster A2Comments: Fraud isn't the point. What about just doing the right thing regardless of whether it's legal to do it or not ? Are we teaching our kids to take advantage of people whenever you can ? We all know that store ends up being stuck with 9 costumes AFTER halloween and has to discount them 90%, knowing full well there are kids that probably wanted those popular costumes but couldn't because someone was hoarding.
A2comments
Sat, Dec 10, 2011 : 1 p.m.
Nothing fraudulent about that. While it may not be ethical to buy 10 items knowing you will return 9 of them, it is not fraud. If the store keeps customer info they should see this repetitive behavior and perhaps warn the customer.
Rob MI
Sat, Dec 10, 2011 : 12:50 p.m.
I'm surprised, with that MO, that they don't keep the price tag on the one worn and actually return that, too. That child is well on his way to being a complete monster who will grow up under the belief that firm decisions never need to be made about anything. Send it, I say.