Retailers better watch out. Holiday return fraud could cost them $2.2 billion this year.
That’s according to the National Retail Federation’s (NRF) latest “Return Fraud Survey,” published Thursday, which found that scams are on the rise this season—and storeowners know it. Respondents said they estimate 3.5% of their holiday returns this year will be fraudulent, up from last year’s projected 3 percent or $1.9 billion.
“Return fraud remains a critical issue for retailers with the impact spanning far and wide, in-store and online,” Bob Moraca, vice president of loss prevention at NRF, said. “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. When it comes to retail fraud, retailers can build taller walls, but criminals continue to find taller ladders.”
In fact, retailers surveyed said they anticipate total annual returns will hit $260.5 billion this year—or 8 percent of total retail sales—and foresee $9.1 billion of those to be fraudulent.
Such distrust stems from respondents experiencing the return of stolen merchandise (91.9%) and “wardrobing” (72.6%), or the return of used, non-defective merchandise, in the past year.
E-receipts posed a problem in 2015, too, with 33.9% of those surveyed saying they have been scammed by people using fakes ones, up from 18.2% last year. Moreover, merchants said they estimate 10 percent of returns made without a receipt to be fraudulent, up from last year’s 5 percent.
“Retailers have the difficult task of providing superior customer service by always giving the benefit of the doubt to their shoppers when it comes to returns, while simultaneously working to make sure they protect their business assets,” Moraca continued.
The survey wasn’t all doom and gloom, however, as some fraud schemes appear to be in decline: 75.8% of respondents said people had tried to return goods bought using counterfeit money, down from 81.8% in 2014; 71 percent said they were the victim of organized retail crime groups, compared with 78.2% last year; and 77.4% said they experienced employee return fraud or collusion with external forces, down from 81.8%.
Moraca added, “We expect retailers to continue their tried and true ways of combating fraud through increased usage of identification verification, as well as seeking new and innovative approaches on the back end.”