Return Fraud
Costs Retailers
Shoppers with unwanted gift items will not be the only people
standing in return lines after the holidays. They’ll be
joined by criminals receiving cash for stolen merchandise, laundering
money or returning used items, according to the National Retail
Federation (Washington).
In fact, the first NRF Return Fraud Survey shows that retailers
can expect to lose $3.5 billion from return fraud after the
2006 holiday season, and $9.6 billion for all of 2006.
“Retailers have often viewed lenient return policies
as a cost of doing business with honest shoppers,” said
Joseph LaRocca, vice president of loss prevention for NRF.
“Unfortunately, due to an increase in return fraud,
retailers are being forced to strike a delicate balance between
servicing loyal shoppers and discouraging opportunistic criminals.”
According to the survey, 95 percent of retailers experienced
the return of stolen merchandise, the most common form of
return fraud, in 2006. Retailers also encountered returns
of merchandise originally purchased with fraudulent or counterfeit
tender (69 percent) and returns using counterfeit receipts
(52 percent).
Additionally, consumers often attempt to return used merchandise
that is not defective. Called “wardrobing,” this
practice affected 56 percent of surveyed retailers in 2006.
Because return fraud has become so rampant in the industry,
more than two-thirds of retailers (69 percent) have changed
their return policies to specifically address the issue.
Seven out of 10 retailers kept the same return policies for
the 2006 holiday season as for the preceding holiday season.
However, 25 percent tightened their policies. [January 2007
PET AGE]
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