Holiday return fraud to cost retailers $2B

Retail fraud is one of the biggest issues throughout the holiday season and the National Retail Federation estimated it will cost retailers $2.2 billion in 2015.

According to the NRF's Return Fraud Survey, retailers estimated that 3.5 percent of their holiday returns this year will be fraudulent, up from 3 percent last year. Last year, the NRF estimated that fraud accounted for $1.9 billion in losses over the holidays.

In total for the year, returns will cost retailers about $260.5 billion, or 8 percent of all retail sales, and an estimated 3.5 percent of those returns, $9.1 billion, will be fraudulent.

"Return fraud remains a critical issue for retailers with the impact spanning far and wide, in-store and online," said NRF VP of loss prevention Bob Moraca. "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." 

Specifically, nine in 10 retailers surveyed said they have experienced the return of stolen merchandise. The return of used merchandise also plagued three-quarters of polled retailers in the past year.

There are some positive changes though from 2014. The return of merchandise purchased on fraudulent tender is down from 81.8 percent in 2014 to 75.8 percent this year. And fraud made by an organized retail crime group was down from 78.2 percent last year to 71 percent his year. And finally, employee return fraud has dropped from 81.8 percent to 77.4 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 said. "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."

For more:
-See this National Retail Federation press release

Related stories:
97% of retailers victims of organized retail crime
US shoppers return $222B a year
Organized retail crime affects 88% of retailers
Return fraud costs retailers $9.1 billion per year  
Holiday return fraud will cost retailers $3.4 billion 

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