Retailers can expect to lose an estimated $9.1 billion as a result of return fraud once the books are closed on 2013, according to a new survey by The Retail Equation, a firm that tracks point-of-return and point-of-sale data throughout the industry.
The return fraud rate for 2013 comes in 2. 6 percent higher than that of 2012, meaning that customers are increasingly getting away with returning used or stolen items, returning items with fake receipts or using false tender to purchase items. A higher percentage of online sales may have added to the increase in return fraud. Many retailers allow customers to return merchandise purchased online in stores, however, 4 percent of these so-called returns are actually scams, according to the report.
Overall, customers returned $267 billion worth of merchandise to stores last year. That figure accounts for 8 percent of total retail sales for 2013. Returns made without a receipt accounted for 14 percent of total returns, which the study says is the result of too-lenient return policies. In order to thwart this figure going forward, retailers must find new ways to address "hassle free returns" that still offer flexibility to the customer, but minimize the chances of return abuse. Of those retailers surveyed, the average return policy was given a score of 3.2 out of 5, which shows that there is room for improvement in return fraud prevention.
As retailers attempt to make up for significant retail revenue losses stemming from return fraud, they are forced to both raise prices and cut jobs. According to the report, an average retail salary is $27,300 per year, which means the amount of money lost to fraud equates to up to 595,000 jobs.
-See this Retail Equation survey
Holiday return fraud will cost retailers $3.4 billion
Sears' e-receipt fear: Buy once, return many
New digital-receipt standard envisions cross-channel and even cross-chain uses
PayPal waives payment processing fees for startups
Mobile payment system of the future: PayPal or Isis?