Return fraud rises this holiday season

Retailers estimate that they will lose $3.8 billion to return fraud for the 2014 holiday season, up from last year's $3.4 billion estimate, according to a recent National Retail Federation (NRF) survey.

Retailers also estimated that 5.5 percent of all holiday returns are fraudulent, similar to last year's 5.8 percent. 

"Today's sophisticated technology does well keeping criminals at arm's length but often isn't enough to completely stop the unethical practices of organized and individual retail fraud occurrences," said NRF VP of Loss Prevention Bob Moraca. "Return fraud has become an unfortunate trend in retail, thanks to thieves taking advantage of retailers' return policies to benefit from the cash or store credit they don't deserve."

Many of the return fraud cases result from "larger, more experienced" crime rings, Moraca added.

While return fraud reigns during the holiday season, it also plagues retailers year-round. Nearly all (92.7 percent) of the retailers polled say they have experienced the return of stolen merchandise in the last year, similar to last year's 94.8 percent.

And, 78.2 percent of retailers say they have experienced return fraud through returns by organized retail crime groups, a spike from 60.3 percent last year.

Stolen credit cards are also still a major problem. A signficant 82 percent of retailers said they have experienced the return of merchandise purchased with fraudulent or stolen payment methods, compared to 69 percent last year.

Plus, 25.5 percent of retailers have witnessed fraudulent returns using counterfeit receipts, down slightly from 29.3 percent last year.

Meanwhile, retailers have noticed increasing return fraud instances with e-receipts. Eighteen percent of retailers have experienced return fraud with the use of e-receipts, compared to 15.5 percent last year.

For more:
-See this National Retail Federation press release
-See this Pymnts.com article

Related articles:
Amazon workers sue over theft screenings
Inside the $400,000 Saks theft ring
32% of merchants say mobile poses greater risk of fraud
Consumers say card breaches common
Who is to blame in Target card breach?

Suggested Articles

Costco changes up its menu items, and Alibaba and Guess partner for a physical store.

Janey Whiteside, Walmart's new chief customer officer, is well acquainted with the importance of customer service in modern retail.

Whole Foods will offer deals on Amazon's Prime Day, and tariffs against China are causing pricing hikes.