Sears' E-Receipt Fear: Buy Once, Return Many

As retail rapidly moves to integrate mobile into almost every aspect of its customer interactions, many in IT and Loss Prevention are wisely scared about the security holes that will crop up during the rush. One such exec, William Titus, LP VP at Sears, said on Tuesday (Jan. 17) that one of his biggest fears involves mobile electronic receipts.

"The E-receipt problem is that the customer now has a valid receipt. I can't bring it in. I'm not checking it off and signing off on it. So the ability to use that fraudulently increases unless you have a true returns management system," Titus said while speaking at NRF during a StorefrontBacktalk moderated panel.

The problem is that few chains today have such complete returns management systems. This is likely to be a temporary setback, because those types of systems will not only address—dare we say fix?—the E-receipt issue Titus discussed but also deliver quite a few additional benefits with everything from inventory to CRM to payment systems.

Until then, though, this security hole will be quite real.

"Our CIOs are always making decisions about transactions and how those transactions should move up and down the line. Should I trickle this thing up? Should I batch it up? The problem is that if I'm batching this up, or I'm trickling it and it takes a long time for it to get up there, I have this huge window of opportunity where (dishonest customers) can now do multiple fraudulent refunds. There's a lot of different things that we have to be thinking about."

Theoretically, this problem might be slightly reduced through actions from some of the potential mobile wallet players—Google, PayPal, ISIS, maybe Apple, maybe Square. But that would be disjointed, because it would only impact a small portion of the purchases. With the potential for thieves moving from one store to another with stolen merchandise being cashed out as a return, a centralized system within the chain is the long-term viable approach.

Another item that might temporarily alleviate some of this problem, added fellow panelist Michael Sajor, CIO of Ann (owner of Ann Taylor), is item-level RFID. "At least then we would know that that item was purchased," he said.

As a practical matter, though, a chain that doesn't have a full-fledged returns management system is unlikely to go through the much more painful item-level RFID process.