Fraudulent returns cost retailers billions -
Published Sunday, January 5, 2014 at 1:00 am / Updated at 2:24 pm
Fraudulent returns cost retailers billions

As consumers return holiday gifts and redeem gift cards, retailers will be keeping an eye out for transactions that, in all, could cost them billions.

The average person returned nearly four holiday gifts last year, according to a National Retail Federation survey. But returns are increasingly leading to losses for retailers in the form of return fraud, an industry problem that costs about $9 billion a year, the NRF said.

This type of fraud poses one of the most serious loss-prevention issues for stores, the trade group said.

The group estimated that 5.8 percent of holiday returns last year were fraudulent, up from 4.6 percent in 2012 and accounting for $3.39 billion in losses during the holiday season alone, according to an NRF 2013 survey of 62 retail companies.

“Returning used or stolen items, or even using false tender to purchase items is fraud,” Rich Mellor, the trade group’s vice president of loss prevention, said in a statement.

He said retailers’ efforts to fight back are starting to chip away at the growing problem, but “criminals are becoming more savvy and technologically advanced in their methods.”

Retailers noted another problem: “wardrobing,” or returning used but nondefective electronics or special occasion apparel.

To curb problems, many retailers now require customers returning goods to show identification, especially when returning items without a receipt.

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