Returns, an essential aspect of the retail cycle, have skyrocketed in recent years with the growth of online channels. However, with this increase in returns comes a worrying trend of escalating return fraud and policy abuse.
according to report by National Retail Federation (NRF), retailers have encountered various forms of return fraud over the past year. Of these, 44% responded to shoplifting or stolen item returns, and 37% experienced returns related to fraudulent bids or stolen bids. A further 20% cited return fraud organized by retail crime groups.
But scammers aren't the only ones abusing the system. Return abuse (commonly known as wardrobe), where customers take advantage of lenient return policies or return used, good items, further increases the burden on retailers.
Richard KosticCEO of 100% purehighlighted this issue in a recent interview with PYMNTS, confessing that a significant portion (56%) of U.S. consumers have “returned” a product they purchased “after using it once or twice.” he pointed out. This was coupled with 25% of consumers admitting to purchasing with the intention of returning it after use. have The financial strain on retailers has worsened, he said.
To put this burden into numbers, return fraud is projected to result in an overall loss of $101 billion in 2023 alone, costing retailers $13.70 for every $100 of returned merchandise. data From NRF. Additionally, fraud and fraud accounted for almost 14% of total revenue last year.
But amidst these challenges, retailers are leveraging data-driven, technology-enabled solutions to more effectively detect and combat return fraud and fraud.
First, connected devices offer promising solutions using technologies such as: Surveillance camera a monitoring system to assist in detecting in-store exchanges; prevention Price switch at checkout. Additionally, advanced technology will prove essential in analyzing customer behavior, distinguishing between legitimate and fraudulent patterns, and alerting store employees. real time to potential abuse.
Additionally, artificial intelligence (AI)-powered chatbots introduced to online purchases can help flag customers exhibiting suspicious behavior and thwart fraud. These technological advances not only enhance fraud detection, but also support employee training and education, enabling field staff to effectively combat return fraud.
When it comes to customers creating new online identities to abuse the returns process, data can play a vital role in differentiating genuine trading customers from fraudsters. doriel abrahamsHead of Risk, United States; forterhe told PYMNTS.
For example, Forter's platform helps uncover user identities across partner companies and employs advanced analytics and generative AI intelligence to map and associate these identities with specific behaviors. This comprehensive approach allows retailers to effectively identify and differentiate between trusted customers and potential threats.
“The key is to teach AI models and systems to ‘think’ how these people think and how to ask the right questions at the right time,” Abrahams said.
