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Organized Retail Crime Drives Up Instances of Return Fraud

Losses From Fraudulent Returns Nears $11B

Dec 19, 2014 10:57 AM   By Jeff Miller
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RAPAPORT... Loss prevention executives estimated that organized retail crime groups will cost the industry $3.8 billion in fraudulent returns this Christmas season and $10.9 billion for the entire year, according to the National Retail Federation (NRF) 2014 Return Fraud Survey.

The NRF noted that 92.7 percent of retailers have experienced the return of stolen merchandise in the past year, which is down from 94.8 percent in 2013; however, the survey confirmed that 78.2 percent of retailers experienced return fraud through organized retail crime groups, up from 60.3 percent one year ago.

“Today’s sophisticated technology does well keeping criminals at arm’s length, but often this isn’t enough to completely stop the unethical practices of organized and individual retail fraud occurrences,” said NRF's vice president 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. Additionally, many of these return fraud instances are a direct result of larger, more experienced crime rings that continue to pose serious threats to retailers’ operations and their bottom lines.”

The survey observed that techniques and processes meant to thwart criminal activity through return policies continue to be put to the test.  As more consumers use digital receipts for their own ease and convenience, retailers are noticing an increase in return fraud instances from that method, additionally retailers reported higher rates of  returns that were purchased with fraudulent or stolen payment methods. The practice of “wardrobing,” or the return of used, non-defective merchandise, has also increased this year.

Tags: Jeff Miller, loss prevention, NRF, organized crime, return fraud, survey
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