A Breakdown Of Common Fraudulent Activity In The Retail Space
While many retailers may have some of the most lenient return policies around, the truth is they often lead to many additional operational costs that must be paid by the retailer. Despite this, it’s in a retailer’s best interest to provide such a comprehensive return policy, as there are occasions where they can lead to additional sales. However, with every good, comes some bad. Additional sales could be from fraudulent customers, attempting to launder money from unsuspecting retailers. This post will provide the information necessary for retailers to avoid these disingenuous returns and effectively protect themselves against them.
Often times when retailers attempt to reduce the rate of returns they face, they’re killing two birds with one stone. Online returns exceed in-store returns by a large margin, meaning if retailers took the time to make sure products are matching the images and descriptions provided, customers would be less likely to receive an item that they claim to be unlike what they ordered. Retailers must prioritize honest descriptions and images, mostly unedited, for the best results. It’s also worth mentioning that sizing has a huge impact on returns, with nearly 52% of all returns being attributed to inaccurate size estimates.
Improving sales and reducing returns is actually made much easier through offering free shipping and returns. Though it may seem contradictory, often times what happens is customers will place orders for products they know they can safely return but end up appreciating the products more than they thought. Customers keeping these products results in retailers experiencing additional sales. The inverse can be true too, though. Some customers may abuse these policies.
As most shopping within the past two years had been done online, it’s no surprise that the rate of returns jumped as high as they did. According to reports, returns have seen a 70% year-over-year increase in 2020. This is exacerbated by online shopping scams such as wardrobing and bracketing. These schemes include ordering every variation of a product just to later return it and ordering a product, using it, then returning it as new. Many retail organizations have put policies in place to avoid these schemes as they’re necessary to remain successful.
What many retailers discovered throughout these much more frequent return rates throughout these past two years is that not every return was genuine. Every so often, customers would attempt to make fraudulent purchases with hopes of returning the product to make money off of a compromised customer. Through money laundering from stolen credit cards, these customers attempted to steal money from retailers. Retailers unaware of these scams are at a major risk without the correct anti-fraud tools. With the right tools, retailers can block transactions from stolen cards and issue refunds correctly to the actual cardholders. With the right techniques, retailers can even reduce the costs they incur per return. Services offered by certified professionals are available to cater to your business whenever necessary.
Rather than leaving your retail organization compromised, consider the ways in which an anti-fraud tool provider can offer the defense necessary to protect against these attacks. To learn more about these tools in addition to the ways that returns are continuing to impact the retail industry at large, take a moment and check out the infographic that’s included alongside this post. Courtesy of Signature Payments.
