Retailers lose billions each year to fraudulent refunds. Stores keep their return policies flexible in order to be customer-friendly. This opens the door to return fraud, which drains profits right at the point of sale. Return fraud is far more common than most retailers initially think. It’s a double-edged sword for retailers. We broaden return policies to take care of customers while at the same time inadvertently inviting fraudulent refunders to cause high dollar shrink.
As a Loss Prevention expert, I’ve seen several stores suffer return shrink. I once worked in a large store that completed $480,000 in no receipt returns in only a 1 year period. Out of the $480,000, they lost close to $192,000 in one year due to fraudulent returns. The store team knew their return percent for no receipt refunds was high, but had no clue the problem was this widespread. In that location, I prosecuted multiple high dollar cases each week. The majority of them pertained to shoplifters stealing merchandise, then returning that item at a later time. The thief will then receive a gift card or cash for your merchandise they stole. Another popular method is merchandise fraudulently being swapped for used merchandise that did not belong to the store. Subjects do this so they get a store refund, but also keep the actual item that they purchased. They will return one of their own used products, with your price tag attached to it. That way the cashier will scan the tag, thinking the returned item is the one the individual purchased. Now you are stuck with merchandise that is not yours, and they again receive a gift card or cash for the return. It’s called double dipping, causing a loss each time it happens. Another type of return fraud consists of “wardrobing“. Subjects will come into your store and return items that are already worn by them. Once you notice the items are worn, the subjects have the cash and you have to mark out the item that you cannot resell. Another big loss for your store. The numbers of return fraud cases I’ve prosecuted is at least equal to if not greater than the number of traditional shoplifting cases. Luckily, there is something new that retailers can do about it. Alpha Shark tags can be placed on your merchandise in order to prevent this type of fraud. They work as a strong, visual deterrent. They are small, and fit easily on your products. The tag cannot be placed back on the product after a customer removes the tag, which puts a stop to all of the types of fraudulent refunds. The item cannot be returned unless the security tag is in place, proving that the item is indeed the same item and not used by the customer. It does not get better than this!
There are multiple types of return fraud, so as retailers we have to think smarter when it comes to this type of fraud. Alpha Shark Tags are the newest, advanced technology to stop the billions lost in refunds. A lot of retailers I’ve worked for at first didn’t know what they could do to stop this rising trend. The stores would just accept their return percent and tell their associates to “be on the lookout” for fraudulent refunds. But what are you really doing to put a stop to it? Thieves know the ins and out of the system, so simply being on the lookout is not enough in this day and age. Investing in Alpha Shark Tags are the easiest way to stop the frustration of losing money daily due to fraudulent refunds.
For more information about Return Fraud, contact us or call 1.770.426.0547.