Balance, how do you achieve it as a retailer especially when it comes to return fraud? You have to keep your customers happy and coming back to shop but you also have to make sure you aren’t taking a financial drubbing in the process. Recently I purchased some clothing for my wife as a gift and as I am prone to doing I made several errors. First, I forgot that clothing sizes do not always agree from one brand to another. Apparently you have to unfold and look at the items individually. Who knew? Oh, stretchy rayon fabric, another no-no as the sizes are very deceptive. Scoop neck, V-neck, T-neck, three-quarter length sleeves, material is too thin you can see through it, cowl neck, the list of what I can and can’t buy is too long to remember. Perhaps a gift card is in fact my safest choice. On the other hand I did avoid my usual error in clothing purchases. “Honey, you got me two blue shirts and you gave me the same thing last year.” Nope, no duplicate clothing this time, just the wrong fabric and sizes. I do confess, I try but to be fair my wife has pointed out to me what to look for and I just simply forget. Which brings me to my point, I forget and she has to take the items back and exchange them or get a gift card. I DO remember to keep my receipts and all of the tags I have learned that in my retail work over the past 25+ years. We return the items and my wife finds what she really wants. Honest returns with receipts and tags. Guess what? There are those who commit return fraud and also have all of their receipts and tags and they engage in what is called wardrobing.
Wardrobing may sound innocuous and non-criminal unlike return fraud but the hard reality is it can be worse than regular fraud. Often fraud involves no-receipt returns, merchandise that does not match what is on a receipt, the wrong tags on an item someone is trying to slip past the customer service employee or multiple exchanges in an attempt to get cash back. When someone is wardrobing they are buying clothing with the intent of returning them after using the garments one or twice. It is sort of like renting an item without ever paying anything because the clothes are worn and then returned with the tags attached and the patron has the receipt. This person appears to be following store return policies so in their mind they are not doing anything wrong. The problem is that the “customer” never intended to make the purchase permanent. Store personnel may have wasted a significant amount of time assisting this person. If someone works on commission they lose that commission with the return of the merchandise. Sometimes the items have to be cleaned upon return due to odors or stains. Even when cleaned sometimes garments have to be marked down or possibly tossed out and the item marked out of stock. Both situations cost the store money. Is there a way to balance returns from honest customers like me and those who would intentionally abuse store return policies? What if I were to lose a receipt would you want to refuse MY return? Wardrobing tags on your products can resolve the issue.
Bill Bregar is the Chief Executive Officer of Loss Prevention Systems Inc. and he gets it. He knows you can’t ostracize one loyal group due to the return fraud committed through the act of wardrobing by a small percentage of people. In order to maintain a balance that will keep your customers happy and send fraudulent customers elsewhere, Bill and the folks at LPSI suggest using wardrobing tags on all of your clothes. These are one-time use only, bright red tags that are pinned to clothing where they would be visible if someone wore the item out somewhere. The tags are removed by the customer after the purchase and it is determined they want to keep the item. They still allow clothing to be tried on but no one would wear the item in public with the tag on it. If the item needs to be returned, the tag has to be attached and all receipts and labels brought with it.
Return Fraud is fraud and nothing else. It isn’t harmless and it could be costing your store a bundle of money each year. Your good customers deserve your respect and trust. Balance the good against the bad with wardrobing tags and stop losing money to fraud.
Return Fraud is important and we can help you with it. Call 1.770.426.0547 and let’s talk.
Oddly enough signs of return fraud and wardrobing can be all around you when you go shopping and you can see it if you know what you are looking for. My wife and I both have backgrounds in retail sales. I have been in it for approximately 27 or so years, my wife was in sales and comparison shopping for around 15 years. Recently we were out clothing shopping and she stopped me and pointed out a dress that was hanging up on a rack. She said that someone had worn it out somewhere and returned it. Since her experience was in department store clothing sales and jewelry I believed her but I wanted to look a bit closer. Sure enough, a little bit of makeup was around the neckline and the dress looked wrinkled compared to the others. Despite this, the retailer kept it at the same price as the others and I thought this was silly. If I was the customer I would just take one that was in better condition. Why buy a dress in this condition? Walking through another store looking for shoes for our daughter we thought we found a pair. My wife stopped me from selecting them, she said they had been worn and returned. Sure enough I turned them over and there was dirt in the grooves of the sole and the inside of the shoe looked a bit dirty. We put the shoes back and had to go somewhere else to look for shoes for our daughter. Wardrobing costs stores in lost sales and lost profit margin. It can be prevented but it requires a firm return policy and the use of Shark Tags.
Wardrobing is not a common word but it is a form of return fraud and can be hard to defend against because it incorporates a legitimate purchase and appears to follow store return policies. Unlike other return fraud that can be caused by the theft of merchandise and an attempt to return it without a receipt. A person who is wardrobing purchases a clothing item and carefully hides or removes the manufacturer tags. They do not intend to keep the merchandise rather they buy to wear it a time or two and willfully return the item afterwards. All tags are put back, reattached or unhidden and the receipt is properly retained. A couple of issues are involved. Often the merchandise has stains (as my wife and I encountered), the items may have body, food or other odors clinging to it, a salesperson may lose commission when the clothes are returned and the store may have to mark the item down or out of stock entirely. It is not a victimless crime but it falls into a gray area that makes it difficult, if not impossible to prosecute.
The staff of Loss Prevention Systems Inc. knows that return fraud can make a significant dent in a retailer’s profits and their solution to the problem requires only the use of Shark Tags on all clothing. A Shark Tag is a one-time use bright red tag that is pinned to an item. The tag is to be placed where it will show prominently if the garment is worn in public. Because the tag will attract attention and cannot be reattached once removed, people who engage in wardrobing won’t buy clothes when Shark Tags are used by retailers. The key to making the use of the tags truly impactful is a store manager who requires ALL clothing to be tagged and adamantly refuses to accept any clothing return in which a tag has been removed. When properly applied and return policies enforced Shark Tags will cut down fraudulent returns and help stores improve profitability. It will also ensure that the clothes presented to customers like my wife and me, will be items we want to purchase…NEW!
Don’t get stung twice by the people who will buy your merchandise, wear it and return it. When you return the money for clothing someone had no intention of keeping and then you have to mark it down in order to sell it you are getting burned twice. Let Loss Prevention Systems Inc. help you stop being the victim of fraudulent activity and improve sales.
Need information on Wardrobing? Give us a call at 1.770.426.0547 now.
Return Fraud is a common problem for retailers and often it is difficult to distinguish a fraudulent return from a legitimate return. Finding methods to reduce the risk of a fraudulent return can be even trickier. Those who commit return fraud often use the same reasons for a refund that honest shoppers use for their refunds and exchanges. Here is a list of the most common reasons for merchandise returns from https://chargebacks911.com/knowledge-base/9-reasons-why-consumers-return-products/ chargebacks911.com:
- The customer bought the wrong item
- The product is no longer needed
- The product did not match its description
- The customer wasn’t familiar with the product
- A gift purchase was incorrect
- The customer didn’t want the item
- The product was damaged upon arrival
- The merchant shipped the wrong item
- ***The customer engages in wardrobing
Reasons 1 through 8 are understandable, I have had to return items for some of these reasons and working in retail I have assisted customers by ordering something for them through our warehouse. I have had customers who received the wrong item even when I correctly input the information in the computer, it happens from time to time. I found it interesting that the number 9 reason on their list was wardrobing. This is one of the most difficult forms of fraud to combat because reasons 1 through 8 are frequently used to get away with reason 9. I will go into more detail on it in a moment but I want to assure you that wardrobing CAN be prevented by using Shark Tags.
This would be a good time for me to clarify what wardrobing is for readers who are not familiar with the term even if they are familiar with the practice. Have you ever had a customer bring in an article of clothing for a return a day or two after they purchased it? They probably had the receipt, the manufacturer labels were intact and hanging from the garment and they may tell you one of the excuses I listed above. You may have been suspicious of the return because the clothing smelled like it had perfume or other odors on it such as food. There may even be a little stain somewhere and the customer stated that it was there already and they must have missed it when they bought the item. Everything is in line with your store policies so you give the refund to keep the customer happy. You may have to damage the product out of stock and try to get some vendor credit back but you still lose money. What you didn’t know was that the customer had worn the item to a party the night before and taped the tags inside a sleeve or down the neck so others wouldn’t see them. You didn’t know the customer had no intention of keeping the items they just wanted to appear to have a new outfit. You are the victim of wardrobing. Shark Tags prevent this activity because they are attached to clothing in a highly visible place and have to be removed by the customer when the customer gets the item home and decides to keep it. Stores using the Shark Tag make policies that clearly let consumers know that no refunds are given for merchandise which has had a Tag removed. Because they are red the tags are going to stand out like a sore thumb if someone were to attempt to wear a garment with the tag attached. If a shopper needs to make a return for reasons 1 through 8 and the tag is intact you can be certain you are not the victim of this type of return fraud.
Every retailer wants to provide a good customer service experience and sometimes that means the return policy has to be a bit on the lenient side. Allowances must be made for purchasing errors, poor gift choices or products not meeting buyer expectations. On the other hand that does not mean that store owners need to go so far in their leniency that they are being taken advantage of and becoming victims of return fraud. Retail anti-theft devices can help prevent fraudulent returns due to theft and Shark Tags can prevent fraud due to customers taking advantage of refund policies. Help keep your shoppers happy by keeping prices lower when you don’t have to be concerned marking up products to offset costs due to fraud. Use Shark Tags and stop the bad guys from eating up your profits.
For more information about wardrobing, contact us or call 1.770.426.0547
There are different times of the year when people have a tendency to purchase an item to use for a brief period of use and return it. When our area experienced Hurricane Matthew, people purchased power generators and when the power was restored they were taking them back to hardware stores for refunds. This might be good for the people who want one at a discounted price but for the stores that sold them it can be cause for a financial loss, depending on the condition of the unit when it was returned. For the first few years I worked for a big box retailer we sold lawn mowers. As the end of summer neared we would have a number of them returned (within the return date cut-off) and the customer would tell us how it no longer worked. A look at the machine often explained a lot about why it no longer worked. Swim suits would be returned by customers who had clearly worn them either for the summer or for the time they were on vacation. Proms were a notorious time for what is referred to as wardrobing. Our store didn’t sell tuxedos but we did sell prom dresses and you could always be ready to take several back that had obviously been worn but were within the store’s return policy guidelines. How about Halloween and all of those costumes our store sold? You guessed it we always had a number of them returned AFTER the Great Pumpkin failed to make another appearance. So what is the point of all these different returns? They are forms of refund fraud, but fraud that was in large part empowered by our own company policies.
One thing I want to quickly mention is that I referenced wardrobing above. Some of you may not be familiar with this type of fraud so let me describe it. Wardrobing is a form of return fraud that makes it appear the customer is following a store’s own policies but they twist those policies. Where it is expected that a piece of clothing would be returned if it did not fit, had a defect or in the event it was a gift that was not well-received, those committing this fraud disregard that aspect of the policy. These people wear the item(s) intentionally, going out to parties or events appearing to have a new outfit and then return the merchandise within a few days. Frequently the clothing has smells that have permeated them and/or stains that have marred them. Unfortunately many retailers have loosened refund policies to the point that all they require are the tags and a receipt (and sometimes even the receipt isn’t required).
Eventually our business did tighten up policies on some things to prevent return fraud and in some instances we stopped carrying a specific line of merchandise. For example, the lawn mower issue became a big enough problem in terms of non-resalable merchandise being returned under the 90 day return policy that the company simply stopped selling them. Seasonal merchandise such as Christmas trees and Halloween costumes were limited in how much they could be returned for after the date of the holiday. Some items that seemed like they should be able to be turned down because they had obviously been worn such as bathing suits were still taken back. Often managers were afraid to refuse a refund because they didn’t want a complaint called in to company headquarters and sent down the chain to the district manager.
Was the best solution to a refund abuse problem to end the sale of a product line? I’m not sure about that, I didn’t have company data to look at regarding the P and L on the lawnmowers. If a business wants to impact return fraud, without hurting customer service tightening up return policies a little bit can be helpful. Another solution for clothing stores would be to use wardrobing tags to prevent customers from wearing an item and returning it. These are red tags that are pinned where they would be seen if the item is worn in public which would be rather embarrassing. The tag has to be cut off by the purchaser when they decide to keep the item and once it is removed the store policy dictates the item cannot be returned. Think about what that would do to help your profit margin while still maintaining a customer friendly environment.
Before you make a move that would impact the variety of items your store carries or drastically restrict return policies. Look for the simple things you can do to keep clients happy and not take a hit on your bottom line. Wardrobing tags may be one solution for you to consider.
Need information on wardrobing? Give us a call at 1.770.426.0547 now.
As a Retail Loss Prevention Manager I remember getting frustrated at the growing trend I was seeing over the years of people returning merchandise without receipts and we stopped issuing cash back or credit card credit and started giving refunds back in the form of a store credit or gift card. I wanted to see more even exchanges for no-receipt refunds. The concept behind the gift card issuance as I understood it was, if we give a gift card we are keeping the money in the store so we really don’t lose anything. On the surface it sounds right. The person committing the fraud can only use the store gift card in our stores so I guess it really does stay in the store. Then I started finding that those committing return fraud were turning right around and attempting to sell the gift cards to customer in the parking lot or in the store. We would chase them off letting them know we had a no-solicitation policy. That worked for a bit and then we found out through an apprehended shoplifter that he was returning stolen merchandise, getting gift cards as a refund and then taking the gift cards to local pawn shops and selling them. Added to the mess of fraudulent returns were those who engaged in wardrobing. Their returns were more complicated because while fraudulent they didn’t meet the criteria of fraud for any type of prosecution.
What is wardrobing you may ask? It is a type of return fraud when the person intentionally buys an item to wear once or twice and then return for a full refund. The customer makes the purchase, keeps the tags on the clothing by hiding them and of course keeps the receipt. They may also carefully remove tags and replace them when they are ready to take the garments back to the store. The merchandise is worn to dinner, an event or party and it appears the person has a new addition to their clothing repertoire. Rather than keep the clothes and continue to wear them in the future they go back to the store for a full refund. Making matters worse for the retailer is that many times the clothing being returned by a wardrobing customer is that the merchandise has odors from perfume, cologne, food or cigarettes or there may be make-up stains or food stains.
As gift cards have become a more popular form of credit for retailers to avoid the “incentive” of giving cash back for fraudulent transactions the need for selling the cards on the street or in pawn shops has been eliminated. There are now online web sites that will purchase gift cards from people. One web site claims a gift card seller can get up to 92% of the value of a gift card. As I perused the site I found I could buy a $100 CVS gift card for $90 and another website offered a $25 American Outfitters gift card for $19. I found that the website tells a seller that a credit card has to be on file so they will charge it if it is found a gift card was obtained through fraudulent or illegal means. What was not clear to me is how they make this determination? While there are some gift cards I was able to put a stop on because I could prove they were obtained through fraudulent means, such as the use of a stolen credit card or stolen checks, those situations were the exception. I don’t know how or if the site can determine gift cards were obtained through return fraud.
By the way, if someone is committing wardrobing fraud in most cases they don’t worry about getting the gift card. They are receiving cash back because they have all of the proper tags and receipts. There may be a few situations where they receive the gift card because of excessive wear and tear on the garment but often they raise their voices and create a scene to get their way. In part 2 of this article I will discuss how retailers can deal with wardrobing versus other types of fraud.
Get more information on return fraud contact us or call 1.770.426.0547 today.