How Retail Fraudsters Are Creating Challenges in the Returns Process
Return fraud is becoming a growing concern for retailers, as the aftermath of the 2023 holiday season projected that fraudulent returns would account for a staggering $24.5 billion out of the total $148 billion worth of returns, according to a report by CNBC. This surge in fraudulent returns is largely attributed to the rise of online shopping, which has made it easier for individuals to take advantage of lenient return policies.
Many retailers have implemented “keep it” policies, where customers are allowed to keep low-cost items or items that do not make economic sense to return, while still receiving a refund. However, this practice has opened the door for fraudulent shoppers to exploit the system. Some individuals lodge complaints about merchandise never being received, while others return stolen goods or send back entirely different items, as highlighted in the CNBC report.
Major retailers such as Walmart and Amazon have suffered significant financial losses due to fraudulent returns. In some cases, crime rings have collaborated to falsely initiate refunds or returns on completed online orders, costing these retailers millions of dollars. As a result, many retailers have started cracking down on their return policies. Returns management platform goTRG’s 2023 holiday forecast revealed that a growing number of retailers were planning to shorten their return windows and even implement return fees for the first time in a year. These actions are driven by the need for retailers to maintain profitability and offer competitive prices.
However, experts believe that strict return policies may not be a long-term solution. Sucharita Kodali, an analyst interviewed by NPR, stated that she does not see strict return policies lasting for an extended period. She believes that return policies tend to swing back and forth like a pendulum. While it may be tempting for retailers to make returns harder on shoppers to combat fraud, it is likely that they will eventually find a balance between customer satisfaction and fraud prevention.
It is essential for consumers to stay informed about the return guidelines and policies of major retailers. Policies and procedures can vary significantly from one store to another, including the length of time given to make a return. For instance, Costco allows shoppers to return items at any time, while Target Red Card holders are given an additional 30 days on top of the regular return policy. Nordstrom, on the other hand, has no time limits but only accepts returns on a case-by-case basis.
As the retail industry continues to grapple with the challenges of return fraud, it is crucial for both retailers and consumers to find a balance that protects against fraudulent activity while still maintaining customer satisfaction. The evolution of return policies will likely continue as retailers adapt to new technologies and strategies to combat fraud in the ever-changing landscape of retail.
