Post-holiday returns include the return of merchandise that
was never bought in the first place, or was in fact worn and then returned—and
the costs are substantial. Holiday return fraud is expected to cost retailers
$2.2 billion, up from approximately $1.9 billion last year. Retailers estimate
that 3.5% of their holiday returns this year will be fraudulent, up slightly
from last year’s estimated total, according to the National Retail Federation’s
latest Return Fraud Survey.
Retailers predict that 8% of total retail sales will be lost
to total annual returns, estimated at $260.5 billion. The amount of annual
returns expected to be fraudulent is estimated at a cool $9.1 billion.
One problem stands out as the biggest type of return fraud:
nine in 10 retailers surveyed said they have had people return stolen
merchandise, similar to last year. Wardrobing, or the return of used,
non-defective merchandise, also presents a unique challenge for retailers each
year: three-quarters (73%) said they experienced wardrobing in the past year,
on par with the previous year.
Return fraud in 2015 seemed to be dipping, with the return of
merchandise bought using “fraudulent tender” at 76% and return fraud made by
known organized retail crime groups at 71%. Return fraud using electronic
receipts nearly doubled, however, from 18% in 2014, to 34%.
A majority of retailers surveyed (77%) said they their
employees took part in return fraud or colluded with those outside the
organization. Retailers estimate that 10% of returns made without a receipt are
fraudulent, up from an estimated 5% last year. Just 1% of purchases made online
and returned to stores are suspected to be fraudulent.
Other findings of the report are:
- Three in 10 surveyed said they saw more fraudulent purchases
made with cash, while six in 10 saw more use of gift card/merchandise credit
More than eight in 10 retailers surveyed said
they require ID when making a return without a receipt, up from 71% last year.