Return Fraud Plagues Retailers

A report from Statistics Canada has concluded that faudulent returns outrank credit card fraud and counterfeit currency as the most predominant form of fraud taking place in Canada.  Return scams reportedly account for 33% of all retail crimes (credit card and counterfeit cash account for 15% each).

The most popular form of return fraud is exchanging stolen merchandise for cash or store credit and most of the time these involve organized crime.  There are some opportunists out there, but generally organized crime is involved.

More complex forms of return fraud involve returning items that had been purchased with counterfeit money or returning stolen items with a counterfeit receipt.

While thieves are generally targeting stores with more lenient return policies.  It is estimated that 72% of Canadian Retailers experience some form of fraud in the last year.

Fighting Fraudulent Returns

Retailers can take steps to help deter return fraud, but the challenge is finding the balance between good customer service and fraud prevention.

Requiring a receipt for all exchanges or returns and requiring senior staff to authorize returns is a good start that should not inconvenience customers.  Some retailers have begun tracking returns by logging customer information and flagging anyone who does more than 3 returns in a set period of time.