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Nine Tactics Consumers Use to Make Fraudulent Returns


By Tom Rittman,

The holiday season is often considered the most wonderful time of year, but as retail sales soar, so do returns. And don’t be fooled by a seemingly valid receipt. Savvy fraudsters know how to prey on holiday cheer costing retailers thousands of dollars in fraudulent returns and exchanges.

The printed receipt is often the primary credential that confirms a return transaction’s integrity, but it doesn’t eliminate fraud. In fact, even the best POS systems with centralized receipt databases are vulnerable to improper use of receipts that appear legitimate. Here are nine ways consumers cheat with a seemingly valid receipt that retailers need to watch out for this holiday shopping season:

1. Renting/Wardrobing: Buying merchandise for short-term use with intent to return, such as video cameras for weddings, big-screen TVs for a Super Bowl game, or a dress for a special occasion is a form of fraud. Return abuse — excessive violation of a retailer’s return policies — is often viewed subjectively. No one wants to deter a good shopper, but at some point a person’s returns overwhelm the value of his/her purchases and send that customer into a negative margin situation.

2. Shoplifting with a receipt: Many thieves will shoplift with intent to return for full retail price. The classic example is when the fraudster makes a purchase, takes the item to his/her car, returns to the store immediately with receipt in hand, selects another of the same item from the shelf and proceeds to the return counter claiming he/she “changed his/her mind.” The receipt is valid and the return looks legitimate, but you’ve essentially paid this person for keeping your merchandise.

3. Returning old/damaged merchandise: The process for consumers is simple: buy to replace old/broken item, keep new, return old. This system uses the retailer to keep personal items “up-to-date” at the retailer’s cost.

4. Shoplisting: Also known as “shoplifting using found receipts,” fraudsters shoplist by using a discarded or stolen valid receipt as a shopping list to find items in a retail store and return them for a refund.

5. Employee theft: Associates can usually find a valid receipt in the POS system to return items.

6. Reselling: Another simple process for fraudsters: purchase, sell elsewhere, return unsold. In this case, the retailer is being used for free inventory.

7. Tender liquidation: Consumers may buy on one form of tender (maybe even a stolen credit card) and exchange once or several times to switch to merchandise credit, which becomes saleable in an online marketplace. They also may return with small additional cash outlay to finally return products for cash.

8. Price Arbitrage: This process consists of buying differently priced, similar-looking items and returning the cheaper one as the expensive item.

9. Fake receipts: There are fake receipt websites that thieves can use to duplicate or forge receipts, costing retailers thousands of dollars.

With some strategic planning prior to the holiday shopping season, retailers can effectively identify and reduce fraudulent returns and exchanges to help increase their holiday bottom line. Consider a return-authorization solution which enables retailers to rely on objective, verifiable data to determine whether a return is valid, rather than relying on subjective observations and guesswork by sales clerks. This objectivity approves all legitimate returns and ensures that only those with highly suspect return-and-exchange behavior are affected.

Tom Rittman is VP of marketing for The Retail Equation, a leader in optimizing retailers’ revenue and margin by shaping behavior in every customer transaction. The company’s solutions use predictive analytics to turn each individual shopper visit into a more profitable experience. For more information, visit

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