NRF: Return fraud to cost retailers $2.9 billion this holiday season

Washington, D.C. -- Retailers will lose an estimated $8.9 billion to return fraud this year, and $2.9 billion during the holiday season alone, according to the National Retail Federation’s 2012 Return Fraud Survey. Overall, retailers estimate 4.6% of holiday returns are fraudulent.



According to the survey, nearly all (96.5%) retailers polled say they have experienced the return of stolen merchandise in the last year, and 84.2% report that they have experienced the return of merchandise purchased on fraudulent or stolen tender. Wardrobing – the return of used, non-defective merchandise like special occasion apparel and certain electronics – is a huge issue, with nearly two-thirds (64.9%) saying they have been victims of this activity within the last year.



Additionally, 45.6% have found criminals using counterfeit receipts to return merchandise. Employee return fraud or collusion with external sources is also a big problem for retailers: eight in 10 (80.7%) report they’ve dealt with this issue in the past year.



For the first time NRF asked loss-prevention executives about return fraud with the use of e-receipts, and nearly two in 10 (19.3%) say they have dealt with e-receipt return fraud. As online sales continue to grow, 86% say they allow customers to return merchandise purchased online in their stores, and retailers estimate 3.9% of those returns are fraudulent.



When it comes to their company’s holiday return policy, most respondents (83.1%) say their return policies will remain unchanged compared to last holiday season, and 10.2% say they will actually loosen their policies to help ease the process for gift givers and recipients.



The problem of return fraud has forced many retailers to adopt policies which require customers returning merchandise to show identification. Retailers estimate that 13.4% of the returns made throughout the year without a receipt are fraudulent. As a result, nearly three-quarters (73.2%) now require customers returning items without a receipt to show identification. Just seven percent (7.1%) of retailers require customers making returns with a receipt to show ID, and more than one-quarter (26.8%) say they do not require identification during the return process.