Retailers view return fraud with urgency

Return fraud is a pervasive issue in retail.

New data reveals that retailers have major concerns regarding fraudulent returns — and with good reason.

Eighty-one percent of respondents said that return abuse is a growing issue in the industry, and 70% reported fraudulent returns at their store in the last three months,according to a new survey of 300 retail frontline managers from frontline enablement solution provider Axonify. 

Almost two-in-three (64%) respondents said their staff has seen a growing increase in return fraud in the last 30 days, while 36% are encountering fraudulent returns on a weekly basis and 18% deal with fraudulent returns daily.

The most common type of return fraud respondents are experiencing are returning stolen items (27%), returning used items (20%), and receipt fraud (also 20%). More than four-in-10 (44%) respondents believe that fraudulent returns significantly or very significantly impact their store’s revenue.

Frontline staff poses challenges to fraud prevention

Many respondents said that a lack of frontline training and policies directly impacts their ability to understand, detect and handle return fraud. One in three said their staff isn’t properly trained on how to detect or prevent fraud and 28% said their staff isn’t trained on what to do after fraudulent returns occur. 

Other notable staff- and training-related findings include:  

  • Two-thirds of respondents said their staff is concerned about taking any action against fraudulent returns due to the potential of customer violence or escalated situations, while 27% believed fear of customer violence is their staff’s biggest challenge in managing return fraud.
  • Nearly half of respondents report that they have had workers quit due to concerns around safety.
  • Close to half (48%) of managers said their company hasn’t updated its policies or training around fraudulent returns in a year or longer.
  • Three-in-10 (29%) respondents said that understanding and identifying instances of fraud is their staff’s biggest challenge in managing fraudulent returns, while 23% said their store has been penalized or reprimanded for incorrectly spotting a fraudulent return.
  • Close to three-in-10 (28%) respondents said their company has no store policies or training around fraudulent returns, and 45% said their company has not increased training this year for employees around handling returns despite the increase in fraudulent returns. 
  • Only 16% of respondents said that their company’s current return policies and training are "very effective" in preventing fraud.

In a similar survey of retail frontline managers Axonify conducted in October 2023, 85% of respondents said they believed theft and customer violence are growing issues in the industry.

"The returns picture is changing across all of retail," said Richia McCutcheon, senior brand marketing manager, Axonify. "Although it appears returns rates are dropping, fraud and abuse continue to grow as shoppers take advantage of policy, process, and system gaps within retailers." 

In February 2024, Axonify surveyed 300 retail frontline managers above the age of 18 in the U.S. using the online insights platform Pollfish. Respondents work for companies with more than 200 employees.

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