Holiday Season Return Fraud on the Rise, says NRF

Loss prevention executives anticipate that nearly nine percent (8.93) of holiday returns this year will be fraudulent. This figure is a slight increase from the 8.67 percent of last year.

According to the National Retail Federation’s (NRF) second annual Return Fraud Survey, return fraud will cost retailers an estimated $3.7 billion this holiday season, up from $3.5 billion in 2006. For the year, return fraud damages to retailers will total $10.8 billion.

During the holidays, retailers tend to relax their return policies to accommodate holiday shoppers (35 percent stated they would do this); usually this means extending the amount of time in which returns can be made, as well as being more flexible to customers without a receipt.

“Many retailers offer more lenient return policies during the holiday season to accommodate honest customers,” said NRF VP Loss Prevention Joseph LaRocca . “But unfortunately, retailers must constantly balance the desire to take care of their customers with the undisputed fact that criminals are constantly looking to take advantage of return policies.”

According to the survey, nine out of ten retailers (92 percent) say they have had stolen merchandise returned to stores within the past year. Retailers also report being victimized by returns of merchandise originally purchased with fraudulent or stolen tender (83 percent), as well as returns using counterfeit receipts (51 percent).

Concern about the growing practice of “wardrobing” also caught the NRF’s attention – wardrobing refers to the practice of returning non-defective merchandise to the store after wearing it. Nearly two-thirds of retailers (66.1 percent) have been victims of this practice in the past year, up from 56 percent last year.

In general, retailers are not planning any drastic shifts in holiday return policies this year. Four out of five retailers (81.4 percent) plan to implement the same holiday return policies as last year, while 15.3 percent will tighten and 3.4 percent will loosen their policies.