Return fraud costs U.S. retailers billions each year. How are scammers getting away with it?
A Colorado man purchased a PlayStation 4 bundle from Walmart as a gift for his niece. Imagine his surprise when he opened the box and found two bags of rocks. Another customer had returned the box to the store before it was sold to Igor Baksht.
Denver’s ABC7 said Baksht fought with Walmart until his money was returned.
Unfortunately, Baksht’s story is not unusual. According to the National Retail Federation, holiday season return fraud alone was expected to cost retailers a whopping $3.8 billion in 2014. Overall, return fraud was projected to take a $10.9 billion chunk out of retailers’ bottom lines last year. Ouch.
The Daily Beast said it’s become impossible to turn a blind eye to return fraud.
Return fraud has been called the invisible heist — or “de-shopping.” But the increasing number of fraudsters bringing back wares to stores to make an illicit killing has become impossible to ignore.
Bob Moraca, NRF’s vice president of loss prevention, said in a statement:
Return fraud has become an unfortunate trend in retail thanks to thieves taking advantage of retailers’ return policies to benefit from the cash or store credit they don’t deserve. Additionally, many of these return fraud instances are a direct result of larger, more experienced crime rings that continue to pose serious threats to retailers’ operations and their bottom lines.
The NRF estimates that 5.5 percent of returns, or 1 in 20, are a scam. The Daily Beast said fraudsters can be creative in their methods of ripping off retailers with phony returns. It wrote:
One customer retooled a Nintendo Wii with its innards switched out for glued pennies. Another sent back a flat-screen television with a bona fide tombstone within. Another returned a printer box stuffed with a candy-filled piñata.
Many retailers have been forced to loosen their return policies in recent years in an effort to appease customers and make the return process easier, Fortune said. Unfortunately, looser policies, such as not requiring a receipt for a return, left an opening for con artists to exploit.
As a result, an increasing number of stores are now requiring that you show photo identification when trying to return merchandise, Fortune said.
I’m surprised that some retailers don’t open returned merchandise boxes to ensure that the item that was purchased is actually in the box, intact.
I recently returned a $9 gingerbread house to Walmart. When I opened the box to decorate the house with my daughter, we found it smashed to tiny pieces. The employee at Walmart’s return desk opened the box and confirmed that the house was indeed inside and was broken.
I would hope they’d do that for all returns, especially expensive items.
Were you aware that people are scamming retailers out of nearly $11 billion each year in return fraud? Share your thoughts below or on our Facebook page.