The goTRG Fraud Survey Report: Spring 2024 provides a comprehensive overview of the state of retail return fraud and its implications for retailers. Given that return fraud is on the rise with 14% of returns being fraudulent and an associated annual cost that has ballooned to $101 billion in 2023.The survey, which gathered insights from over 400 leading U.S. retailers, delves deeper into this escalating issue. Key findings include the increasing sophistication of fraudulent schemes, with 68% of retailers reporting a growth in fraud as a significant business challenge, and 53% experiencing heightened financial losses due to return abuse.
The most common types of return fraud are the return of stolen goods (57%), wardrobing (50%), and returns made with fraudulent or stolen payment methods (42%). Retailers are combating this trend with stricter return policies and innovative measures such as 'Keep It' policies during peak seasons and Buy Online Return In Store (BORIS) strategies, which, despite encouraging in-store traffic and sales, also see higher incidences of returns abuse. Despite 90% of retailers training staff in fraud detection, the continued prevalence of return fraud calls into question the effectiveness of current training methods or the increasing prevalence of staff being compromised and recruited by Organized Retail Crime Rings via social media.
To address these challenges, 80% of retailers have adopted new strategies to deter returns abuse, including imposing fees and banning excessive returners, but these can adversely affect customer satisfaction and loyalty. A more refined approach is seen with 70% of retailers using customer profiling software to differentiate between fraudulent and legitimate customer behavior, with only 11% using third-party service providers specialized in returns and reverse logistics. The report concludes that retailers must balance the mitigation of fraud with maintaining a positive customer experience with advanced technologies and partnerships with specialized returns management service providers being key to a successful returns strategy.
