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How To Protect Your Retail Business From Return Fraud

 August 25, 2014  /  Comments Off on How To Protect Your Retail Business From Return Fraud

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Return fraud is a serious concern for many retail businesses. It generally involves defrauding a business through the returns process. Retail enterprises lose large sums of money through this crime each year. Return fraud can take different forms as explained in the list below.

  • Returning stolen merchandise:  

Thisinvolvesshoplifting with the intension of returning goods for full refunds.

  • Wardrobing:

In this fraud, customers purchase an item with the intent of returning it after short-term use. For instance, buying a dress for a special occasion and then returning it.

  • Receipt Fraud:

Also known as cross-retailer return fraud. This happens when customers use stolen, reused or falsified receipts to return goods bought from a different store at a cheaper price with the intension of profiting from the difference.

  • Switch fraud:

Customersengaged in this practice purchase an item in perfect condition then switch it with an identical yet defective one to qualify for refunds.

  • Employee fraud:

Thisnormally entails collaborating with shoplifters to return merchandise for full retail price.

How To Protect Your Retail Business From Return Fraud

With all of these threats, how does a retail business protect itself from return fraud? Fortunately, there are several ways to fraud-proof your business. Here are three effective ways to achieve this goal.

Invest in a POS System

Investing in a smart point of sale system is one of the best ways to detect, minimize and possibly stop all forms of return fraud. A good point of sale software can achieve these goals in several ways. For starters, you can use your retail software to track questionable returns. This will be possible since most POS applications track return statistics. What’s more, you can use your reporting system to track down the number of retunes that each sales attendant takes.

If you find that a particular associate has an unusually high returns rate, you might want to inspect this information closely to ensure that he or she is not involved in employee fraud.

Only Authorized Employees Should Process Returns

Return fraud that involves employees can be highly sophisticated and difficult to detect if you leave loopholes in your business system. To thwart employee fraud, only have authorized staff handle and process returns. You can achieve this easily through a point of sale system that assigns security levels to various to staff members who are responsible for handling transactions.

This feature will also allow you to limit the information that employees have access to, thus eliminating chances of record manipulation to cover fraud.

Create a Smart Return Policy

Every business that sells goods should have a smart return policy. For instance, you can make it a standard to reject refund claims when a customer does not have a valid receipt. If items show signs of usage as well, you can refute returns. It may also be helpful to impose time restrictions such as a 30-day limit on all returns. This will allow enough time to run investigations and possibly detect fraudulent returns.

With those few tips, you can secure your business and protect it from return fraud.

For more than 5 years, Arthur Stone has been running his retail business in the UK. He loves to share useful business related information through writing. Visit I-POS to learn more about the smart business application Arthur uses to run his business while keeping return fraud rates at zero percent.

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  • Published: 3 years ago on August 25, 2014
  • Last Modified: August 25, 2014 @ 6:26 am
  • Filed Under: Technology

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