Refund scams threaten profitability

Return Receipt fraud is now one of the leading causes of fraud loss across the entire retail industry. According to the National Retail Federation’s annual Return Fraud Survey, the industry lost an estimated $2.7 billion in return scams during the 2009 holiday season, and an estimated $9.6 billion for the year. Additionally, from the NRF survey:

• More than 5% of ALL product returns are fraudulent.
• More than three quarters of the retailers surveyed said they had seen products returned which had initially been purchased with counterfeit or fraudulent payment.
• More than 40% had seen counterfeit receipts used to return products.

Employing Fraud Fighter™, a division of UVeritech, retailers have taken great strides to combat return receipt fraud. Databases and barcodes can track inventory serial numbers and relate them to specific receipts, and software can forensically audit return behavior to identify suspicious activities. However, in keeping with the “layered” fraud prevention approach Fraud Fighter™ designs and implements for our customers, proactive retailers should take additional steps to secure their stores against refund scams by taking measures that can both DETECT and DETER fraudulent returns at the point they are presented.

DETECTION LAYER can be achieved via the Fraud Fighter SafeTape line of secured register receipt tape. This patent–pending innovative product contains a “covert” security feature easily verified by store employees through the use of a security activation pen that causes the covert features to become visible. This is a very cost–effective solution to the counterfeit receipt issue.

DETERRENCE LAYER can be achieved through one of several methods used to capture personal identification information from those who return goods to the store. One very low–cost solution is to use an inkless fingerprint pad, like the Fraud Fighter Positive ID™ pad. Capturing fingerprints has shown to change criminal behavior by DETERING criminals from attempting fraud in the store location, and will also provide law enforcement with actionable evidence that can be used to both investigate and prosecute criminal cases against the culprits. A second option is to capture an image of the identification document presented at the time of the product return. Both the Fraud Fighter ID Cam and the ICV 1000 are capable of capturing images of driver licenses or other ID documents. This procedure also contributes to DETERENCE levels, and will similarly allow law enforcement to pursue criminal cases against the perpetrators.