Phony returns can cost businesses and shoppers

Phony returns can cost businesses and shoppers

In the crowd of shoppers back at the mall today, there may also be a crime that’s costing retailers more money and ultimately consumers.

Return fraud happens all year long, but some people can see the time after Christmas as an opportunity to take advantage of crowds and businesses.

Like millions of other shoppers, Ruth Wood found herself back at the store the day after Christmas. She had to return a couple shirts that didn’t fit her grandchildren.

While she had her receipt and the shirts there was a hiccup along the way.

“The computer wasn’t reading it right but they straightened it out so it come the way it should,” explained Wood.

But among legitimate returns like Ruth’s, the National Retail Federation’s latest return fraud survey estimated 5.5 percent of holiday returns are fraudulent.

“Sometimes people take this opportunity to, when there’s a lot of returns, return stolen merchandise that someone has shoplifted; or return merchandise purchased with stolen credit cards,” said Moses Altsech a marketing professor at Edgewood College.

Altsech said there is a growing trend of people returning a used item, an act called “wardrobing.”

“This costs stores a lot of money and a lot of times consumers think of it as a victimless crime, but it really adds up and when stores suffer financially guess who pays the price. Ultimately it’s all the rest of us,” Altsech said.

It’s estimated companies will lose nearly $3.8 billion dollars because of return fraud during the holiday season alone.

Jeff McEathron, the store manager at Madison’s west side Boston Store, said it’s not a big issue there but they have seen it happen.

“We take care of the customer. If the customer doesn’t have a receipt we ask for photo ID, and they get an in-store credit,” McEathron said about their store policy.    

Other ways stores are tightening up their policies include attaching large tags to the outside of garments and only allowing returns if the tag is still there.

Also, some retailers and organizations keep track of a customer’s return history, and depending on their behavior they may be blacklisted from making returns.

The tough part for businesses can come to balancing good customer service and weeding out the fraud.