Common Return Fraud TacticsHave a Return Policy? Here Are All the Ways Fraudsters Are Getting Around It
Common Return Fraud Tactics That Scammers Use to Steal Your Revenue
Having a customer-friendly return policy is a positive thing.
For starters, it’s a sign that you stand behind your products and value your customers’ satisfaction. It’s also a tool that can help you avoid chargebacks from buyers who might’ve otherwise called their bank out of frustration or convenience.
But, for a growing number of scammers, your goodwill is a target for exploitation. From returning stolen goods for cash to sending back empty boxes, return fraudsters have developed a whole playbook of scams, all designed to turn your policies against you.
In this chapter, let’s examine a few of the most common return fraud schemes so that you know what to look for.
Can Shoppers Commit Return Fraud by Accident?
Yes. I wanna preface this by saying that it’s possible to commit return fraud innocently. And, we should probably talk about this before going any further.
A customer may not have read your return policy, or they may return the item to the wrong store by accident.
To illustrate, think about retailers that carry similar products; take home improvement suppliers like Lowes, Home Depot, and Ace Hardware, for example. These stores stock many of the same items. Without a receipt, it may be hard to prove someone didn’t purchase the item from one or another of those retailers.
But, there are also a lot of deliberate return fraud tactics that scammers can use, too. While genuine misunderstandings tend to be isolate incidents, deliberate return fraud is part of a larger pattern. I’m going to outline a few examples in the next section.
Return fraud is a major threat facing eCommerce merchants.
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Top 7 Most-Common Return Fraud Tactics
There are a number of tricks that scam buyers can use to intentionally commit theft through your return process. A few of the most common tactics that these bad actors use include:
Some scammers attempt to rationalize their behavior by claiming that return fraud is a victimless crime. To be clear, this is patently false. Fraudsters who perpetrate this type of scam are enriching themselves at the expense of merchants. In turn, those merchants incur unnecessary interchange fees, lose out on revenue, and suffer from the added burden of handling returned inventory.
If caught, return fraud scammers may be blacklisted from stores. Depending on the value of the fraud and the jurisdiction the fraudster is in, they may also face civil or criminal penalties that range in severity from fines or community service up to probation or imprisonment.
When Return Scammers Get Organized
Return fraud scams are not solely practiced by individuals. Large, multinational crime rings may be behind an attack, for example.
The same applies to your competition, who might use return fraud as a sabotage tactic. One may purchase a large amount of a product in your inventory, then wait for you to restock. The competitor then sends everything back and demands a refund, meaning you’re now stuck with much more inventory than you anticipated.
Many of these tricks are harder to pull off in a physical store thanks to the use of barcodes on products and receipts. That’s why return fraud is even more of a threat for eCommerce merchants.
