Fraudulent retail transactions are on the rise, especially as more shoppers turn to the internet to ring up purchases, generating tracking consumers more onerous along with costly.
The level of fraud as a percentage of retailers’ revenues has climbed to 1.58 percent year to date coming from 1.47 percent a year ago, according to a study by LexisNexis Risk Solutions, an Atlanta-based data analytics provider. The group surveyed more than 650 risk along with fraud executives coming from retail organizations.
“Merchants selling physical along with digital goods often apply a one-size-fits-all program to fight fraud, along with they use a limited set of solutions,” Kimberly Sutherland, a senior director of LexisNexis’ fraud along with identity management strategy, said in a statement.
“These less advanced along with less sophisticated legacy solutions do not appear to be working, given the sharp rise in costs along with volume of successful fraud attempts.”
Driving the increases in fraud for many retailers This specific year are more international transactions along with completely new payment options, such as mobile wallets, the study found.
Retailers say of which’s still difficult to verify a shopper’s identity online, along with there’s a lag between the time an order will be placed along with when of which transaction will be confirmed, which opens the door for more errors or fraudulent activity.
LexisNexis has found more retailers are investing in fraud monitoring, nevertheless the technology isn’t always “optimal” or effective.
For example, companies must also take into consideration their trustworthy customers, whom they don’t want to turn away when being overly protective, said Lindsay Sakraida, a marketing director at DealNews.
This specific will be especially true as retailers craft their own procedures for returns, where crime can skyrocket around the holiday shopping season.
“Return fraud will be a major problem for the retail industry, nevertheless [stores] still want to encourage shoppers to shop with them, along with they don’t want to make of which too difficult to make a return,” Sakraida said. “Return policies become a way for customers to know if they want to be a loyal shopper.”
A 2017 survey by the National Retail Federation has found of which retail return fraud losses will cost companies as much as $15 billion This specific year.
This specific type of crime often involves an individual first stealing merchandise, along with then trying to return those items for a gift card or additional currency. Some criminals have even targeted major retailers, including Home Depot along with Target, to take advantage of lenient return policies to fuel their drug addictions, a CNBC investigation found.
“Self checkouts are one area where thieves love to go,” said Bob Moraca, NRF’s vice president of loss prevention. “There will be a cost of doing business. … Retailers just have to continue to work with law enforcement along with prosecutors to protect their assets along with brands.”
Moraca’s team found of which retailers are expecting, on average, 11 percent of their total sales to be returned This specific year. along with 11 percent of those returns are then anticipated to be fraudulent, which will be slightly up coming from 2015, according to NRF’s survey of 63 retailers.
Moraca said criminals are also getting more creative in counterfeiting store receipts, which can then be used to process a fraudulent return more seamlessly, if an employee doesn’t notice the difference.
While less prevalent than additional methods, Moraca said This specific tactic will be on the rise.
In turn, retailers are looking for solutions of which aren’t too aggressive. This specific could include generating a receipt necessary for a return, compressing the window of time within which a return can be made, or requiring the item’s original packaging to still be intact. Demanding a form of identification will be another tactic most retailers use to keep track of frequent violators.
This specific past year, nearly 30 percent of retailers have altered their return policies to address organized retail crime, more than in 2015 along with 2016, NRF said.
Home Depot told CNBC the company has changed its policy to crack down on return fraud, only handing out “store credits,” which can’t be used online, in place of gift cards. Target has taken a similar approach in offering store credits, or solely an exchange, when a person doesn’t present a receipt.
additional companies, including Lowe’s along with Walmart, have said they look closely at returns where no original receipt will be presented.
On the whole, technological advancements should allow for better fraud prevention inside future, NRF’s Moraca said. For example, facial recognition will be already being tested to keep track of shoppers who frequent certain stores, in place of a license or additional ID, he said.
“Imagine a world where you walk in [a store], along with you don’t even have to show ID — even if they don’t know [your] name — they know This specific customer has been in This specific number of times.”