Three Return Scams Retailers Will Be Looking For This Holiday Season

We’ve barely waded into the hectic holiday shopping season, but retailers are already preparing for a rush of returns after the big day — and the scams that inevitably go along with them. 

The Chicago Tribune reports that retailers across the country have begun combatting fast-growing return fraud that accounted for nearly $2 billion in losses last holiday season.

According to the National Retail Federation, return fraud, which cost retailers an estimated $15 billion in 2015, doesn’t just hurt the bottom line for companies but for customers, as well.

When a retailer loses money through returns, the state — it if includes sales tax — loses sale tax revenue, putting more of a burden on taxpayers. Additionally, as we’ve covered before, loss to retailers is often passed along to customers in the form of higher priced items.

This year, retailers will be on the lookout for several return fraud schemes, the NRF reports, citing a survey of 62 major retail companies last year.

The first scam — dubbed a “hot exchange” — occurs when a thief steals an item and then brings it back to return for cash.

Similarly, the “renting” or “wardrobing” scam involves a customer purchasing a product — dress, jewelry, or other apparel item — wearing it and then returning it soon after for a full refund. Calling this a “scam” may be a stretch, legally speaking. While wardrobing may be unfair to the retailer, it’s not always illegal or even against some stores’ policies. Critics contend that if apparel retailers want to curb this practice, they can employ stricter return policies.

Another scam, that we’ve reported on multiple times, involves thieves working with someone on the inside — “colluding“. For example, an employee will assist a fraudster — or defraud their own employer — generally by falsifying a return.

According to NRF, between 72% and 90% of retailers have been affected by one of these schemes at some point in 2015.

The Tribune reports that to combat these types of fraud, retailers have been raising their refund requirements for holiday purchases. For example, retailers may now require a receipt or personal identification in order to process a return.

Others have mandated that seasonal or new workers be restricted in making refunds, instead requiring a supervisor to finish the transaction.

Scam Alert: This holiday, retailers expect many unhappy returns [The Chicago Tribune]