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Return fraud will cost retailers $2.9 billion this holiday season

Retailers will lose an estimated $8.9 billion to return fraud this year, and $2.9 billion during the holiday season alone, according to the National Retail Federation's 2012 Return Fraud Survey.

Return fraud costs retailers billions of dollars every year in the form of criminals who return stolen merchandise, use counterfeit receipts, or even return items already worn and/or used that are not defective.

According to the survey, completed by loss prevention executives at 60 retail companies, approximately 4.6% of holiday returns are fraudulent.

Nearly all (96.5%) retailers polled said they have experienced the return of stolen merchandise in the last year, and 84.2% report that they have experienced the return of merchandise purchased on fraudulent or stolen tender.

Additionally, 45.6% have found criminals using counterfeit receipts to return merchandise. Employee return fraud or collusion with external sources is also a big problem for retailers, with 80.7% reporting they've dealt with the issue in the past year.

About 19% of loss prevention executives say they have dealt with return fraud via e-receipts. As online sales continue to grow, 86% percent said they allow customers to return merchandise purchased online in their stores, and retailers estimate 3.9% of those returns are fraudulent.

Most respondents (83.1%) said their holiday return policies will remain unchanged compared to last holiday season, and 10.2% said they will loosen their policies to help ease the process for gift givers and recipients.

Retailers estimate that 13.4% of the returns made throughout the year without a receipt are fraudulent. As a result, nearly three-quarters (73.2%) now require customers returning items without a receipt to show identification.

NRF's 2012 Return Fraud Survey polled senior loss prevention executives at 60 retail companies in October 2012. Executives from discount stores, department stores, drug stores, supermarkets and specialty stores completed the survey.


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