Economy

Survey: Retail industry to lose $3.4 billion to return fraud during holidays

national retail federationA recent survey by the National Retail Federation revealed that the retail industry is expected to lose $3.4 billion to return fraud during the holiday season.

“Recent efforts to combat fraudulent activity are slowly starting to work, but criminals are becoming more savvy and technologically advanced in their methods, making it even more difficult for retailers and law enforcement to keep up with the growing problem,” NRF Vice President of Loss Prevention Rich Mellor said.

According to the survey, nearly all retailers said they have seen stolen merchandise returned in the past year, and 69 percent reported that they have seen merchandise returns purchased with fraudulent or stolen tender. Nearly one-third of retailers have seen criminals use counterfeit receipts to return merchandise.

“Wardrobing,” or the return of used non-defective merchandise such as certain electronics and apparel, remains a key challenge for retailers. Only 62.1 percent of retailers reported having been victims of wardrobing—a decrease from 64.9 percent last year.

Almost half of all retailers reported an increase in gift cards/store merchandise credit fraud over the past year. While approximately 20 percent of retailers reported a decrease in the fraudulent use of cash, over 25 percent reported an increase. Over half of all retailers said they have seen no change in the fraudulent use of credit cards.

The survey polled senior loss prevention executives across 62 retail companies, including department stores, drug stores, supermarkets, specialty stores and discount stores.

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