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Retailers Losing Billions from Holiday Return Fraud

January 4, 2014

Returning Holiday gifts and redeeming gift cards could cost retailers billions of dollars. Stores are on the lookout for these transactions that could end in a scam.

The average person returned nearly four holiday gifts last year, according to a National Retail Federation survey. But returns are increasingly leading to losses for retailers in the form of return fraud, an industry problem that costs about $9 billion a year, the federation said.

This type of fraud poses one of the most serious loss-prevention issues for stores, the trade group said. The group estimated that some 5.8 percent of holiday returns last year were fraudulent, up from 4.6 percent in 2012 and accounting for $3.39 billion in losses during the holiday season alone, according to a 2013 federation survey of executives at 62 retail companies.

“Returning used or stolen items, or even using false tender to purchase items, is fraud,” Rich Mellor, the trade group’s vice president of loss prevention, said in a statement.

He said retailers’ efforts to fight back are starting to chip away at the problem, but “ criminals are becoming more savvy and technologically advanced in their methods.”


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