Shopping is a vital part of our lives, it allows us to access things we need to function in our daily lives and ecommerce has made that even easier. By transferring aspects of their business online retailers have made a huge difference to their business as now they can reach a wider audience. They are no longer restricted by their location so they can finally reach customers around the world and expand their business. For example, a small handmade jewelry manufacturer from France can now reach the customer in Japan who has been looking for just that kind of jewelry, or a customer from Australia can find a carpet they have been looking for in Austria. Possibilities are limitless.
While some people still prefer to be physically present, the change is coming, especially now after the Covid 19 Pandemic. This horrible ordeal taught us how precious time actually is, and nobody wants to waste it if they don’t have to.
According to the Adobe Digital Economy Index global ecommerce hit $876 billion in the first three months of 2021 alone which is an increase of 38% compared to previous year and it is predicted to hit $4.2 trillion this year. But it is not enough just to transfer their business online in order for them to be competitive in today’s market, they also need to implement a strategy that will deal with all the risk they might face. One of the highest risks ecommerce businesses are facing is a risk of a return fraud and businesses need to start taking a proactive approach in avoiding false claims to protect their customers and their business.
What is return fraud?
While there are different types of fraud that are targeting ecommerce business, return fraud is the most common one and it ecompasses all of the times when customers defraud merchants through their return policy. Simply put, with this type of fraud merchants’ return policy is exploited as customers steal the money or the merchandise. There was an estimated $428 billion in merchandise returned to retailers last year, while roughly 5.9 percent of it were fraudulent, equating to $25.3 billion, according to a report released by the National Retail Federation. What makes it even more harder to prevent is the fact that there is so many different types of return fraud like seller sabotage, receipt fraud, bricking, empty box fraud or stolen merchandise fraud, just to name the few,
How to reduce the risk of return fraud?
Even though return fraud is one of the most common types of ecommerce fraud, at the same time it is also one of the most difficult to prevent. Businesses need to step up their game and start taking proactive steps against fraud. The prevention of return fraud starts with your return policy. This is the main thing that can protect you against the return fraud which is why it needs to be clear, understandable and most importantly, easily accessible. If you want your customers to know what is expected of them you need to implement parameters that clearly state their responsibilities.
Condition: Define in which condition merchandise needs to be returned, for example with tags attached, unopened box. You should also indicate which documents they need to send with the item like the receipt included, identification, specific contact information or some other product-specific data.
Time Limit: Set a time limit in which it is possible to return the item to discourage different types of return fraud like a wardrobing or free renting fraud. Did you know that two-thirds of retailers have encountered wardrobing fraud, with some of the customers returning around 20 items a year? Set a time limit and avoid that.
Shipping: Clarify how return shipping should be done and make sure you include any related requirements like acceptable form of packaging or insurance conditions. You should also indicate if it is free or not and who will pay additional charges associated with the return, like a restocking fee.
Special Circumstances: All return policies need to be updated in accordance to merchants specific circumstances. For example, if you are an international company make sure that you indicate it might take longer to process refunds coming from different countries. There might be some conditions that relate directly to the product like stating electronic items will be weighted upon return and compared with original weight which can help eliminate bricking fraud.
Accessibility: If the customers can’t find it, then it is like it doesn’t exist no matter how well written it is. Make sure you display it in as many places as you can and provide it during the checkout process.