The end of the holiday gift buying season ushers in the inevitable holiday gift return season. Clothes that don’t fit, ugly holiday sweaters no one really wanted, toys that were too old for a young child or too young for the older child all lead to returns, exchanges, and refunds. For those who have been in retail for any length of time, we know that many of these items will be returned without tags or a receipt and not even a gift receipt. It also means people will try to return merchandise to your store that was never even purchased there, despite what the customer in front of you says. This means it is prime time for those who engage in return fraud. There are so many people making returns that trying to separate legitimate refunds and exchanges from the fraudulent ones is difficult. There are steps you can take to minimize the number of fraudulent returns you accept.
- Ensure you have your store return policy clearly posted at the points of sale all year round but make it especially prominent during November and December.
- Encourage cashiers to remind customers of the store return policy at the time of purchase. If there is a time limit to how long a customer has to refund an item that should be stated.
- While some stores have gone to print as well as emailed receipts if your store has instituted this recommend that patrons use BOTH options. This means that even if a receipt is lost it should still be in their email.
- Open packages to see what is inside even when shrink-wrapped. The really good criminals will know how to seal a rock inside a box to make it look normal.
- Require a government-issued I.D. card with no-receipt refunds. It may sound extreme but those persons who engage in fraud are less likely to do so if they have to produce a picture ID.
- For no-receipt refunds require an exchange for a like item. Criminals have gotten to the point where they are willing to accept in-store credits what they don’t want is the merchandise. Exchanging for a like item defeats their purpose.
- Be ready for the returns. If possible have one return line for receipted returns get customers through more quickly. Have a second line for no receipt refunds/exchanges that may take more time to process. You will make life easier for the customers with receipts and you give cashiers the opportunity to be more thorough with no receipt returns without feeling pressured to hurry through the transactions.
- Don’t leave a regular employee alone with a line of customers, have a manager at the return desk or register too. Most customers will be understanding of wait times and return policies but some won’t be and hourly employees shouldn’t have to put up with the added stress caused by upset “no-receipt” returners. Fraudulent returners also look for employees who appear to be young or relatively new. Having a manager up front can discourage some of these people.
Being aware in advance that fraudulent returns will be attempted helps prepare managers for the situations when they arise.
It should also be pointed out that gifts are not the only items that will be returned fraudulently after the holidays. A lesser-known practice called wardrobing will also be conducted by dishonest customers. Store owners should be aware that these will be the Christmas or New Year’s Eve partygoers that don’t want to rent an outfit or buy it outright. The problem with this group is they are returning their merchandise with the tags intact and with a proper receipt. Unless they are returning the items outside of a specified policy it can be very hard to put a stop to this activity. An example might be if a store has a 30-day return policy and a customer attempts a return on day 31. This would be a clear reason to turn down the refund. The only sure way to prevent this fraud is for a store to use devices known as wardrobing tags on clothes to keep it from occurring. Loss Prevention Systems Inc. can provide more information on this type of fraud for store owners or managers interested in deterring the activity.
Not all no-receipt refunds during the holidays are fraudulent but a significant number are and it hurts a store’s profit margin. Make preparations now and put control measures in place that will make it hard for criminals attempting to cheat your business.