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merchandise and used non-de- fective merchandise, including special occasion apparel and certain electronics, continues to pose a huge problem for online retailers and brick and mortars alike. These all too common types of return fraud cost American retailers $14.4 billion in 2011, according to the National Retail Federation, up from $9.4 billion in 2009. The holiday season alone cost retail- ers an estimated $3.48 billion in return fraud. While both the online and offl ine communities suffer, online stores are particu- larly vulnerable, as few people risk buying something with- out trying it out fi rst, requiring many ecommerce businesses to provide a fl exible and generous returns policy. Retailers need to be aware


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that while most de-shoppers (return fraud culprits) think they are doing nothing wrong, their crime is in fact more or- ganized and deceptive than ever. They create diversions, ugly scenes, or spread their re- turns across branches to keep from being recognized as se- rial offenders. The NRF reports, “When asked if their company has ever changed its return policy to specifi cally address return fraud, nearly two-thirds (64 percent)


said it had.”


However, as The Economist reports, “Many return policies far exceed the minimum legal


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requirements, so there is room to be more strict.” For instance, in 2009, Marks & Spencer, a British retailer famed for its no- questions-asked refund policy, reduced the window for returns from 90 to 35 days. It also in- troduced dedicated returns desks, usually away from the shop fl oor. This makes shout- ers and screamers less likely to succeed, and helps with keep- ing a consistent policy across all its outlets. In the U.S., some of the


stricter return policy features retailers are adopting include specifi c windows of time in which the return can be made, detailed reshipping rules, store credit returns, and the need for identifi cation and a receipt. A recent survey found that 2.89 percent of returns with a re- ceipt are fraudulent, but those without a receipt have a high- er chance of fraud, estimated around 14.2 percent. According to the NRF, “As a result, six in 10 retailers now require cus- tomers returning items without a receipt to show identifi cation. Slightly more than 10 percent of retailers require customers making returns with a receipt to also show ID,” proving stores can protect themselves. ■ This article is adapted from an original piece by The Economist.


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