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3 Step Strategy to Manage Return Receipt Fraud: Deter, Detect, Convict

Sean Trundy
fraud prevention In another great article on the National Retail Federation blogsite, Ellen Davis discusses return receipt fraud with executives from two retail companies, Bon-Ton and Orchard Supply Hardware.

As detailed in our retail fraud pages on our website, return receipt fraud is a nearly $10 Billion a year problem for U.S. retailers. Return fraud scams include utilizing genuine receipts to return stolen merchandise, creating fabricated receipts, and purchasing goods with fraudulent payments (i.e. counterfeit money, stolen credit cards, fake checks) and then returning them for cash refunds.

In the NRF blog article, the two retail executives discuss implementing new policies at the return desk in which customers are required to show a valid ID at the time of the return. The Bon-Ton executive is quoted as saying this immediately halted over 12,000 returns from even being initiated, since the customer did not have a valid ID.

We agree with this strategy, which is Part I of a three-step strategy for managing return fraud.

I. Deter Fraud from Happening
This has been the cornerstone of our approach for reduction of fraud of all types. It is absolutely the best-case-scenario that a bad-guy fears your defenses against their intended crime and determines that they should go somewhere else to attempt it.

II. Detect Fraud While it is Occurring
This second step has also been fundamental to our approach to fraud prevention. We see an industry (e.g. - loss prevention) that has been focused on metrics and analytics that allowed them to see behavior trends and to detect fraudulent transactions AFTER THEY HAVE OCCURRED. Our business-proposal to any organization is that prevention of fraud before the loss is incurred allows the LP department to justify the purchase of equipment by presenting an ROI analysis that shows fraudulent transactions prevented will pay for the expenditures on the equipment.

III. Enable Law Enforcement to Convict Perpetrators
Of course, it is preferable to either deter or detect a fraudulent transaction; however, in the event a fraudulent event occurs, it is also desirable to be able to provide law enforcement (police, district attorneys, etc.) with actionable evidence that can be used to definitively identify the perpetrator.

This three-pronged approach to reducing return receipt fraud is, we believe, the best way to achieve results.

We do, of course, offer solutions to enable your company to implement all three of these steps, ranging from low-tech products, such as inkless fingerprint pads and customized security register receipt tape to higher end products that capture images of the ID documents of the customer and stores them in encrypted files - some of which can even be integrated with facial-recognition software to identify watch-list or frequent-return customers.

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