By Tom Stevenson, UK Director, Forter.
“The 2nd of January 2020 marked National Returns Day, the busiest day of the year for holiday returns. In fact, UPS stated that it expected to ship 1.9 million returns, a 26% increase over last year.
“With this comes returns abuse and opportunities for fraudsters. For those less familiar with the term, returns abuse is a form of “friendly fraud” where someone purchases products without intending to keep them, for example wearing clothing and then returning it, using products for a short period and returning them when no longer needed. However, for those that ‘Buy Online Return In Store (BORIS)’ it is very hard to define or capture the true intent of the buyer. Some returns are legitimately conducted by good shoppers. However, by examining frequencies of returns and the different identities used, it can be established that among merchants who offer in-store returns, 6.2% of the returns are highly likely to abuse the merchant’s return policy, according to our 2019 7th Edition of the Fraud Attack Index.
“We also found that BORIS fraud has increased by 23%, therefore the price tag for this kind of returns abuse is high and getting higher. A UK survey by Barclaycard found one in four retailers has seen an increase in the volume of returns in the last two years, with one estimate putting the total cost to the industry at £60 billion a year. These costs range from losses incurred by item wear and tear to operational costs for processing, shipping, and restocking of items, as well as allocation of store personnel to returns. As merchants turn toward a more ‘customer-centric’ approach, whereby they adopt more flexible policies to encourage repeat purchases and higher lifetime value, BORIS will continue to grow. While more flexible return policies are vital for merchants to stay competitive, both fraudsters and legitimate consumers are more likely to take advantage of these flexible policies, creating risks and the potential for financial losses.
“Striking a balance between offering a frictionless customer experience and the fraudulent abusers taking advantage of the situation requires a fraud prevention system that understands the nuances of your customer ecosystem, but does not create an onerous experience for the legitimate consumer.”