Sunday, June 21, 2009

Find Ways To Lower Your Rate Of Return Fraud

Return fraud was a hot topic at the 2009 NRF Loss Prevention Conference & EXPO for good reason. With a recessionary economy, returns increased 20% in 2008, and the NRF estimates return fraud at $11.8 billion annually.

Lowering your rate of return fraud can significantly contribute to your company’s bottom line. “Margin erosion is where you see return fraud do damage,” said Mark Gray, VP, loss prevention & risk management, TJX Europe. He spoke at an NRF LP breakout session titled, “Optimizing Returns: Preventing Return Fraud and Impacting Net Sales.”

Gifts-and-accessories retailer Coach deals extensively with return fraud because of the gift-giving nature of its products. The company attacks the problem by integrating its POS records and refund databases to compile a list of repeat returners. “The way to get the greatest impact on fraudulent returns is to focus on the most abusive rate of returns without a receipt,” said Dan Hafford, Coach loss prevention divisional VP, during the session.

Coach sends a certified letter to each frequent “returner” — many of whom have never made a purchase from Coach. The company informs them that they are no longer allowed to make returns without an original receipt. Coach has sent out 275 such letters in 2009 and more than 2,200 since initiating the program, resulting in significant company savings.

Has one of your LP initiatives helped your company cut return fraud? If so, post a comment
here or send me an e-mail.