Return frauds risk the seller’s finances and ruin the brand image. Calculating the exact cost of return fraud is not practical as it is astronomical. For an estimate, the resources and efforts must be considered, such as the costs of customer acquisition, customer satisfaction, fighting fraud, and updating policies. However, we have curated a list that mentions some estimates regarding how much money a business can lose in return fraud:
- The annual losses for the U.S. retailers’ from merchandise return fraud are estimated to be USD 18.4 billion. If we combine return fraud with abuse, it is estimated to be USD 24 billion.
- 50% of the return fraud happens in the form of free renting or wardrobing, where customers return non-defective items after using them once.
- Furthermore, 21% of returns made without a receipt are fraudulent.
- In the digital era, 38% of merchants have witnessed an increase in online sales, and 29% report a rise in fraudulent returns Business Loss in Return Fraud from such transactions.
- More than 10% of the revenue of a business is spent on reverse logistics, including dealing with items fraudulently returned.
Methods to Identify Return Fraud
With the rise of startups worldwide, companies are growing significantly. Over the last decade, many homegrown companies have established themselves as a key player in successful startup hubs.
When online stores are rapidly developing and hungary phone number list scaling businesses, the risk of exposure to return fraud is also growing simultaneously. Hence, it is imperative to know the measures to be taken to detect return fraud proactively:
1. Scrutinising the data from previous return fraud cases or your competitors
Have you experienced any return fraud Business Loss in Return Fraud in the past few years? The answer might be yes if you have been running an online store for quite some time. First, you need to analyse the behavioural patterns or red flags specific to your business. Even if you haven’t encountered return fraud, you can evaluate the data of your competitors to study the situation. This information helps sellers spot potential scams and take appropriate measures to prevent losses.
2. Leverage machine learning and behavioural analytics
These elements will help you identify peculiar behaviour that signifies different types of fraud, which we have already discussed in this guide.
3. Building a proficient workforce
Enhancing your staff expertise to determine the red flags surrounding return fraud and categorising the regular or unusual number of returns can help detect fraud.
Is it Possible to Identify Return Fraud Using Anti-Fraud Tools?
In recent years, innovative fraud detection software or anti-fraud tools have helped to detect fraud in real-time. These tools allow you to access an extensive range of applications without having to know much about the technical side. This software also helps you evaluate which transactions led to post-transaction issues like return fraud.
Let’s dive in to learn how data enrichment Business Loss in Return Fraud platforms can help identify return frauds:
1. Reverse email lookup
Reverse email lookup tools play a crucial role in identifying return fraud. But how? Leveraging these will help determine how long the customer used the email address. Remember, a fraudster will always have multiple email accounts and keep on creating new ones through free domain addresses. This is where email lookup will help!
These tools will help you gauge the customer’s best chatbot creation services in 2024 legitimacy by checking the email address creation date and doing database checks.
2. Social media lookup
Scammers will have multiple email addresses. Moreover, they won’t have time to connect to social networks using all the email addresses they have created.
They will always find new ways to deceive people and businesses. Hence, it is highly unlikely their email address will be linked to any social media accounts. So, without any accounts linked to a particular email ID, it can be a red flag.
3. Phone number lookup
This is another way to identify if your customer is a fraudster or a legitimate buyer. Always consider the customer’s phone number, including the clean email country they are from, the carriers they use, and whether they have used the same number to make other purchases. This information could prove helpful if you suspect the customer is a scammer.
