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Return fraud : to catch a thief

Updated: Apr 6, 2019

5% of returns are fraud. The remaining 95 out of 100 are valued customers who believe in your product but feel let down by the experience. Do you A) treat them like a thief? B) go through the motions and issue a full refund or C) figure out what went wrong and fix it!

No one likes being lied to. People who wardrobe or return a stolen items for credit are deceitful and immoral. It’s the kind of thing that can get under anyone's skin, if you let it. …so don’t. It’s not worth it.  (you'll get that pun later)

I'm not saying fraudulent returns should be ignored but I am saying we need to put it into perspective.

Here is a 2017 report from Appriss Retail who track big sales data worldwide. In this report they state that 10% of in-store purchases are returned. Of that, 5% of all returns are estimated to be fraudulent. That seems high until we put it into perspective. 5% of 10% is 0.5% of all of your sales. Let me say that twice to be clear; that's half a percent of all your sales. If profit is your goal, and it should be; you should put your efforts into converting the 95% of returns into an exchange or new sale.

At this point you should be palm slapping yourself in the realization that this fraud isn't worth the time and effort you put into detecting it. You should, as I have just suggested work on closing the sale a second time. After all, you, or your staff have already put in the effort the first time and the customer was impressed enough to buy… so what are you reading this for?

Figure out what went wrong and fix it! Get that sale back!


…What? you still here?

Ug, ok. Let's do some real numbers to get a tangible perspective. Let’s say you have 2,000 returns on the year. 5% of those returns will be attempted fraud. That's a pretty significant number. — I’m talking about the 1,900 honest customers who want to make a regular return. How do you want to treat them? Do you want to read them the riot act? Will you look at them suspiciously? Will you cast shade? Do you think your aspersions will make them feel like purchasing again. — It's more likely your sour attitude will make them regret ever buying from you in the first place. It's up to you to convert this return into an amazing and re-affirming exchange. Just think 1,900 sales that have slipped through your fingers and yet, amazingly the customer is back — giving you the opportunity to fix things. It's golden! Don't waste it.


How to facilitate a feel good return in-store

It always starts with “I would like to make a return

Greet them with enthusiasm and appreciation:

Absolutely, no problem. Thank you for coming back. I'll need to inspect the item to make sure it's ready to return and we can get you on your way.” While reaching for the item I ask: “Is there a defect or issue I should be aware of? What I'm looking for here is product failure. Failure to meet an expectation that we set. Usually the answer is no, it just doesn't fit. — now is your opportunity. ”Is it length or width? …we have other models I can show you once we are finished here.” No pressure. A subtle agreement to browse. Now down to business. Be as transparent as possible. You have all the power. This is your opportunity to build trust. When you inspect the returned item explain everything you are doing. Explain how you will check the product for defects, items left in pockets, damage or scent (smoke or perfume). Be thorough but forgiving. Show your VIP that you want them to stay. That there is no regret with purchasing in your store. Make this an experience! Don’t mail it in. Don’t rubber stamp it and move on. This is a VIP moment. Be present. Talk to them. Move around the counter to their side! The more you can do to absolve them of their mistake, the better your chances of creating a new sale. A new sale is your goal here. Why return their money when you can exchange for a new product. Assuming the returned product meets the 'good enough to put back on the show room' standards, it is now appropriate to ask for the receipt.

Note that I did not ask for the receipt first. Hopefully by this point I have a bit of raport and explaining that a return without receipt forces me to give them the lowest sale price on store credit. *This is also a perfect opportunity to recommend email receipts. Mailing list can be very useful for your business …but that's a topic for another post.

That's it! make the return based on your store policy and please for the love of all that is holy; be lenient. Consider giving them a 5% on the spot discount for browsing. Give them the benefit of the doubt. Help them. It's your job. It's who you are.

How to facilitate a feel good return online

You don't have the face to face of instore when an online purchase is returned but that doesn't mean it's any less important. Infact I would say with 30-40% of online sales returned it's more important.

Most returns online require the customer to fill out an online return form. Print the form. Find a box or shipping bag, go to the post office and spend their money sending it back. After that they wait 5-10 business days and… hopefully a refund appears on their credit card within thirty days. — How do you think they feel about your product after all that?!

The current system is just abismal. Unfortunately some of it is unavoidable. The product has to go back and be inspected before the return can be processed. That in itself is not an issue. The lack of transparency and communication is what is lacking. All purchases should include reusable, labeled, postage paid packaging. Once the return form has been submitted the customer should receive a confirmation email from their return agent along with a tracking number. Once the items is received the agent sends an update of the product. This includes any issues, open questions and an offer of discount should they want to exchange within the next week. Remember your goal is to convert this return into a new sale.

Read the next blog:

In this post I discuss how to reframe your perspective and make a positive return.



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