What is return fraud ?
Return fraud involves abusing customer-friendly return policies when shopping online. It takes place when the customer returns an item claiming that it is damaged or does not meet their expectations.
“ The objective is to defraud the e-retailer through a fraudulent return and an unjustified refund request ” explains Philippe Gomes.
Return fraud can take several forms:
- the customer returns a package filled with sand or earth or with another worthless product to fool the weight checks of the return procedures;
- the customer returns a counterfeit product;
- the customer returns the product free of its accessories which he can subsequently resell: battery, charger, etc. ;
- the customer can also claim to have never received their order (this is referred to as receipt fraud).
In all cases, it is a question of taking advantage of the facilities of the return procedures, of fooling the summary checks and of being reimbursed before the deception is discovered. “ When it is… ” , retorts Philippe Gomes: “ Some e-retailers, in fact, do not check packages below a defined amount ” . Reimbursements are automated without control, either to improve the customer experience or to avoid additional costs when logistics services are outsourced.
Regardless of the return policies applied, the result of fraudulent behavior is the same for all e-retailers:
- a direct financial loss linked to reimbursement and returns management costs;
- the temptation to tighten the rules for everyone, including honest customers, in order to protect against scams;
- a loss of image and competitiveness compared to competitors who offer more advantageous return conditions.
Why return fraud is becoming commonplace?
Online payments are now very secure. The various strong authentication systems, such as 3D Secure for example, make the task of fraudsters more complicated at the time of purchase. Their ingenuity therefore naturally shifted to the stage where it is still quite easy to defraud: product returns.
“Return and refund policies are, in most cases, very simple and quick ” explains Philippe Gomes.
E-retailers are increasingly relaxing the rules to maintain their attractiveness and reassure buyers. Free returns, product testing before payment, returns possible after 100 days, etc., these attractive offers are real selling points that drive conversion and improve customer satisfaction. “They have become the norm, but at the same time they call for caution,” warns our expert.
“They create, in fact, opportunities for fraudsters who will take advantage of these facilities to divert substantial sums in reimbursement. ”
The inflationary context, finally, strengthens the determination of the crooks. It can even push previously honest customers to try returns fraud. “It is clear that inflation has an impact on consumer behavior ,” confirms Philippe Gomes. “It’s a point of tension that makes professional scammers even more ingenious and encourages occasional fraudsters to act more regularly. Especially if they slip through the cracks, it then becomes tempting for them to start again. ”
How to protect yourself from return fraud?
AI, coupled with access to open data and open banking data, makes it possible to analyze irregularities and potential fraudulent behavior in real time.
Detecting return fraud is a major challenge for retailers. The balance must be struck between preventing fraud and not harming normal customers, who it is essential to continue to trust.
The goal is not to deteriorate the customer experience while tracking down malicious buyers. “ Our clients are sensitive to not making the UX more complex and having a rapid ROI ” specifies Philippe Gomes.
Meelo’s RetailSafe solution at the service of your business;
The RetailSafe solution is very easy to integrate. It predicts the risk of fraud:
- either at the time of the transaction;
- either at the time of the return request.
Meelo collects and analyzes a whole series of data at different points in the purchasing process: basket, identification, choice of delivery method, postal address, choice of payment method, payment, etc.
RetailSafe establishes in seconds the probability that an order could be fraudulent and generate a dishonest return.
Once the alert is given, you can decide:
- to block certain payment methods or impose payment by open banking ;
- not to insert the return slip in the package;
- to impact the return of the product, by restricting the method (by requesting an in-store return, for example) or the return area.
Philippe Gomes confirms: “ Meelo promises a risk-free customer journey that predicts return fraud, whatever the type of product, without complicating the lives of normal customers, nor the process of compliant returns . ”
