South-Western - Management  
Many Unhappy Returns for Retailers
Topic Strategy, Technology, Innovation and Change
InfoTrac Reference A134868932
If your textbook came with an InfoTrac passcode, click here to login on InfoTrac.
Key Words fraud, returns, shoplisting, gift cards, InfoShare
News Story

Once considered a retail fact of life, fraudulent returns now account for an industry loss of $16 billion per year. Return scams range from simple deception (swapping bricks for DVD players) to advanced networks of receipt purchasing and gift card fraud.

Gift cards are especially vulnerable since they are essentially like cash, as opposed to a credit card. During "shoplisting," a scammer purchases an unexpired receipt, shoplifts the items on the list, and returns the same items for a refund or gift card. Receipts are often at the center of fraudulent returns. Thieves will either obtain them online or use printers and scanners to counterfeit them.

Retailers are now using the same technology to fight back. Since many fraudulent gift cards are sold online, the Retail Industry Leaders Association (RILA) convinced eBay to limit sellers to one gift card auction per week with a maximum value of $500. RILA also began testing InfoShare, which tracks scammers and alerts store personnel to theft situations. There's also an online database available this month that will provide police officers with incident reports and bar-code information on stolen merchandise. When using the database, retailers say they will limit their scope of major incidents by type of crime instead of shopper IDs, in order to ensure the privacy of legitimate customers.


As a theft protection manager, how could you use new innovations in technology to reduce fraudulent return losses while safeguarding your customers' privacy?


What are some additional ways for a manager to deter fraudulent returns?

Source "Many Unhappy Returns for Retailers,"Business Week Online, Aug. 5, 2005.
Instructor Discussion Notes Discussion Notes
These notes are restricted to qualified instructors only. Register for free!


Return to the Strategy | Technology, Innovation and Change Index

©2005  South-Western.  All Rights Reserved     |