Data Team
Nov 13, 2023
NewRosetta Research Forecasts 10% Rise in Return Fraud: New Solutions for Retailers to Combat Emerging Threats
[San Ramon, Nov 13th 2024] – NewRosetta, a leader in AI-driven fraud prevention solutions, has released new research forecasting an estimated 10% increase in return fraud across the retail sector in 2024. This anticipated surge is attributed to several driving factors, including the rise in online shopping, the emergence of new fraud techniques, and economic pressures, which have increased both organized and opportunistic fraudulent return activities.
As return fraud becomes more sophisticated, NewRosetta is helping retailers counteract fraud and protect their bottom lines with innovative tools like Customer ID Validation (CIDV) and Lexicon AI, which bring advanced analytics, real-time risk scoring, and automated validation processes to the forefront of retail security.
Key Drivers of the Projected Increase in Return Fraud
1. Increased Online Shopping and Easy Return Policies
Ease of Return Policies: To improve customer satisfaction, many retailers have adopted lenient return policies, which can inadvertently open the door for exploitation.
Increased E-commerce: As online shopping continues to grow, so do returns, making it harder to verify whether returned products are in original condition, or have been tampered with or replaced.
2. Fraudulent Return Techniques
Wardrobing: Fraudsters buy items, use them briefly, and return them – a tactic common with apparel and electronics.
Receipt Fraud: Fraudsters return items with fake receipts or attempt to get refunds for items bought elsewhere.
Price Arbitrage: Items bought during sales are returned at full price, allowing fraudsters to profit from price differences.
3. Rise of Organized Retail Crime (ORC)
Organized retail crime (ORC) has become a significant challenge, with professional rings engaging in large-scale theft and return fraud, often returning stolen items for store credit or reselling online.
4. Employee Fraud
Internal fraud, sometimes involving employee-customer collusion, can lead to unauthorized returns and refunds, exacerbated by weak internal controls.
5. Inadequate Return Verification Systems
Lack of stringent verification technology or weak fraud detection practices make it easier for fraudsters to manipulate the returns process.
6. Economic Pressure
Economic hardship, such as inflation or recession, often correlates with increased retail fraud as individuals look to cut costs through fraudulent means.
7. Growth of Secondary Marketplaces
With more resale platforms available, fraudsters have new avenues for profiting from stolen or fraudulently returned goods.
8. Seasonal Trends
Peak seasons, like post-holiday periods, see higher return volumes, creating an opportune environment for fraud to go undetected.
9. Counterfeit Products
Some fraudsters return counterfeit products, which can infiltrate a retailer’s inventory if robust tracking and authentication systems are lacking.
10. Digital Payment Fraud
Payment fraud, such as using stolen credit cards, overlaps with return fraud when fraudsters seek cash or credit for fraudulently acquired goods.
NewRosetta’s Fraud Prevention Solutions: CIDV and Lexicon AI
To tackle these escalating threats, NewRosetta offers cutting-edge technology solutions designed to meet the unique challenges faced by today’s retailers:
Customer ID Validation (CIDV): CIDV verifies customer identities in real-time, reducing the risk of fraud during the return process. This tool provides retailers with instant validation, minimizing instances of fake or stolen identities and improving transaction integrity.
Lexicon AI: NewRosetta’s flagship AI engine, Lexicon AI, analyzes patterns and trends across transaction histories, return behaviors, and fraud risk factors. Lexicon’s machine learning algorithms can detect fraudulent activity at every stage of the customer journey, from purchase to return, with advanced risk scoring and behavior analysis capabilities. By leveraging Lexicon AI, retailers gain actionable insights that enable proactive measures against fraud before it impacts the bottom line.
A Strong Defense Against Return Fraud
“Return fraud is becoming increasingly complex, driven by factors like economic shifts, organized crime, and the surge in e-commerce,” said [Spokesperson Name, Title] at NewRosetta. “NewRosetta’s CIDV and Lexicon AI equip retailers with powerful tools to counteract these fraud vectors, ensuring that security measures don’t compromise the customer experience. We’re committed to helping our partners stay one step ahead of fraudsters while building trust with their customers.”
For more information on how NewRosetta’s CIDV and Lexicon AI can enhance your fraud prevention strategy, please visit www.newrosetta.com or contact us at news@newrosetta.com.
About NewRosetta
NewRosetta is a pioneer in AI-driven fraud prevention solutions, dedicated to helping retailers protect their revenue and reputation. With advanced technologies like CIDV and Lexicon AI, NewRosetta offers tools that seamlessly integrate with existing systems, empowering retailers to combat fraud effectively without sacrificing customer satisfaction.
Media Contact: