UK online retail fraud

“It’s much easier and more lucrative to steal on the internet than it is to go out and rob a bank.”

So claims MP Keith Vaz in a new report on cybercrime and fraud in the UK. This report shows that compared to other EU countries, UK citizens and retailers are prime targets for internet crime. Part of the problem is poor policing of online venues. A further problem for enforcement is the lack of methods for detecting fraudulent behaviour.

Online retail fraud grew by 23% in the UK in 2012, causing a £16.1 billion cost for retailers according to the National Fraud Authority’s 2012 report. However, Computer Weekly reported last week that 22% of retailers don’t know how much of their revenue is lost to online fraud, and 20% do not have anyone on the loss prevention team assigned to tackle the problem despite listing the lack of fraud detection and analytics tools as a top concern.

Research by the Clear Returns team has found that although fraudulent shoppers are typically 1% or less of the consumer population, they can be responsible for up to 10% of the cost of returns. Each of these shoppers cost the retailer an average of £1300 annually, although some individuals can cost up to £5000. Clearly more needs to be done to improve current methods of tracking customer purchases to enable retailers to distinguish fraud from activity by legitimate, high-value customers.

Posted by Shaylon

BRC report on the increasing cost of retail crime

A recent report from the BRC (British Retail Consortium) found that the cost of retail crime has continued to rise significantly, with the overall cost in 2012 totalling £1.6 billion.

What is particularly worrying about this increase is that e-crime is costing retailers the most, as it now accounts for 37% of all retail crime totaling almost £600 million. Although it was not made clear what their definition of e-crime consists of. Part of Clear Returns’ own research involved identifying issues of fraud such as wear and return. As the online shopping channel grows,  Drapers announced last week that online sales in 2013 are expected to reach £87 billion, this type of fraudulent behaviour could increase in frequency.

Retailers are increasingly being pressured to enhance their multi-channel strategy in order to survive and compete successfully, therefore security measures and protection must now become one of retailers top priorities in light of this new information. Perhaps we will see more companies investing in technology such as the Clear Returns system to help effectively manage this problem throughout 2013.

The growing problem of retail fraud

Retail Bulletin has reported today that shoplifting and retail fraud will cost UK retailers £1 billion over Christmas.

The Shoplifting for Christmas 2012 report by the Centre for Retail Research broke down the costs into losses of £522 million from shoplifting, £431 million through employee theft, and £47 million due to vendor and distribution losses.

However with the right solutions it is possible to bring this number down. Clear Returns’ CEO Vicky Brock commented,

“Losses from fraudulent behaviour are something that the Clear Returns solution can definitely tackle. By analysing historical data we can pinpoint the customer’s who are consistent fraudsters, allowing the retailer to give the customer a call to check if there is a problem, and subtly let them know we’re onto them!”

This problem is not just limited to the UK. The study also looked into costs overseas and found that shoplifting and fraud would cost €5.8 billion in Europe and $8.9 billion in the USA over Christmas.

Clear Returns have discovered that fraud is also apparent online. Our system is able to spot those shoppers who consistently re-buy the same items, and we can highlight wear-and-return issues. Therefore as the online channel grows for retailers, so will these issues. By tackling this now we aim to save retailers millions in lost profits.

Customer Return Behaviour – The Serial Returner

A recent survey conducted by Clear Returns has investigated customer return behaviour and the growing trend of consumers continually returning garments they have already worn.

67% of survey respondents have returned items that they ordered online, with almost 40% returning several items.

Much more concerning is the statistic that nearly a quarter of respondents have returned items that they had already worn, basically committing fraud. 52% of respondents also said their friends had committed similar offences. The most common reason given was that customers would buy an item for an occasion, wear it once and then get a refund:

“My friend has WAG aspirations and regularly returns dresses to coast etc she has worn to an occasion. She has commented that more shops are putting labels on the outside now so she can’t hide them or pin them in. I think returning online gives her more anonymity but she has returned in store (rotates the stores she goes to).”

“Wore the clothes, damaged them, returned them claiming they were damaged on arrival”

“No point of keeping it if it was only going to be worn once.”

This behaviour is known as “de-shopping” and it is becoming increasingly common as is returns fraud. A recent publication by Tamira King and John Balmer on this issue provides some further insight.

Worryingly retailers may be encouraging customers to buy more than necessary by providing offers such as free postage or discounts. The survey results found that 22% of customers returned items they had bought on special offers such as these. This suggests that these perks from retailers are potentially detrimental as this may encourage more impulse buys that may cost them far more than they gain in sales.

Posted by Ellie