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The University of Southampton

Warning issued to retailers over festive fraudsters

Published: 15 December 2022
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“Stop being nice – or risk festive fraudsters” is the warning from a University of Southampton academic, after research shows a link between the 'season of goodwill' and return scams.

As the retail sector seeks to recover from the devastating impact of the Covid-19 pandemic, business owners have been stepping up on their customer service standards in a bid to increase footfall and reputation.

However, as the battle continues, Dr Regina Frei , associate professor of operations and supply chain management at Southampton, believes that retailers must be more assertive if they are to survive.

She explains: “Our research has shown that in pursuit of good customer service, many retailers have been found guilty of not asking enough questions when it comes to returning goods so as not to upset the customer.

“This can lead to a significant increase in returns fraud – an online or offline scam that occurs, for instance, when a person buys an item from a shop with the intent to use and return it, or use duplicate receipts to get their money back twice."

Returns fraud has increased significantly and retailers are seeing higher returns than pre-pandemic, which Dr Frei says could be linked to the cost of living crisis as people seek to recoup costs wherever they can.

Researchers from the University of Southampton have identified three types of criminal profiles that business owners should know about:

  • The one off or 'opportunistic' crimes, where an individual may have no criminal history and may innocently (or even accidently) come to benefit from a product return.
  • The serial abuser – who thinks that it’s ok to commit fraud because retailers are big companies who do not get hurt by small-scale actions and hence it’s a 'victimless' crime.
  • Organised crime and large gang circles.

It’s this third category that Dr Frei can be the most dangerous, because these individuals are very clever professional criminals who can be very difficult to spot.

Dr Frei added: “There are also professional 'refunders' out there, who offer to obtain refunds on behalf of a customer for an agreed fee. These individuals operate as part of a larger outfit and you will unlikely ever know who they are, but they know all about you.

“If your retail policies are not robust, then you risk opening yourself up to fraudsters. In fact, they are more likely to target a retailer that is ‘too willing’ or ‘too nice’ in their returns policies, because they know they can exploit them.”

Habitual fraudsters, the second category, can be deterred by increasing the probability of getting caught, and retailers creating an image of being “tough on fraud.”

Following its findings, the University has gathered advice on how business owners can tackle the Christmas season – as well as the cost-of-living crisis – without being stung.

Dr Frei said: “Retailers shouldn’t be afraid to ask questions and implement robust returns policies that are watertight against opportunist criminals. This is really important if retailers are to prevent losing money unnecessarily – and weather the storm of the next few months in the face of the cost of living crisis.”

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