E-commerce experienced exponential growth in the last few years as new players appeared on the playing field – fraudsters who are taking advantage of retailers’ return policies.
Returns became the norm amidst the pandemic and beyond. And while PSD2 Strong Customer Authentication (SCA) presents difficulties for fraudsters attempting to penetrate the checkout process, they must target another weak link in the process. Returns represent a rich target.
Today, we explore some of the schemes undertaken by fraudsters and what online retailers can do to protect their businesses from returns fraud.
To improve customer returns experience, businesses have been crediting an account as soon as a return has been scanned in for shipment back to the merchant. Unfortunately, this also opens the floodgate for fraudsters to take advantage of the policy. They would often ship back goods that weigh about the same as the original product. Sending back a counterfeit copy of the product or an old or damaged version are other popular approaches.
UK electronics giant Maplin, for example, experienced this type of fraud first-hand.
“Some favourites are, you know, sending those cans of baked beans that weigh similar to a PlayStation that they bought,” said Ollie Marshall, managing director at Maplin.
Maplin is at higher risk of return fraud due to the nature of its business – consumer electronics.
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