Growing numbers of shoppers are casually and blatantly taking advantage of returns and refund policies, costing brands millions every year in lost revenue.
Cheats and tips spread via social media give this activity a veneer of acceptability, though legitimate customers and businesses end up counting the cost.
To make matters worse cybercriminals are now offering “refunds as a service” with growing numbers of consumers hiring them to claim fraudulent refunds on their behalf in exchange for a share of the proceeds.
These criminals socially engineer businesses into providing refunds by using third-party services to falsify tracking and returns information.
“Refund fraud is far from friendly — it’s digital shoplifting,” says Grant Shipway, Senior Operational Risk Manager at River Island.
“There is a casual normalisation of wardrobing, fake returns, and returns abuse, and it’s costing retailers — and legitimate customers — a lot.”
Fight Back
Ravelin says it is helping merchants fight back. It can spot suspicious activity in real time, helping retailers stop bad actors while giving legitimate customers a better shopping experience.
According to Ravelin, over a third of finance leaders describe first-party fraud, including “friendly fraud”, returns, and promotions abuse, as the number one risk factor facing their business.
Ravelin is partnering with two of its customers to raise awareness of, and discuss solutions to, the growing problem of dishonest customers.
“Most online shoppers are perfectly honest, but there is a growing minority who think nothing of defrauding brands week in and week out,” says Ravelin CEO Martin Sweeney.
“There are also more and more shadowy outfits offering ‘returns as a service’ to shoppers. They are gaming rules put in place to protect consumers, and cost retailers millions.
To deal with this, forward-thinking businesses deploy a combination of specially trained fraud teams, artificial intelligence and powerful automation. This is an approach that makes a genuine difference, and we’re proud to be a part of it.”
Trainline: tackling consumer and sophisticated fraudsters
Trainline, Europe’s leading ticketing service for trains and coaches, has a 30-strong fraud and payments team, many of whom have been trained by the police and cybercrime experts.
The team has over 15 years of experience in this space and since working with Ravelin, the company has seen a 40% reduction in fraudulent activity.
“In a bid to tackle the more sophisticated fraudsters, we’re becoming stricter about what’s OK and what is not,” explains Director of Fraud and Payments at Trainline, Nick Aiken.
“Our approach is to reach out directly to people, telling them what they are doing is wrong, and that they’re on our radar. We find that this type of direct engagement works with most people.
Customers who are persistently dishonest will continue to be checked, picked up, challenged. Our goal isn’t to throw people off; it’s to encourage them to change their behaviour.
Some offenders, as you can see from the examples we’ve highlighted, are incredibly blatant and openly boast online about what they’re doing.
They will boast about the fact that they have walked through a barrier, not had a ticket scanned, and instantly get it refunded.”
Trainline is an active member of the Rail Industry Fraud Forum, helping the sector fight fraud, both consumer and more organised fraud.
River Island: stopping the digital shoplifters
The recent focus on in-store shoplifting incidents masks the fact that its online equivalent is also a challenge.
River Island, the high street fashion retailer, regularly contends with criminal gangs offering “fraudulent returns as a service” via social media, along with people who think they can game the system.
“Significant change can only happen when merchants, banks, payment providers, the government and law enforcement collaborate. We can change the narrative and shift behaviours by raising awareness of the issue and educating people that this is criminal behaviour,” says Shipway.
“Technologies like Ravelin help contain customer fraud. It gives us a clear view of each transaction and the customer behind it so that we can identify and stop the fraudsters while safeguarding our thousands of genuine customers.”
The rise in consumer fraud is having a major financial impact on e-commerce across Europe with many losing millions a year to the issue.
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