In 2023, over 14% of retail purchases in the U.S. resulted in returns, a drastic 4% increase from 2020.
We have already talked about the state of retail fraud and how to find the right solution, but with the growth in returns inevitably comes growth in return fraud, a hot topic across the industry.
Return fraud – abusing returns for monetary gain – adopts many different and unique shapes. The most common type is returning stolen goods, but other types of behavior include using falsified receipts, returning used items or articles of clothing, consistently returning an item to a different store than where it was purchased and more.
Especially with retail crime making waves and growing more violent – 24% of retail workers in 2023 reported an increase in individuals loitering in the store, and 17% reported an increase in organized retail crime rings – all eyes are on fraud. But how can retailers combat return fraud accurately and efficiently? They need a user-friendly solution that makes it easy.
With GK, retailers can set their own unique rules, including the ability to leverage artificial intelligence (AI) and allow the store’s point-of-sale (POS) to enforce them.
The retailer decides the return policy rules
For many retailers, the prospect of outsourcing fraud protection is intimidating. They lose control over the process and must rely on a third party to determine where the line is drawn when it comes to fraud. It is less visible and feels far less transparent. The good news is that with GK’s fraud solutions, retailers are able to establish their own set of rules.
What do we mean by rules? Let’s say a retailer wants to implement a 30-day return policy on a specific item category. It can make that distinction in GK’s user-friendly system itself. After implemented, if the rule is violated, it will automatically trigger an alert and require an additional step, such as requiring managerial approval before the return goes through.
The rules can also be turned on and off – and even adjusted – at the will of the retailer. For example, the 30-day return policy can be adjusted to 90 days or turned off completely around the winter holidays, when shopping and returns are much more prominent.
AI enforces the return policy rules
When a customer enters a store to make a return, it typically looks like this: the customer brings their receipt, the clerk scans it and marks it for return and the retailer’s system will validate that return. Should the system flag it as questionable, it will then trigger an action, such as a manager override. GK’s solutions, in particular, are also able to give the clerk a defined reason for any violation, which allows the clerk to communicate the reasoning clearly with the customer.
It does not stop there, however. With AI added to the equation, the system is that much more fluid.
AI can play a crucial role in preventing fraud by tracking and flagging patterns. Along with the rules that a retailer chooses to set, the technology can monitor customer’s overall behavior and analyze the patterns when one makes a return. For example, a customer may only have a couple of returns under their belt from the past five years, and then suddenly the customer tries to return a different item every day for a week. AI will flag that as unusual behavior and alert the store to take a specific action.
GK’s AI solution – GK AIR – will also be able to create a fraud probability score for the customer. This score will help inform the retailer’s decision on whether or not to accept the return.
A positive CX and protected store are not mutually exclusive
In retail, the pendulum is constantly swinging between prioritizing the customer experience and protecting the stores from fraud and crime. However, it is important for retailers to find a balance.
Efforts to fight fraud should not be at the expense of the customers, and return fraud prevention solutions can help keep the process effortless and intuitive, freeing up associates to provide excellent customer service while protecting the store in the background.
Contact us today to learn more about how GK can help your business fight return fraud.
