Augusto Beato Sees Urgency in Curtailing Fraudulent Return of Online Purchases

Augusto Beato, CEO of Portland SEO, asserted that e-commerce merchants should set parameters in accepting the return of goods in order to minimize fraudulent returns.

Beato said that this has become necessary in the light of a National Retail Federation (NRF) report that fraudulent returns—such as returns of stolen merchandise, wearing and then returning items, and use of counterfeit receipts—rose from 8.8 percent to 10.8 percent.

"Among the practices from customers is to buy items in multiple sizes or variations with the intent to return or engage in ‘wardrobing’, or returning items after use," Beato pointed out. "The problem also arises from the lack of industry safeguards to minimize these returns and fraud."

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Based on 2017 U.S. retail sales those fraudulent returns surpass $573 billion in total and more than $90 billion online, resulting in $62 billion in retail return fraud and nearly $10 billion in e-commerce losses.

Returns and fraud surpassed any proportionate trend in U.S. e-commerce sales that soared 16 percent to US$453.5 billion last year.

Monica Eaton-Cardone, a FinTech executive specializing in risk management and fraud prevention, notes that organized crime and consumer entitlement both contribute to rising return fraud.

She blamed Amazon policies for helping fuel the recent proliferation of returns. By offering free shipping, fast delivery and frictionless—often free—returns, Amazon has raised consumer expectations and created a sense of entitlement.

Amazon has been struggling with excessive returns and has recently resorted to closing the accounts of shoppers with particularly high return rates.