Our website uses cookies

Cookies enable us to provide the best experience possible and help us understand how visitors use our website. By browsing Essential Retail Magazine, you agree to our use of cookies.

Okay, I understand Learn more

How to avoid fraudulent returns

Printed paper receipts are often the only proof of purchase a retailer has to rely on when validating returns. But unfortunately, even as a legitimate proof of purchase medium used for decades, they cannot totally prevent fraud in this day and age. With ever-busy customer services, the inability to trace the legitimacy or history of a receipt back beyond a few weeks and/or a no-quibble returns policy in the event of a ‘lost’ receipt, retailers are on the back foot from a cost management perspective.

With some of the UK’s largest retailers losing what could be millions a year through fraud, returns management has become a major operational and customer experience management cost industry wide.

For bone-fide customers in today’s highly competitive retail environment, a simple, hassle free returns experience can make all the difference and actually incentivise consumers to shop at a particular store again. The challenge for retailers then, is to find a balance between actively reducing fraud, whilst still providing good customer experiences which boost loyalty.

So what can be done to achieve this?

Well, below we will examine some of the tactics that fraudsters use and how our digital receipt and systems technologies can thwart them.

Firstly, implementing our digital receipts system has the major advantage of enabling retailers to link specific customers directly to their purchases history, and in with this create a digital ‘audit trail’. For example, scanning of a loyalty card or receipt (paper or on an app) can bring up the last 12 months purchase history for a customer and as a result provide staff with the ability to ask knowledgeable questions. Not something paper receipts are capable of in their own right. This innovation alone is a significant step forward in the battle against fraud. So let’s look at some specific examples where this can be used to the retailer’s benefit.   

1. Shoplifting with a ‘valid’ receipt. One of the most common tactics where high value items are purchased and a valid paper receipt is issued. The fraudster returns to the shop an hour or two later with their receipt in pocket, picks up the same item and heads to customer services for a full refund. The receipt is valid and all seems to be in order. But they’ve just got that rather expensive toaster for free.

Our system can help in two ways, firstly it can alert staff that the ‘shopper’ has made frequent returns before. Secondly, for products with unique IDs it also has the ability to verify that the item being returned is not the one originally purchased via a lookup against the product serial number contained in the receipt data. 

2. Return old/keep new. Simply put, devious consumers purchase a new item to replace an old or broken one, return the broken one for a full refund and keep the new one. As identified previously, having the ability to link purchases to specific goods eliminates these scams.

3. Fake receipts. Petty if not serious criminals will go a long way to duplicate or forge receipts for high value items and use them to defraud stores.

Digital receipts can be made far more secure, as not only can they assist customer services validation but also from an email or App copy perspective they contain digital watermarks.

4. Shoplisting. Otherwise known as shoplifting with found receipts. Savvy fraudsters know the potential value of a discarded or stolen paper receipt – particularly when they contain high value items. Typically, they will use the receipt as a ‘shopping list’ to pick up items in store and return them for a ‘refund’.

For customers who choose the digital only option the incidence of receipts being discarded or stolen is effectively eliminated, as they are issued and stored electronically and can only be accessed with their personal passcode.

5. The self-scan scam. With self-scan checkouts becoming more commonplace thieves have found simple ways to defraud the store. They scan the goods as normal, pay and obtain a valid receipt.  Then they ask a member of staff for help claiming that the till did not print the receipt. Staff assist and if the claim seems valid, print out a second receipt which can be used for shoplisting.

Well trained and diligent staff can always help contain, but never totally prevent this scenario.  However, we can help via shoplisting verification tools allowing customer services staff to check and ask knowledgeable questions about previous customer related purchases – whether from the same or other stores.    


Click here to learn more about Tag Retail Systems