3 ways to make sure your small business isn’t a victim
Return fraud, a sneaky yet common crime, cost the retail industry an estimated $8.9 billion last year. It ranges from returning stolen items to “wardrobing”—or buying a product, using it and returning it.
As a busy small business owner, you must be especially vigilant to out-maneuver the perpetrators of return fraud. Start by taking these three steps to protect your business.
1. Ask for signatures and IDs.
The use of false receipts is among the most common forms of fraud, says Upper Nyack, New York-based Certified Fraud Examiner Nat Wasserstein. To dissuade people from returning items they didn’t buy, always get a signature with credit card purchases, and keep a record of identification, especially with returns of high-priced items or large aggregate sales.
2. Keep good records.
Customers may falsely claim they didn’t authorize a credit card purchase, or that they didn’t receive the goods. Julian Dutton, marketing manager for Middletown, Conn.-based credit card comparison site CardFellow, emphasizes good record keeping to outsmart them. Require a signature upon delivery for goods that are shipped, track communication with customers who make purchases online or over the phone, and keep a record of the IP addresses for online purchases.
3. Create clear signage.
Wasserstein encourages businesses to post return policies at the point of sales in large, bold print, making it clear that no returns will be taken without proper forms of identification. “This way a fraudster is put on alert that if he gets away with it, there will be a record of who he is,” he says.
According to the National Retail Federation, 62 percent of retailers in 2013 said they were the victims of wardrobing. A sign posted next to dressing room mirrors—with messages such as, “Please don’t borrow our clothes”—could cut down on the problem, says Wasserstein.
