RFID: A Novel Approach to Combatting Return Fraud

RFID identification down to the specific item level is game-changing, allowing you to track items and the success of your mitigations. Integration with point-of-sales (POS) systems amplifies this power even more, with payoffs that go far beyond traditional surveillance and loss-prevention methods and technologies. For example, consider the problem of fraudulent returns, a monster loss driver for retail. In a 2021 study, the National Retail Federation (NRF) estimates that 2020 returns to retailers amounted to $428 billion, approximately 10.6 percent of total U.S. retail sales in 2020. Of those returns, roughly 5.9 percent —or $25.3 billion were fraudulent.

Combining item-level information with POS data about transactions can flag “returns” for items that have never been sold while associates are starting to process a return. Associates can then ask the right questions, prompted by the software or by previous training, to understand whether return fraud is being attempted. Perpetrators can be detected early, before multiple stores are affected by fraudulent returns, a common pattern in organized retail crime. RFID-based Electronic Article Surveillance (EAS) software can provide insights that are not easy to detect by analyzing a single set of data—such as returns fraud—even when goods are bought and returned at different stores or from diverse channels such as mobile, in-store, ecommerce, or hybrid sales channels such as buy-online-pick-up-in-store (BOPIS).  Essentially, RFID gives you an unprecedented ability to track a specific item.  This allows loss prevention teams to easily implement tactics that are both simple yet impossible for thieves to get around. 

It’s critical to watch for fraud across the entirety of their customer journey. Bad actors are increasingly diversifying their efforts by exploiting less-protected touchpoints. ”

With the changes that are happening to the way consumers shop, these new loss prevention strategies are imperative.  Thieves and fraudsters will probably find new ways to create shrink by exploring weaknesses in multi-channel-fraud prevention.  Jordan McKee, research director at Forbes warns store loss prevention decision-makers that “It’s critical to watch for fraud across the entirety of their customer journey. Bad actors are increasingly diversifying their efforts by exploiting less-protected touchpoints.”

Fortunately, the solution here is simple.  Gaining the ability to track specific items reduces the workload the loss prevention staff while simultaneously increasing their effectiveness.

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Loss Prevention

RFID EAS