Online Retailers Develop New Means Of Combating Fraud—And It Has A High Cost

source: Beauty And Health Tips

The Retail Equation estimates that fraud cost retailers up to $17 million or more per year.  Fraud can include many actions, but in the end, it is the retail that will pay the highest cost. Because of the rising costs of multiple returns from certain customers, and this indeed factoring into fraud in the eyes of many retailers, some extreme measures are being taken

A report in the Wall Street Journal stated that one of the retailers taking the measures to cut down on fraud is online megastore Amazon.  The retailer is reportedly barring, and even in some case booting, individuals they view as excessive amounts of returns.  The returns are an intricate part of the equation they use to determine the possibility of fraud, along with suspicious reviews on the site as well as requests for items not received to be reshipped or refunded.

In late March and early April, the retailer performed a massive ban on customers, just in the name of fraud protection.  Other online retailers are joining beginning to track how often their customers return items, including Best Buy, Victoria’s Secret and Home Depot, all in an effort that seems to point to punishing individuals for abusing return policies.

In many of the reported Amazon cases, the retailer failed to inform the customers that they considered their returns to be excessive before just outright banning them from purchasing on the site ever again.  The Wall Street Journal spoke to several customers who had received an email and were then banned from the retailer's site.  Many of the bannings, thus far, seem to be centered more around the act of review fraud. 

When contacted, many of those banned admitted to the actually violating the retailer's review policy.  They stated they had been given a free item or a gift card, in reward for the reviews they left.  Others stated they had left a review after even receiving the product for free or at a major discount.  Several others stated they had no recollection of having violated any policies.

The return of items in and of itself can cost many retailers a large amount of month.  However, when you look at the fact that many customers are purchasing and reviewing items, in order to inflate the reviews of a third-party seller, that in some cases they are returning, you can see how the problem can begin to escalate rapidly.  

In March it was reported by The Wall Street Journal that a firm, the Retail Equation, tracks customer returns dating back years.  If they see a growing trend of returns, and possible fraud, they will notify the retailer, who more often than not will now ban the customer from their website and further purchases. 

Will the banning of customers by online retailers become a growing trend?