THE TAG BLOG
Return Fraud Spotlight | High Risk Designer Tags
FEBRUARY 20 2021
WARDROBING RETURN FRAUD OF DESIGNER CLOTHES
When it comes to managing the risks of return fraud, secure tamper-proof tags seem the most apparent and low-cost preventative action a merchant could take. Since the introduction of hard plastic EAS tags in stores 60 years ago to prevent shoplifting, shoppers worldwide became used to such loss prevention measures.
The e-commerce boom of the post-COVID-19 pandemic is seeing a more significant percentage of transactions occur online, taking business away from traditional brick-and-mortar retailers.
However, what is still yet to entirely shift are equivalent loss prevention measures designed specifically for e-commerce. The traditional, stereotypical profile of a shoplifter or return fraudster would be someone from organized crime.
Switch to today, and the faceless nature of e-commerce and the perpetrators are not typical scammers. The "I can get away with this without anyone ever knowing" mentality is leaving merchants exposed to a new type of return fraud perpetrator who typically does not see the harm of their actions.
The most important questions become: why is this happening, and how can e-commerce return fraud be stopped?
WHY IS E-COMMERCE RETURN FRAUD ON THE INCREASE?
- Special Occasion or Social Borrowing
- Snap and Send Back
- Affordability of a Revolving Wardrobe
- Faceless Nature of E-Commerce
1. SPECIAL OCCASION OR SOCIAL BORROWING
We must think of other reasons why non-criminals would return worn or used merchandise to retailers if they are not typical shoplifters. Special occasion or social borrowing are two of the main driving factors why people commit wardrobing return fraud.
Not to be seen in the same outfit twice or wanting something new to wear are the internal justifications wardrobers tell themselves to permit this behavior.
Prevent clothes from being purchased for a special occasion and fraudulently returned with a 360 ID Tag. Shown here is the Classic Loop Pack - 22mm.
2. SNAP AND SEND BACK
"Snap and send back" along with social pressures to keep up with fashion bloggers are the social media drivers of return fraud, real or imagined. To maintain status, online shoplifters fraudulently "borrow" clothing, shoes, and accessories from e-commerce merchants merely for the photo op.
Instagram posts and family photos are situations where wardrobing return fraud is common
E-commerce merchants inspecting returned products need to be on the lookout for signs of wear or repeated customer return patterns, often referred to as serial returning.
Prevent clothes from being purchased for the photo op on the Gram with a 360 ID Tag. Shown here is the Classic Loop Pack - 22mm.
3. AFFORDABILITY OF A REVOLVING WARDROBE
A continually revolving wardrobe's economic reality is unsustainable for most, leading some to think that return abuse is their only option. The justification of these actions as a victimless crime and thinking the merchant can resell the products for full price leads to the thought of "so what's the harm"? The reality is that returned merchandise is often liquidated, sold at a discount, or becomes an environmental burden piling up in landfills.
So how likely is it that those committing return fraud are not in an economic or socially disadvantaged position? Secure Authentication Brands' research project looked at online shoppers to determine who is committing return fraud. Here's what we discovered:
37% of respondents admit to wardrobing return fraud where an item is used or worn once and returned for a full refund
Of those respondents: 63% were college graduates, 58% earn over $50/year, 61% are Skilled, Professional, or Managerial employees. This profile does not match a stereotypical shoplifter and broadens the risk associated with e-commerce an undetected cases of return fraud.
4. FACELESS NATURE OF E-COMMERCE
The faceless nature of e-commerce coupled with free shipping and return policies, often at 30 days or more, makes the above statistics troubling for merchants. Free return shipping labels and liberal return policies coupled with not having to speak with a store associate make it easier for consumers to commit return fraud like wardrobing, counterfeit product switching, or tag switching.
Just like store security tags, clothes can still be tried on at home with a 360 ID Tag attached, just not worn out or swtiched and then returned.
Shown here is the Classic Loop Pack - 22mm.
Even the very conscientious e-tailer could miss identifying fraudulently returned items, inadvertently place the product back in inventory, and put their reputation on the line by reselling the used or fake product to an unsuspecting consumer.
EASY TO COMMIT E-COMMERCE RETURN FRAUD
Adding to the ease of committing return fraud are designer clothing hang tags. It is shocking to look along the racks at high-end department stores and see tags that can be removed and replaced without any evidence. Yes, they look sophisticated and match the brand's esthetic, but when some dresses cost more than a second-hand car, there should be more importance placed on tamper-proof tags. Shift these same products to an e-commerce merchant, who is likely offering free shipping and free returns, and the risk of return fraud escalates.
Let's look at some examples of designer tags and see how easily they can be removed and replaced without tamper-evidence. These types of tags show how exposed e-commerce merchants, and retailers, are to return fraud.
DESIGNER TAGS - A HIGH RISK OF RETURN FRAUD
The Looped Cord Tag
A tag that is typically seen on designer clothing is the looped cord tag. A silky cord attaches the brand's clothing hangtag via a loop through a buttonhole, or a clothing label tied with a double knot as seen here.
There is no wear and return or wardrobing return fraud prevention provided by these tags as they are easy to take off and easy to replace without evidence.
What is striking is the ease of removal and subsequent reattachment of the tag. Other than the perpetrator, who else would know whether the tag was removed, the item worn, and the tag replaced?
These brand becomes a prime target for return fraud when unsecured tags are on their clothing. A quick photo shoot for an Instagram outfit of the day, #OOTD, or worn once to a party and returned for a full refund can go undetected, defrauding the e-commerce merchant.
Unscrupulous buyers who engage in wardrobing return fraud are known to seek out these types of tags.
When clothing items are subjected to wardrobing and then returned, they are most likely still processed as a legitimate return. They are unknowingly put back in the reverse logistics channel and resold to an unsuspecting, honest customer. Brands are inadvertently putting their reputation for trustworthiness on the line when they take few preventative steps to protect their merchandise from return fraud.
The Safety Pin Tag
What can be more straightforward than removing and reattaching a safety pin? The inventor of the safety pin intended this action to be simple! So why are brands using safety pins to attach their clothing hang tags?
Safety pins tags provide no protection from wear and return or wardrobing return fraud.
There is no evidence of tampering when reattaching a safety pin tag, allowing devious customers every opportunity to commit return fraud. Statement pieces of clothing or special occasion dresses need more protection than a safety pin could offer! Items most at risk for wardrobing need tamper-proof, home removal security tags that prevent any opportunity for return fraud.
The Plastic Barb
The most prevalent and straightforward means of attaching hang tags to clothing is the plastic barb. Found on items with a broad range of values, plastic barbs do not offer any protection from wear and return as reattaching the barb is easy.
See how easy it is to remove and replace a plastic barbs! They provide no protection from wardrobing return fraud or counterfeit tag switches.
Abusing the returns honesty system can be done with a 1000 barb tagging gun kit purchased on Amazon for $4.69 plus $0.99 shipping. Retagging circumvents any efforts towards loss prevention by allowing the dishonest buyer to repeatedly replace plastic barb tags, costing them a mere half a penny a time.
BRANDS THAT RECOGNIZE RETURN FRAUD
Designer clothing brands cannot be oblivious to the risks associated with return fraud and refund abuse. Standout examples of brands who have taken steps to protect their clothing from wardrobing with strong deterrents have modified the traditional style of tags by adding tamper-proof locking mechanisms. It is a subtle addition, but one that their loss prevention team knew they had to take to reduce exposure to wear and return, wardrobing fraud, counterfeit product switches or tag switches.
Adam Lippes' Locking Seal Tag
Adam Lippes' hangtag still incorporates the silk cord and traditional cardboard hang tag but uses a custom "AL" branded locking seal to securely attach their tag to the clothing label. Their solution is smart protection against return fraud and acts as a strong deterrent.
However, being connected to the dress's inside clothing label does reduce its effectiveness in preventing wardrobing return fraud.
The dress might indeed be a little uncomfortable to wear with a large tag poking into the skin, but what is a little discomfort to a would-be fraudster?
On close inspection, someone who is handy with a needle and thread could detach the gold bar, slip out the tags, wear the dress and then reassemble it with black thread. It is devious, but assessing all the risks of return fraud has become a necessity.
Olivia Palermo's Locking Seal Tag
Likewise, Olivia Palermo has taken a similar approach with a tamper-proof locking mechanism to secure their clothing hang tags.
A stronger deterrent to return fraud would be the placement of this tag on an outside dress seam.
There are, however, ways around these tags too. Exposing the shortcomings of plastic locking seal tags is found on YouTube.
Hackers are there to school fraudsters on removing these tags using a knife blade to prise them apart.
Resealing them involves adding a small dob of glue and clicking the two halves back together.
The lengths some people will go to is shocking but an unfortunate reality of e-commerce.
Off-White's Zip-Tie Orange Tag
Off-White is the pioneer of branded security tags, making the functional locking mechanism a fashion statement while also drawing subtle attention to its stance against return fraud.
The orange locking mechanism is deliberately hanging below the hem of this top, making wardrobing impossible or obvious if the wearer leaves the tag attached.
Fanatics of the Off-White brand are, however, known to leave the tags visible as a fashion statement.
Denim Anti-Counterfeit Return Tags
The last 15 years have seen a proliferation of counterfeit denim circulating globally, and in the late 2000s, many brands took a stance against the thriving illicit trade.
Current Elliott and True Religion are two brands whose jeans now come with tamper-proof, home removal security tags.
In both cases, the hang tags are secured to a belt loop, making them a robust return fraud deterrent against wardrobing and counterfeit product switches.
NEW ANTI-RETURN FRAUD TAG
360 ID Tag – a versatile tamper-evident return tag solution
The retail shrinkage problem driven by increasing instances of wardrobing return fraud, price switching, receipt fraud, and cross retail returns has escalated rapidly along with the explosion of e-commerce and has sellers searching for solutions to eliminate cases of return abuse.
The use of tamper-proof return tags seen in department stores and attached to certain fashion brands' clothes has increased. However, custom manufacturing of such return tags is out of reach for most of us. So, whether you are a boutique owner, a fashion brand, or an online seller (like I am on ebay and Poshmark), we have a versatile solution to ward off unscrupulous shoppers looking to engage in return fraud or abuse.
A versatile solution for clothing, shoes and accessories. Shown here are the two types of the anti-return fraud 360 ID Tag.
When designing the patent-pending 360 ID Tag, we wanted to account for all return fraud scenarios. Whether it was to stop instances of wear and return or wardrobing, price tag, or counterfeit product switching, we knew the solution had to be versatile, robust, and fraud-proof.
Honest customers value the added protection of the anti-return fraud tag
The return tag also had to be easily understood by consumers and only deterring dishonest buyers. Honest consumers appreciate the added protection measures provided by the return tag. When buying something represented as new, they expect it to be exactly that and would be horrified to discover that it was previously worn by someone else.
E-commerce businesses also reduce their exposure to fees, particularly with PayPal. As of October 2019, PayPal is no longer returning the original payment processing fees to merchants when they issue a customer a refund.
Clothing with the anti-return fraud 360 ID Tag can still be tried on for fit. Shown here is the Extended Loop Pack for dresses - 22mm.
The return tag solution includes a 164' roll of return tag material dispensed as needed and uniquely numbered tamper-evident security seals. Even in the unlikely instance where another person has a 360 ID Tag supply, the return tag is non-transferable due to the serial numbers.
After cutting the return tag material from the roll, it can be looped through merchandise easily without risk of damaging the item, the two ends secured with the tamper-evident security seal. The obvious VOID pattern reveals when the seal is removed or tampered with, providing the perfect deterrent to eliminating return fraud instances, hurting sellers' bottom line.
Adding a 360 ID Tag to merchandise still allows the consumer to try the item for fit or size. The return tag solution starts at just 22 cents per-use and is available in 2 widths, 10mm or 22mm, and is sold separately or in 4 different package combinations suited to varying merchandise types.
Want to talk about return tags, have questions, or need some advice? Add a comment below or send me a message at email@example.com, and I will be happy to assist.
CHELSEA DUHS - FOUNDER 360 ID TAG
Choose a 360 ID Tag Pack to suit your business
We offer 4 different 360 ID Tag packs with varying combinations of return tag material and tamper-evident security seals, or you can build your own combination. Have a look at the 360 ID Tag products and choose the return fraud solution that suits the types of products you sell online.
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