THE TAG BLOG
E-Commerce Returns Fraud:
How to prevent wardrobing & product or tag switches
DECEMBER 07 2020
E-COMMERCE AND INEVITABLE RETURNS
Returns are an inevitable part of e-commerce, and allowing easy returns is extremely important to consumers. On the other hand, when returns are fraudulent, it becomes vital to employ loss prevention measures adapted to the needs of e-commerce.
The anonymity of online shopping has deceitful consumers feeling emboldened due to online returns' faceless nature, freeing themselves from wrongdoing by justifying their behavior as a type of friendly, harmless fraud. These consumers are taking advantage of the returns process and gaining financially by deceiving businesses, causing a loss of profits and inventory devaluation.
Returns fraud should not be dismissed as inevitable for e-commerce
Despite this being dismissed by some as merely the cost of doing business online, you can take preventative measures by identifying types of returns fraud and implementing proactive solutions to deter these behaviors.
TYPES OF RETURNS FRAUD
- Wardrobing / Wear & Return
- Counterfeit product switches
- Cross retailer returns
- Tag switches
1. WARDROBING / WEAR & RETURN
Fraudulent returns in the category of wardrobing, or wear and return, happen when a consumer buys merchandise, uses it briefly, and returns it for a full refund. Consumers are committing online shoplifting by purposely returning the non-defective item, having used it at no cost.
Parties, family photos, and special occasion events, like proms, are prime targets for wardrobing returns fraud.
Some clothing manufacturers make this practice easier by using tags attached with petite safety pins or cord neatly tied in a double knot that can easily be removed and reattached to an item without any evidence of tampering.
Return fraud of preowned items is often overlooked
An often-overlooked category is preowned items, sold on various online marketplaces, which have no tags and show existing wear. Assuming a flexible 30- or 60-day return policy, preowned items are susceptible to wardrobing because the buyer has no evidence of returns fraud to cover up and ample time to wear and return.
Driving the phenomenon of snap-and-send-back is social media and the desire to post new and on-trend outfits of the day, #OOTD. Influencers looking for engagement of their followers feel the pressure of maintaining their status and are defrauding businesses by only wearing items for a photo op and then returning them.
This false reality leads to broad social pressures to keep up with fashion bloggers and the hesitancy to be seen in the same outfit twice. However, without access to an unlimited budget clothing, shoes and accessories are fraudulently 'borrowed' from retailers when purchased, photographed, and returned for a full refund.
Serial returners are being tracked on social media
Snap-and-send-back has become so prevalent that ASOS announced tracking social media accounts of serial returners and blocking those abusing their return policy.
Social media influencers can be prevented from engaging in snap-and-send-back with a 360 ID Tag. Shown here is the Classic Loop Pack - 22mm.
3. COUNTERFEIT PRODUCT SWITCHES
The rise of e-commerce has contributed to the proliferation of counterfeits circulating the globe. While counterfeiting is not new, shoppers can more easily purchase fake items from hard-to-police third-party sellers.
The concern for e-commerce businesses is when a scammer buys a counterfeit item for a fraction of the authentic item's value, purchases the real thing from an authorized seller, and returns the fake to that seller for a full refund. Adding to this issue is recently confiscated counterfeit merchandise by customs and border officials, as it appears extremely genuine and more challenging to detect.
With returns hitting 30%, even the very conscientious e-commerce retailer could miss identifying the counterfeit switch, inadvertently placing the product in the reverse logistics channel, and putting their reputation on the line by reselling it to an unsuspecting consumer.
4. CROSS RETAILER RETURNS
Another example of fraudsters exploiting loopholes happens with cross-retail returns. In this scenario, the consumer takes an item that has either been stolen or purchased elsewhere for a lower price and initiates an in-store, non-receipted return refunded to a gift card or as cash.
This practice is most prevalent during the holidays when stores are busy, and price promotions are commonplace.
5. TAG SWITCHING
Items tagged with a traditional plastic barb are most at risk from being fraudulently returned. Abusing the returns honesty system can be done with a 1000 barb tagging gun kit purchased on Amazon for $4.69.
Tag switching allows the dishonest buyer to return less expensive but similar-looking items at higher prices easily and repeatedly.
NEW RETURNS FRAUD SOLUTION
360 ID Tag – a single-use, tamper-evident return tag
E-commerce businesses are increasingly walking a fine line between consumers' demands for more flexible and lenient returns policies while also alleviating the risk of returns abuse. Achieving balance is possible with a new single-use return tag that deters returns fraud without penalizing honest shoppers with harsher policies.
Invented by an ebay seller looking to protect designer merchandise from unscrupulous buyers, the 360 ID Tag is a win-win for both consumers and businesses fighting against returns abuse. The patent-pending return tag gives e-commerce retailers a low-cost, practical, and easy-to-use loss prevention tool, strengthening their existing return policies.
The 360 ID Tag is fraud-proof and designed to stop wear and return, wardrobing, price tag, and counterfeit product switching outlined above. E-commerce businesses can still offer great returns experiences to their valuable, honest shoppers while detecting and deterring returns policy abuse by scammers.
Prevent clothing from being worn and returned with a 360 ID Tag. Shown here is the Classic Loop Pack - 22mm.
How the return tag works
A 360 ID Tag pack includes a 164' roll of tag material, dispensable to the required length, and uniquely numbered tamper-evident security seals. Even in the unlikely instance where a consumer has a supply of 360 ID Tags, the return tag is non-transferable due to the serial numbers.
The tag material is malleable and easily loops through merchandise without risk of damage, and the tamper-evident security seal reveals an obvious VOID pattern when altered or removed.
Customers who receive merchandise with a 360 ID Tag attached can freely try on and assess the item while at home. Once they have committed to keeping and wearing or using the merchandise, the tag is removed with scissors or by peeling back the seal. Customers wishing to return their purchase leave the 360 ID Tag intact, making for a predictable, faster, and less labor-intensive return process.
Benefits to e-commerce merchants
The measurable payback to businesses using the 360 ID Tag comes from handling fewer fraudulent returns. While adding a 360 ID Tag to items takes a minute or two at the front end of the sales cycle, businesses can take this proactive step and minimize their exposure to those looking to abuse flexible returns policies.
Receive back what you sent out in a saleable condition
The benefits of receiving returned merchandise in a saleable condition and not devalued by wear or use are substantial. Businesses can recoup the small upfront cost of adding the return tag by lessening the labor burden of handling returns and inspection of merchandise for authentication or signs of use.
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.
Additionally, a reduced volume of returns aligns with the latest consumer-demanded market trend towards sustainability, with lower environmental impact due to fewer carbon emissions and fewer products ending up in landfills.
The anti-return fraud tag starts at just 22 cents per-use and is available in 2 widths – 10mm or 22mm. The 360 ID Tag can also be customized for larger orders with a business' logo and return policy.
Want to talk return tags, have questions, or need some advice? Add a comment below, or send me a message at firstname.lastname@example.org, and I’ll be happy to help you out.
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.
The act of wardrobing; where shoppers buy an item, to use or wear and return for a full refund; is a form of return fraud or abuse and is on the rise for e-commerce stores. By adding a return tag to items sold online, businesses can deter this brazen consumer behavior. See how a 360 ID Tag can work for your store.Read more
A surge in online sales this year, mainly due to the global COVID-19 pandemic, could mean a corresponding surge of returns in the new year. Businesses using the 360 ID Tag can expect less anxiety with the influx of January 2021 returns, making for a predictable and smoother returns process for merchants and consumers.Read more
Returns are an inevitable part of e-commerce, and allowing easy returns is extremely important to consumers. On the other hand, when returns are fraudulent, it becomes vital to employ loss prevention measures adapted to the needs of e-commerce.Read more