RFID Journal Editor Mark Roberti's Blog
RFID Could Reduce Return Fraud—a $14 Billion Problem
November 09, 2010
A press release came across my computer screen this morning, bearing the headline "Return Fraud to Cost Retailers $3.7 Billion." That's a big number, so I began reading.
The release said, "According to NRF's annual Return Fraud Survey, completed by loss-prevention executives at 111 retail companies, the retail industry will lose an estimated $3.68 billion to return fraud this holiday season, up from $2.74 billion last year. Return fraud will cost retailers an estimated $13.95 billion during the 2010 calendar year, up from $9.59 billion in 2009."
Wow! Nearly $14 billion in losses!
Return fraud is simply bringing back items you didn't buy at a specific retailer, and getting money back for them. The biggest problem in this area is that people steal goods and then return them.
Of those surveyed, 93.5 percent reported that they have experienced returns of stolen merchandise in the last year. When RFID Journal created its RFID Fashion Retail ROI Calculator (see RFID Journal to Give Away New Retail ROI Calculator at RFID in Fashion 2009 and RFID Fashion Retail ROI Calculator), we didn't include the reduction in return fraud as a potential benefit, because we had no data regarding the amount by which the technology could reduce such fraud.
But there's no doubt in my mind that RFID can put a big dent in this problem. If every item in an apparel store were tagged, and if the retailer had an RFID reader at the point of sale, then that store would know whether a particular product was sold or stolen. And if someone tried to return a stolen garment, the retailer could then call the police.
Another issue is buying an item at a discount and returning it, claiming it was purchased at full-price. I have a friend who does this all the time. She will buy a sweater before Christmas for $50, and then see the same sweater on sale after the holiday for $12. So she'll buy the $12 item and then return it using the receipt for the $50 purchase, pocketing the $38 difference.
If each item were individually identified through the RFID tag's unique ID, then when my friend returned the $12 item, saying it had cost her $50, the retailer would know the actual price for which that item had been sold. At that point, the retailer could then decide whether or not to take the item back and refund the difference.
To manage returns, retailers would need to have a policy in place stating that for an item to be returned for cash, its tag must still be on it. I don't see that as a big obstacle. It doesn't mean the tag must be sewn into the article of clothing—it just means the tag should not be cut off or removed. If a person hasn't yet worn a purchased garment, then there's really no reason to cut off the tag.
RFID can't solve all return fraud, of course. It won't help retailers deal with customers who buy a gown and wear it once to a wedding and then return it, nor will it help with the return of items purchased with counterfeit money. But if RFID could reduce the $14 billion in return fraud by even 10 percent (which, in apparel, it surely can), then that would add significantly to the return on a company's investment in an RFID system.
POST A COMMENT
What CEOs of RFID Companies Need to Know
Posted on: 12/18/2012
Tools for UHF Deployments
Posted on: 11/13/2012
RFID Journal Publishes Article No. 10,000
Posted on: 11/6/2012
Where to Find Good RFID Leads
Posted on: 9/27/2012
Talk to End Users About Their Business Problems
Posted on: 4/2/2012
RFID for a Good Cause
Posted on: 3/23/2012
About That Untapped Pool of Customers
Posted on: 3/15/2012
Hello! I'm Ready to Buy an RFID Solution
Posted on: 3/13/2012
Is There an Untapped Pool of RFID Customers Somewhere?
Posted on: 3/12/2012
How Small Companies Can Market RFID Successfully
Posted on: 3/9/2012
5 Common Mistakes Made by RFID Marketers
Posted on: 2/29/2012
Veterans Health Administration Seeks RTLS Experts
Posted on: 1/28/2011
How Do You Value Information?
Posted on: 11/17/2010
Maximizing Exhibitor ROI at RFID Journal LIVE! 2011
Posted on: 11/16/2010
Posted on: 11/9/2010
Seeking Judges for the RFID Journal Awards
Posted on: 11/8/2010
Hong Kong RFID Awards 2010 Announced
Posted on: 10/20/2010
Some Positive Coverage of RFID
Posted on: 10/19/2010
More Musings on Moore
Posted on: 9/23/2010
More Free Advice for RFID Vendors
Posted on: 9/22/2010
Free Advice for RFID Vendors
Posted on: 9/21/2010
Inside an RFID Industry Roundtable
Posted on: 9/17/2010
Wal-Mart's President Says EPC RFID Strategy Is Working
Posted on: 9/16/2010
Are RFID-Enabled Credit Cards Safer Than Magstripe Cards?
Posted on: 9/15/2010
Technology Predictions Aren't Always Accurate
Posted on: 9/14/2010
Should We Be Tracking Kids With RFID?
Posted on: 9/13/2010
Internet of Things Event in Tokyo
Posted on: 9/8/2010
The Future is Not Inevitably Bleak
Posted on: 9/7/2010
The RFID Privacy Conundrum
Posted on: 8/27/2010
Using RFID to Improve Online Availability
Posted on: 8/26/2010
Coca-Cola Event Exploits RFID on Facebook
Posted on: 8/25/2010
Awarepoint's Big RTLS Music Video Contest
Posted on: 8/24/2010
PBS NewsHour Responds to RFID Journal
Posted on: 8/19/2010
PBS NewsHour Misinforms Viewers on RFID
Posted on: 8/16/2010
Academic Navel Gazing Continues
Posted on: 8/12/2010
A Privacy Expert’s Misguided View of RFID
Posted on: 8/11/2010
Please Contribute to the Sinclair Laing Memorial Scholarship Fund
Posted on: 8/9/2010
Using RFID to Solve Postal Address Problems
Posted on: 8/6/2010
BNET Blogger Spreads False Info About Wal-Mart and Privacy
Posted on: 8/5/2010
RFID Not at Fault in Passport Test
Posted on: 8/2/2010
Why Isn't Wal-Mart Killing the Tags?
Posted on: 7/27/2010
Privacy Nonsense Sweeps the Internet
Posted on: 7/26/2010
Thank You, Bill Hardgrave
Posted on: 7/9/2010
Staff Spread Too Thin? RFID Can Help
Posted on: 6/22/2010
ABC Eyewitness News Presents Selective Facts About RFID Credit Cards
Posted on: 5/28/2010
Presentations now available
Posted on: 5/6/2010
Do You Want to Be an RFID Gorilla?
Posted on: 4/2/2010
Why Contextual Marketing Works
Posted on: 3/30/2010
Would Geoffrey Moore Validate Your Business Model?
Posted on: 3/17/2010
The Biggest Mistakes Vendors Make at Trade Shows
Posted on: 3/9/2010
The Biggest Mistakes RFID Marketers Make
Posted on: 2/28/2010
When Will RFID Become a Mainstream Technology?
Posted on: 2/23/2010
Build the Whole RFID Solution
Posted on: 2/18/2010
RFID Deployments Rarely Start in the C-suite
Posted on: 2/12/2010
Be wary of hotel solicitations
Posted on: 2/7/2010
Posted on: 2/5/2010
Welcome to the all new RFID Connect
Posted on: 1/26/2010
Founder and Editor
Add them to my Contact List
Recommend this blog
Mark Roberti is the founder and editor of RFID Journal. His blog focuses on all aspects of radio frequency identification and related technologies.
Latest Blog Posts
Marathon de Paris de l’internet des objets 2ème partie "Comment aborder les opportunités" à l’IAE Paris
iOS Software Development Kit for UHF RFID Readers
Using RFID to Track Tools and Equipment [Upcoming Webinar]
3 Ways to Maximize Your SharePoint Investment
Inspirações do RFID Journal LIVE! Brasil 2013
Palex Medical y la Fundación FIDISP juntos para mejorar la seguridad del paciente