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Key takeaways from the RCC Loss Prevention Forum: How to guard against return fraud

While a report of theft or fraud to the police may not necessarily lead to an arrest, RCMP encourage retailers to do it anyway.


Whether we own a retail business or work for someone else’s, theft and fraud become cringeworthy yet inevitable realities of dealing with the public.

As Canada Post security director Rita Estwick noted, the retail sector is customer-centric. This begs the question of how retailers can continue to profit and maintain their customer-service standards while guarding against theft.

Estwick and Guy-Paul Larocque of the RCMP discussed all the different ways fraudsters perform scams in  retail during the Mitigating the Creative Deception of Professional Fraudsters in Retail segment of the Retail Council of Canada’s Retail Loss Prevention Forum 2022 on Apr. 14.

The keyword here is “creative.”

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As Larocque put it, return fraud is now a full-time business. Scammers participating in this type of exploitation of return policies essentially sell “back” counterfeit items to legitimate retailers and turn a profit. They work as individuals or they work in coordinated groups, hitting multiple stops and covering more ground. They may offer their skill for generating income from fraudulent returns to other consumers as a service.

While a report of theft or fraud to the police may not necessarily lead to an arrest, Larocque encourages retailers to do it anyway.

“Any piece of information can be critical to advancing an investigation,” said Larocque, who is acting officer in charge at the Canadian Anti- Fraud Centre.

“Especially if losses are significant, or if there’s any indication that it is part of an organized network, we highly recommend victims report it to the local police. We also encourage victims to report it to the anti-fraud centre.”

Larocque said police recognize that it is ultimately the retailers’ decision to make a report or accept the loss as the “cost of doing business.” However, reporting to the anti-fraud centre allows investigators to leverage the information given to them and identify trends they can share with one another. This enables a more coordinated approach with different investigative units. Additionally, the anti-fraud centre will work to increase public awareness on these trends.

E-commerce channels and supply chain fraud

Ever dealt with an angry client who said they ordered something online and opened their package to find some miscellaneous item inside? This was likely not an accident. Larocque mentioned that this too is an ongoing trend where someone participating in a scam deliberately opens the package and switches the contents before the shipment reaches its final destination.

What about the client who calls to say that they never received their online order and demand a return, yet their address is quite a distance from that in the purchase record? This is yet another red flag and indicative of another trending scam.

Larocque’s main piece of advice is for retailers to tailor their customer service standards so that they incorporate protections against return-policy exploitation.

This could mean explicitly communicating or posting the return policy in a way that is visible and comprehensible to everyone before any purchases are made.

Real return vs. Fake return

They key here is to ask a lot of questions or “take a layered approach,” in Larocque’s words.

In this situation, retailer’s should keep in mind that the goal of fraudsters is to get the funds returned in cash and to get them fast.

A first question could be, “at which location did you make this purchase?” which allows them to cross verify the purchase against other retail locations.

And then there’s the old “do you have your receipt?” 

In cases where an honest customer doesn’t have proof of purchase, retailers can offer a store credit or item exchange — something our return fraudsters do not care for.