4 Easy Steps To Avoid Return Fraud This Holiday Season

When you run a retail business, whether online or off, your profit margins can be changed to a great degree by several factors. Having items returned to you is definitely one of them. As the holiday season is one of the busiest for all retailers, it is also during this season (and particularly in the first few days after the holidays are over) that the risk of return fraud runs the highest.

There are several types of return fraud. The most common is a customer who returns an item that they have paid for with a check, but for the return they want cash. Another common return fraud occurs with clothing; the returner has, in fact, worn the item being returned, and they are now returning it for no good reason.

This is also called "renting", and it can mean a big loss for your business as the item may not be available for re-sale (actually this is the biggest problem with returns after the holidays, as retail sales tend to take a massive plunge).

So how can your business avoid return fraud this holiday season? We've compiled a list that will help, whether your business is an online one or brick and mortar.

* Conceive and stick to a return policy. Make sure you have a good return policy and that you stick to it. In particular, you may want to limit holiday returns (those purchased before December 25) to a week after the big date; that way you won't have anyone renting out clothes for the New Year's parties!

* Use credit - not cash - for returns. The big point of return fraud is for the "customer" to get cash back. Most stores will have some merchandise that will interest a legitimate returner, and store credit should be sufficient recompense for a gift that they don't need.

* Customer tracking. Creating some sort of system which allows you to track customers, their purchases, and their returns will help in smelling out and avoiding fraud.

Online businesses have an advantage here, as most purchases will be done through credit card or a third party such as PayPal. It's easy to see what customers are buying and who is doing it, and who is making too many returns.

* Require a receipt. Holiday retail means good bargains, and a good fraud artist will try and receive a present cash price on a holiday sale item. It's important to know what date you sold the item on, and for how much, in order to avoid losing extra cash.

A few simple procedures can help you maximize the profitability of your business during the holidays and avoid return fraud. Remember, while most people will play Santa during the season, some will play the Grinch and take advantage of unprepared retailers!