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5 Ways to Fight Retail Return Fraud

By Brett Snider, Esq. | Last updated on

As Christmas draws nigh, so does the day after Christmas when customers will attempt to return gifts. And some stores are ready for an onslaught of return fraud.

In order to combat this wave of phony returns, big toy and electronics retailers are shortening their return periods this year, reports NBC's "Today."

Don't be caught snoozing after Christmas. Here are five ways your business can combat retail return fraud:

1. The 'Big Black Tag.'

Every year, consumers will purchase clothing for loved ones which they will wear once ... and then return. This practice is called "wardrobing," and it's an issue for clothing retailers year-round.

Department store mainstay Bloomingdale's has come up with a way to lay waste to wardrobers: require a giant ugly tag for any returns that will prevent anyone from wearing the garment in public.

2. Tighten Return Periods.

Consumers may be mindful to check each store's return policies, so it might behoove your business to update them. According to a survey, Best Buy, Sears, and Toys R Us will be slimming their holiday return periods to reduce return hassle, reports "Today." In some cases, the deadline for returns may be as soon as January 9.

3. Maybe No Returns?

Assuming that your business has its return policy posted in its brick-and-mortar locations and online, there is no legal obligation to offer returns for any non-defective items outside of your store's policy.

Retail fraudsters may try to take advantage of more lenient policies in order to get cash or credit for unpurchased or out-of-store items, but you can easily close off this liability by offering no returns.

4. No In-Store Returns for Online Purchases.

Business owners might take a page out of Sports Authority's book and state that "online purchases cannot be returned to our stores." Requiring returns directly to the dot-com side of your store may deter would-be fraudsters who rely on the confusion of the in-store return rush to bamboozle store employees.

5. Do Not Offer Cash for Returns.

Offering cash for returns is an invitation for massive return fraud. Retailers are not at all required to offer cash for returns -- even for defective items -- and store credit will serve most honest consumers just as well.

If you're worried that your policy is skirting the law, contact an experienced business law attorney near you.

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