With the winter holiday shopping season and subsequent return surge almost behind us, electronics retailers are now bracing for the next wave of returns. While 2023 brought a notable decline in overall retail returns, dropping 8.95% and breaking the pattern of consistent annual increases, the industry simultaneously experienced a surge in fraudulent returns, soaring to a record $101 billion—a $16 billion increase from the previous year.
One contributor to the growing problem of return fraud is the trend of shoppers flocking to purchase TVs for their upcoming Super Bowl watch parties with the intention of returning the TVs after the big game. Referred to as “wardrobing,” also known as “renting,” football fans want to impress guests with a massive TV for the big game and then return it afterwards.
The buy-watch-and-return trend
The excitement surrounding the Super Bowl ignites fan enthusiasm, translating into a total projected spend of $17.3 billion as consumers prepare for the big game day with purchases ranging from food and beverages to televisions, furniture, team apparel and accessories, and decorations. Amidst the pre-Super Bowl spending frenzy, electronics retailers see a drastic spike in TV sales. For example, goTRG takes returns from our clients and resells them on their behalf on a variety of proprietary and third-party marketplace “recommerce” channels. We refurbish close to 600,000 TVs annually and (re)sell close to a million, and 15% of our annual TV sales occur in the month preceding the Super Bowl. However, this trend is shadowed by the darker side of consumer behavior—return fraud.
Following the Super Bowl, retailers and manufacturers brace for the annual swell of returns—a “buy-watch-and-return” pattern that’s become almost as predictable as the game itself. While the average monthly TV return rate is 8%, according to goTRG’s internal returns data, the period following the Super Bowl experiences a notable surge in TV returns, with rates in March climbing to 11%—a 36% increase. Similarly, the highest monthly return rate for TVs with cracked screens also happens in March, jumping up by 15%, suggesting return fraud.
Strategies to tackle Super Bowl TV return fraud
Retailers can better protect themselves from the threat of return fraud by developing a comprehensive mitigation strategy with preventative measures set in place at each step of the purchase and post-purchase journey. The following recommendations are ones that can be easily implemented by retailers, both large and small, to protect against return fraud for all products, including TVs.
1. Identify potential return fraud. Return fraud presents a growing challenge for retailers, yet certain patterns and behaviors can alert them to such activities. Some red flags retailers should be aware of include a sudden jump in the number of returns, serial returners, suspicious customer data, and consistent patterns of return abuse. Having advanced returns management software in place will pick up on these red flags and alert the retailer of suspicious activity.
Additionally, irregularities in employee processing of returns and the frequency of returns at specific store locations can also be telling. Vigilant tracking of these signs assists in detecting and mitigating fraudulent returns.
2. Use advanced returns management software. Technology plays a pivotal role in the fight against retail return fraud, especially during peak times such as the end of Super Bowl season. Finding and implementing an innovative returns management software that can seamlessly integrate into a retailer’s point-of-sale (POS) system will help to make returns transparent and traceable, helping to identify habitual returners, as well as identify fraudulent activity.
Retailers should use software that has the capabilities to identify the entire chain of custody for each product including its every touchpoint and movement for reconciliation purposes. This will allow a retailer to narrow down which locations specific items came from and attain the business intelligence needed to help catch criminals when any fraudulent activity occurs.
3. Work with a refurbishment partner. Partnering with a sophisticated and certified refurbishment partner is key in identifying theft once a product has been returned. For example, a meticulous inspection, diagnostic testing, and refurbishment process enables technicians to detect missing parts from within an electronic gadget, a feat not easily achievable without a partner equipped with advanced refurbishment capabilities.
Trained technicians can leverage a software's detailed tracking of product interaction across every touch and movement to identify the original source of the fraudulent activity. The combined efforts between returns experts and cutting-edge software have proven to be powerful combatants for return fraud.
4. Implement effective return policies. Many retailers provide shoppers with incredibly flexible return policies, including free returns. Due to rampant TV wardrobing and other types of return fraud, retailers have begun implementing and testing out stricter return policies to combat return fraud, including charging restocking fees for returns.
When it comes to creating more stringent return policies, retailers are advised to require a receipt for every return, ensure product packaging is intact, and allow only short time frames for returns. When a receipt is not present, offering exchanges or store credit instead of cash refunds can reduce the risk of fraudulent returns. In addition, asking for an ID to match customer and payment data would help deter criminals from targeting a merchant. During the post-Super Bowl season, retailers should enact stricter return policies as this is the most active time for criminals to prey on retailers’ vulnerabilities.
5. Recognize the role of employees. When an employee lacks incentivization or proper training to spot suspicious activity, that store can easily become a target for fraud. Employees play a pivotal role in managing in-store returns and identifying fraudulent ones. All staff involved in the transaction process should be trained to spot signs of fraud. From mismatched product packaging to sketchy receipts and inconsistent data, a store’s employees can be their greatest vigilantes in fighting crime or their biggest perpetrators in enabling fraud to occur.
Employee training, incentives, rewards, and a positive work environment create a layer of protection against fraudulent returns. Staff should keep detailed records of transactions and returns, allowing them to trace the history of purchased items and identify patterns that could indicate fraudulent behavior.
Safeguarding retail integrity beyond the end zone
These insights into consumer returns underscore the need for vigilance and advanced retail strategies. Retailers, in response to this trend and the potential for fraud, should tighten return policies and employ tracking systems to identify serial returners, ensuring the sustainability of their sales strategies during this peak retail return fraud period. To combat return fraud, innovative processes and fraud identification processes are imperative.
Retailers must tackle this head-on, ensuring that the Super Bowl period is not only a celebration for fans but also a victory for retail security and integrity. It's essential for retailers to understand and anticipate these trends, not just for inventory and sales strategy optimization but also for crafting more robust fraud prevention measures.
