Protect Your Retail Business from Fraud: Stay Ahead of the Game

[San Ramon, Jan 17th 2024] - Retail fraud continues to be a major challenge, costing businesses billions annually. As fraudsters evolve their tactics, it’s crucial for retailers to stay informed and proactive. Let’s dive into some of the most common retail fraud schemes, how to identify them, and why they’re so tricky to manage.

Common Retail Fraud Schemes

1. Chargeback Fraud (Friendly Fraud)

   • What it is: A customer makes a legitimate purchase but later disputes the transaction, claiming it was unauthorized or the goods weren’t received.

   • Why it's tricky: The chargeback process often favors customers, leaving merchants scrambling to prove the legitimacy of the transaction.

   • Fraud loss: Chargeback fraud costs retailers over $125 billion globally each year.

   • How to identify: Look for patterns like frequent disputes from the same customers, claims without prior communication, or orders to high-risk regions.

2. Return Fraud

   • What it is: Customers exploit return policies by returning stolen goods, used items, or counterfeit merchandise.

   • Why it's tricky: Policies aimed at improving customer satisfaction can inadvertently create loopholes for fraud.

   • Fraud loss: U.S. retailers lose approximately $27 billion annually to return fraud.

   • How to identify: Monitor customers with high return rates, mismatched receipts, or damaged items without valid proof of purchase.

3. Employee Theft

   • What it is: Internal fraud where employees steal merchandise, cash, or manipulate the POS system.

   • Why it's tricky: Employees know the system and can bypass controls, making detection difficult.

   • Fraud loss: Employee theft accounts for 35% of retail shrinkage, costing over $50 billion annually worldwide.

   • How to identify: Watch for unusual cash register activities, discrepancies in inventory, or employees staying late frequently.

4. Account Takeover Fraud

   • What it is: Fraudsters gain unauthorized access to customer accounts, using stolen credentials to make purchases or redeem loyalty points.

   • Why it's tricky: These attacks can mimic legitimate customers, making it difficult to detect.

   • Fraud loss: Account takeovers cost businesses over $11.4 billion annually.

   • How to identify: Look for unusual login locations, rapid changes in account details, or large transactions shortly after account updates.

How NewRosetta Can Help

At NewRosetta, we empower retail businesses to stay one step ahead of fraudsters. Our cutting-edge AI-powered fraud prevention platform detects and stops fraudulent activities in real-time, ensuring your business and customers are protected.

• Advanced Fraud Detection: Identify anomalies and flag high-risk transactions before they cause damage.

• Behavioral Analytics: Monitor user behavior to detect account takeovers and insider threats.

• Customizable Rules: Tailor fraud prevention strategies to match your business needs and risk tolerance.

• Comprehensive Reporting: Gain insights into fraud trends and loss prevention performance.

💡 Don't let fraud erode your bottom line. Contact us today at sales@newrosetta.com to learn how NewRosetta can safeguard your retail business.