There’s been a point in all of our lives where we have ordered an outfit or two online to wear out that we then return after wearing it. This is known as return fraud, and is becoming a very expensive problem for retailers.
When I first started out as a fashion blogger, I didn’t have the money to fund all the outfits I wanted to create and so often bought clothes with every intention on returning them after. At the time I was so focused on showcasing my creativity and styling I didn’t once stop to think about the effects on the other side.
This week I read an article on Business of Fashion which discussed a whole new type of return fraud, in which customers are buying designer goods and returning a fake version in order to still secure a refund. This type of return fraud is estimated to account for 8.2% of all returns according to data from National Retail Federation in 2018, but is very hard to manage due to an increase of hassle free returns within brick-and-mortar retailers.
Starting only last year Selfridges decided to try a new approach and paired up with software firm Entrupy in order to crack down on return fraud. This new system involved taking a series of photos of minute details of a range of products before being sent out, and then taking them again when these products are returned in orders to compare and identity small discrepancies that may be evidence of forgery. The articles stated “So far in 2019, out of the 18,000 items Selfridges ran through Entrupy’s software, 30 were flagged as potential fakes. Those items included a bag retailing for over $2,100”.
ASOS however made a mistake in implying that all of their customers were potential suspects. Whereas Sephora has partners with Retail Equation which calculates a “risk score’ for each customers based on their shopping behaviour and flags up any suspicious customers. Whilst Amazon simply bans their customers with an alarming return rate.
This article really got me thinking about the ways in which a range of retailers handle returns, and then I remembered Klarna, a company I came across last year that advertised itself as a way of making returns hassle free and I decided to do some further research.
For those of you who have never heard of them, Klarna are basically a type of payment method similar to PayPal in offering direct payments but also with the option to pay after delivery options and instalment plans. ASOS, Beauty Bay, Missguided and Topshop all offer Klarna as a payment method, so it must be a reliable company right?
However I came across a blog post by Lady Writes who wrote about her first encounter with Klarna. Despite being a very positive experience what concerned her was the fact that she had gone past the 30 day limit to pay and she had no email or any form of contact from the company chasing her up about the money, as well as the fact that no credit checks are done before hand. I feel like in the long run this will definitely encourage debt amongst young people who are vulnerable and aren’t always knowledgeable when it comes to money as well as cause issues for retailers who don’t end up receiving their payment.
I feel like these issues are a result of retailers who seem to be less concerned about the keep of products and more involved with just pushing a purchase. What are your thoughts?