NRF Session Scope: How Some Merchants are Dealing with Returns Fraud

NRF Session Scope: How Some Merchants are Dealing with Returns Fraud

January 20, 2022

Returns abuse continues to get wider recognition as a significant problem for online merchants. During a session at the National Retail Federation’s Big Show in New York City this week, Eva Sciulli, a senior product manager for digital fraud at Dick’s Sporting Goods explained the challenges fraud departments are encountering to an audience of retail generalists.

The biggest challenge is that customer service agents, who are not trained in fraud and are dedicated to providing service that will create positive, lasting relationships with customers, are not equipped to spot the relatively small number of bad actors who can have an outsized impact on a business’s bottom line.

E-commerce orders surged during the pandemic and growth in the channel shows no signs of slowing. But, according to panelists during the NRF session (titled “Risk, Return, and Reshipment: How Dick’s Sporting Goods is Managing the Omnichannel Experience”), online return rates are roughly double that of in-store return rates and are becoming increasingly costly. Additionally, return fraud has become professionalized, with some bad actors advertising their expertise in securing returns and free product for people who wouldn’t normally resort to fraud.

Sciulli and Dick’s have begun to employ AI tools that model what good behavior looks like so it can more easily spot fraud and quickly supply its agents with the information they need to identify good customers from bad actors.

“If people are creating multiple accounts, different shipping addresses, different shipping names, skipping between different IP addresses when they’re creating orders, using different tenders, buying different carts, the fact is there’s enough digital footprint out there in the data to be able to link people together, it just takes a lot of processing power to do it,” Sciulli said. “When someone does try to make an appeasement, we can understand who they are.”

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