E–commerce businesses alone were estimated to have lost around 20 billion dollars due to
fraud in 2021 alone. Stopping fraud from occurring is essential to the health of any retail
venture. Here are some of the kinds of retail fraud you should be aware of.
Chargeback fraud occurs when a consumer falsely claims that they were sold products that
did not arrive or that were broken. They open a dispute with their bank or the victim
merchant and a refund is given to them via the chargeback system – leaving them with the
product and the money
Payment fraud accounts for a very large portion of retail fraud cases. Payment fraud is
categorized as any kind of transaction that takes place under a false identity or for the
purpose of extracting money illegally. One of the most common ways of committing
payment fraud is by tricking a company into making payments that can never be finalized.
Products or services are received by the fraudster but never actually paid for. Fraudsters can
also use stolen information to impersonate a vendor – tricking consumers into transferring
money to them for products that they do not actually possess. Companies can increase their
chances of keeping on top of payment fraud by employing a payments fraud management
system. These systems are often offered by leading banks and are essentially automated
warning systems. They can be very useful in cutting fraud out and patching up areas that are
Triangulation fraud is an increasingly common kind of fraudulent money–making scheme
that makes use of the relative anonymity of online marketplaces. An unsuspecting consumer
purchases a product from a fraudulent e–commerce retailer. This retailer then uses stolen
credit card details to purchase the item ordered by the consumer from a legitimate retailer
before shipping it. This helps them launder the money spent using stolen credit card details.
This kind of fraud is hard to spot, as fraudulent e–commerce sellers make and delete profiles
with ease and typically have the appearance of being genuine third–party sellers
Sliding is a rather old–fashioned kind of internal retail fraud. If an employee is tasked with
scanning items for sale, they may choose to ‘slide’ an item past without scanning it in order
to give it away for free. This can be part of a large–scale money–making scheme but is more
often than not just a way of giving friends and families a discount. Sliding can be stopped
using increased employee surveillance, but this can create a bad working atmosphere.
The best way to prevent sliding is to provide a good working atmosphere and adequate
discounts for family and friends of employees. Some companies have gone so far as to prevent employees from processing payments from families and friends. These measures usually do more harm than good by damaging
employee morale and building bitterness that can lead to poor performance in the future.