[et_pb_section fb_built=”1″ fullwidth=”on” _builder_version=”4.16″ global_colors_info=”{}”][et_pb_fullwidth_post_title meta=”off” featured_placement=”background” text_background=”on” text_bg_color=”rgba(255,255,255,0.64)” _builder_version=”4.16″ background_color=”rgba(255,255,255,0)” parallax=”on” text_orientation=”center” use_border_color=”off” global_colors_info=”{}”][\/et_pb_fullwidth_post_title][\/et_pb_section][et_pb_section fb_built=”1″ admin_label=”section” _builder_version=”4.16″ global_colors_info=”{}”][et_pb_row admin_label=”row” _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Intro” _builder_version=”4.17.4″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” global_colors_info=”{}”]<\/p>\n
OK. You\u2019re an independent retailer and you\u2019ve taken several steps to protect your pride and joy against retail fraud, also known as shoplifting, payment fraud, data theft, et cetera. Your store is equipped with the latest payment card technology, its digital platform has all sorts of firewall protection, and you have a security policy in place, so your employees know how to identify fishy payments, and sketchy emails, websites and customers. So, you\u2019re good, right?<\/p>\n
Wrong.<\/p>\n
The\u00a02018 National Retail Security Study, from the National Retail Federation, says retail shrinkage \u2013 inventory loss due to shoplifting, error or\u00a0other forms of\u00a0retail fraud \u2013 cost the U.S. retail economy $46.8 billion in 2017. That doesn\u2019t include the billions lost by merchants in the roughly 53,000 computer data breaches that occurred last year.\u00a0That\u2019s why each year in November, the Association of Certified Fraud Examiners supports\u00a0International Fraud Awareness Week.<\/p>\n
Improved payment card technology \u2013 EMV or microchipped credit\/debit cards\u00a0\u2013 has\u00a0put a dent in payment card fraud. According to Visa \u2013 the \u201cV\u201d in\u00a0Europay, Mastercard, Visa (EMV)\u00a0\u2013 counterfeit card fraud fell 76% from December 2015 to December 2017 as American retailers adopted\u00a0new technology. As of\u00a0March,\u00a097% of all the payment card transactions in this country were with chipped cards, and\u00a0BizTech\u00a0reports that at the end of 2017, there were 7.1 billion EMV-enabled cards in circulation worldwide.\u00a0However, as is the case with many retail fraud prevention measures, when one obstacle arises, thieves\u00a0find\u00a0a\u00a0different\u00a0avenue\u00a0of exploitation.<\/p>\n
[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.16″ background_color=”#2b3843″ global_colors_info=”{}”][et_pb_row _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_cta title=”See our Retail Fraud Prevention Checklist” button_url=”http:\/\/info.paladinpos.com\/ReturnFraudPreventionChecklist.pdf” button_text=”Show Me” _builder_version=”4.16″ use_background_color=”off” global_colors_info=”{}”][\/et_pb_cta][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ admin_label=”section” _builder_version=”4.16″ global_colors_info=”{}”][et_pb_row admin_label=”row” _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Invisible Cards ” _builder_version=”4.18.0″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” global_colors_info=”{}”]<\/p>\n
One way\u00a0the bad guys\u00a0have found around\u00a0improved\u00a0technology is to\u00a0make\u00a0card not present\u00a0(CNP) transactions\u00a0via telephone\u00a0or internet. They use stolen card and personal information to make purchases for merchandise that can be kept, returned to a store for cash,\u00a0or sold over the internet.<\/p>\n
So, as much as card-present fraud has dropped \u2013 from\u00a0$3.6 billion in 2015 to an estimated $1.8 billion this year \u2013 card-not-present fraud has risen \u2013 from $3.1 billion in 2015 to an estimated $6.4 billion\u00a0in 2018.<\/p>\n
Javelin, a research-based financial advisory firm, reports that\u00a0CNP fraud is 81% more\u00a0common\u00a0than\u00a0payment card fraud at a point of sale terminal inside a store.\u00a0Because the technology of chipped cards makes it so difficult to capture sales transaction data, fraudsters have also turned to setting up new card accounts\u00a0to do their business,\u00a0which\u00a0now\u00a0makes up\u00a0over 20% of all payment card thefts.<\/p>\n
A\u00a0new\u00a0LexisNexis report\u00a0says\u00a0every dollar of retail fraud\u00a0costs\u00a0merchants an average of $2.66 through a combination of\u00a0chargebacks, fees, interest, merchandise replacement and redistribution.<\/p>\n
\u201cAs more transactions move away from the physical point of sale and to the digital and mobile spaces, businesses need to account and prepare for the various potential attack points of fraudsters,\u201d\u00a0says\u00a0Kimberly Sutherland, senior director, fraud and identity management strategy for LexisNexis Solutions. \u201cIn their efforts to fight fraud, however, businesses should not overlook the importance of reducing friction in transactions to ensure a smooth end-customer experience.\u201d<\/p>\n
[\/et_pb_text][et_pb_text admin_label=”Clone Wars ” _builder_version=”4.22.0″ hover_enabled=”0″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n
Ever since their invention, gift cards have been an easy way to sell merchandise to people who don\u2019t know what to buy for their friends or\u00a0relatives. Point of sale systems make it easy to sell and redeem the cards.<\/p>\n
However, a new scam is turning those convenient gift cards into retail fraud nightmares for many merchants. Thieves steal gift cards that are\u00a0often\u00a0displayed on shelves with regular merchandise,\u00a0clone\u00a0them with the pilfered magnetic strip information, and then sit back and wait for the cards to be purchased and activated by regular customers. Then the thieves use them like\u00a0legitimate\u00a0gift cards to purchase merchandise that can be turned for a profit.<\/p>\n
Grocery stores\u00a0and big-box retailers\u00a0are notorious for the\u00a0large displays \u2013 usually endcaps \u2013\u00a0full\u00a0of\u00a0unactivated\u00a0cards from various companies.<\/p>\n
Merchants can get a handle on gift card fraud by keeping an accurate inventory of\u00a0those pesky cards.\u00a0They can also monitor them by looking for\u00a0an unusual number of returns or credits being issued by a single employee. If any anomalies are spotted, they should\u00a0consider auditing those transactions.<\/p>\n
[\/et_pb_text][et_pb_text admin_label=”Fraud to Go ” _builder_version=”4.18.0″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” global_colors_info=”{}”]<\/p>\n
The trend of shopping online either from a laptop or mobile device and utilizing in-store merchandise pickup has created another\u00a0multichannel problem for some merchants. Many retailers have quickly adopted the\u00a0practice of\u00a0click-and-collect, or\u00a0buy online, pick up in store (BOPIS),\u00a0to satisfy shoppers aiming to avoid checkout lines. But that\u00a0has opened their lines of security to fraudsters.\u00a0Retail experts say cross-channel sales are more difficult to track and can lead to thieves picking up a good customer\u2019s purchase.\u00a0Again, the thieves can return that merchandise or sell it online.<\/p>\n
Mobile sales and use of mobile wallets\u00a0are key pieces of both retail sales and fraud.\u00a0Juniper Research, a financial and retail advisory consultant, expects online transactional fraud to reach $25 billion worldwide by 2020.\u00a0With many retailers focused on making sales transactions easier for the customer, retail fraudsters are finding ways to\u00a0exploit\u00a0that desire.<\/p>\n
[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ fullwidth=”on” _builder_version=”4.16″ global_colors_info=”{}”][et_pb_fullwidth_image src=”https:\/\/paladinpointofsale.com\/retailscience\/wp-content\/uploads\/sites\/2\/2018\/11\/FRaudPreventionRoadmapNoHeader.jpg” _builder_version=”4.16″ global_colors_info=”{}”][\/et_pb_fullwidth_image][\/et_pb_section][et_pb_section fb_built=”1″ admin_label=”section” _builder_version=”4.16″ global_colors_info=”{}”][et_pb_row admin_label=”row” _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Common Types of Retail Fraud ” _builder_version=”4.16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” global_colors_info=”{}”]<\/p>\n
[\/et_pb_text][et_pb_blurb title=”Merchandise Return Fraud or Wardrobing” use_icon=”on” font_icon=”A||divi||400″ icon_color=”#cc6633″ icon_placement=”left” admin_label=”Merchandise Return Fraud or Wardrobing” _builder_version=”4.16″ global_colors_info=”{}”]O<\/span><\/span>ften used with high-end clothing or electronics, a customer buys something, uses it once and then returns it (like the teen who wears a prom dress and returns it the next day, or the sports fan who returns the big-screen TV he bought from you the day after the Super Bowl).<\/span><\/span>\u00a0<\/span> Unauthorized transactions, account takeover and friendly fraud are three major\u00a0retail\u00a0fraud risks experts expect to see during the holiday shopping season, according to research by Javelin and Vesta.<\/p>\n Unauthorized transactions<\/b>\u00a0are purchases made with stolen card or payment information. In these transactions, thieves pose as card holders. These incidents are increasing in numbers because the bad guys are making more card-not-present purchases and finding other ways to circumvent e-commerce security measures.<\/p>\n Account takeovers<\/b>\u00a0are different from unauthorized transactions in that fraudster takes\u00a0control of a legitimate\u00a0merchant account \u2013 like Amazon, eBay or any other large retailer \u2013 and often resets\u00a0the username and login password. They can even change the physical or mailing addresses and phone numbers, essentially hijacking the entire account.\u00a0Because the entire account is stolen, the Javelin research says it takes an average of 53 days to detect an account takeover compared to an average of 30 days for other types of fraud.\u00a0A new report, the 2018 Fraud Attack Index from\u00a0Forter, says account takeovers rose 31% in 2017.<\/p>\n Friendly fraud<\/b>\u00a0isn\u2019t nearly as nice as it sounds.\u00a0 It occurs in several ways. The most common is through disputed transactions\u00a0that result in chargebacks for merchants. Customers\u00a0make legitimate purchases and then\u00a0\u201cdispute\u201d charges to their payment cards\u00a0with little more than a point and click\u00a0of a mouse\u00a0on their bank\u2019s\u00a0website, thereby stealing the merchandise. Unintentional and unrecognizable purchases also contribute to friendly fraud. Again, charges are disputed\u00a0by the card holder,\u00a0which basically nullify the payment to the merchant.<\/p>\n Chargebacks911, a loss prevention firm, says merchants were shouldered with approximately $31 billion in chargeback costs last year. Legendary Alabama football coach Paul \u201cBear\u201d Bryant was credited with saying: \u201cOffense sells tickets. Defense wins championships.\u201d Retail merchants should put that defensive mantra to work when it comes to protecting their valuable business and sales data. A good defense will not only protect the business, but it will also smooth and speed\u00a0up\u00a0checkout and improve customer service.<\/p>\n Experts agree the foundation of a secure retail business is a sophisticated digital business platform, one that starts at the point of sale system and integrates the entire business.<\/p>\n \u201cA comprehensive digital platform is essential to improving a business\u2019s security. The bad guys have gotten very sophisticated, especially the past couple of years. It\u2019s important to have a multi-tiered approach to security,\u201d says John\u00a0Oetinger, director of Managed Network Services for Paladin Data Corp. \u201cIt\u2019s also wise to have a company that provides the platform\u00a0to\u00a0manage the security. It\u2019s not enough just having antivirus, patch management and backup files for your retail system. Professional system management can spot problems in a system and eliminate them before users even notice.\u201d Like a good football coach, merchants should draw up\u00a0a game plan that includes\u00a0procedures regarding purchases with payment cards, gift cards, checks\u00a0and even cash to avoid any retail fraud incidents.\u00a0Merchants should also consider investing in loss prevention technology\u00a0like\u00a0video surveillance and\u00a0upgrading their business\u2019s digital platform. A sophisticated\u00a0retail\u00a0system can allow merchants to accurately track purchases and spot disturbing trends of unusual payment methods or increased merchandise returns that could indicate some form of retail fraud.<\/p>\n The National Retail Security Survey says two-thirds of loss prevention budgets are flat or declining, while the average shrink rate\u00a0is increasing. Stopping retail fraud is impossible. However, with modern retail technology and sound management practices it can be kept in check.<\/p>\n","protected":false},"author":13,"featured_media":28050,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3,16,4],"tags":[],"class_list":["post-27577","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-posts","category-how-tos","category-industry-news","et-has-post-format-content","et_post_format-et-post-format-standard"],"yoast_head":"\n
\n[\/et_pb_blurb][et_pb_blurb title=”Sweethearting \u2013 False Price Adjustments” use_icon=”on” font_icon=”A||divi||400″ icon_color=”#cc6633″ icon_placement=”left” admin_label=”Sweethearting \u2013 False Price Adjustments” _builder_version=”4.16″ global_colors_info=”{}”]The most common type of employee theft where a clerk gives away merchandise to an accomplice at the cash register.<\/span><\/span>\u00a0<\/span>
\n[\/et_pb_blurb][et_pb_blurb title=”Employee Fraud” use_icon=”on” font_icon=”A||divi||400″ icon_color=”#cc6633″ icon_placement=”left” admin_label=”Employee Fraud” _builder_version=”4.16″ global_colors_info=”{}”]Dishonest employees may be in cahoots with friends to falsify returns.<\/span><\/span>
\n[\/et_pb_blurb][et_pb_blurb title=”Discount Abuse” use_icon=”on” font_icon=”A||divi||400″ icon_color=”#cc6633″ icon_placement=”left” admin_label=”Discount Abuse” _builder_version=”4.16″ global_colors_info=”{}”]Abuse of a company\u2019s employee discount is one of the top forms of retail shrinkage.<\/span><\/span>
\n[\/et_pb_blurb][et_pb_blurb title=”Merchandise Theft” use_icon=”on” font_icon=”A||divi||400″ icon_color=”#cc6633″ icon_placement=”left” admin_label=”Merchandise Theft” _builder_version=”4.16″ global_colors_info=”{}”]\u00a0<\/span><\/span>Outright theft accounts for more than $25 million\u00a0<\/span><\/span>in losses<\/span><\/span>\u00a0daily<\/span><\/span>.<\/span><\/span>
\n[\/et_pb_blurb][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ admin_label=”section” _builder_version=”4.16″ global_colors_info=”{}”][et_pb_row admin_label=”row” _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Holiday Surprises ” _builder_version=”4.16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” global_colors_info=”{}”]<\/p>\nHoliday Surprises<\/h2>\n
\n[\/et_pb_text][et_pb_text admin_label=”Getting Defensive” _builder_version=”4.16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” global_colors_info=”{}”]<\/p>\nGetting Defensive<\/h2>\n
\n[\/et_pb_text][et_pb_text admin_label=”Draw Up Your Game Plan ” _builder_version=”4.16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” global_colors_info=”{}”]<\/p>\nDraw Up Your Game Plan<\/h2>\n
\n[\/et_pb_text][et_pb_image src=”https:\/\/paladinpointofsale.com\/retailscience\/wp-content\/uploads\/sites\/2\/2018\/11\/FraudPie-1.jpg” align=”center” align_tablet=”center” align_phone=”center” align_last_edited=”on|desktop” _builder_version=”4.16″ max_width=”60%” module_alignment=”center” global_colors_info=”{}”][\/et_pb_image][et_pb_text admin_label=”Draw Up Your Game Plan ” _builder_version=”4.16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” global_colors_info=”{}”]Stopping retail fraud is\u00a0practically impossible. When technology or loss prevention methods prevent one form of fraud, another inevitably arises. However, through a combination of modern retail technology and sound management practices, retail fraud can be kept in check.
\n[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.16″ global_colors_info=”{}”][et_pb_row _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_team_member name=”Brian Bullock” position=”Author” admin_label=”Brian’s Author Box” _builder_version=”4.16″ border_style=”solid” global_colors_info=”{}”][\/et_pb_team_member][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":"