Beyond Payment Fraud: Creating a Fraud Prevention Strategy for Returns Abuse

By Mark Michelon, VP Client Services March 18, 2016


Returns fraud may seem small scale, but collectively the losses can add up quickly.

Luckily, there is a strategy you can put in place, utilizing the data your fraud prevention solution provides.  Here are four basic tips for creating a strategy for returns abuse.

1) Identify who truly are your good customers.  Compare spending total and return totals for your customers.  Those customers with a small return percentage can be put in your positive list.  Customers with a high amount of returns make it on your watch list.

2) Watch for large quantity purchases of the same product.  Simply look at tracking velocity at a product sku level.  Also look for multiple sizes ordered of the same product.

3) Send returns into your fraud system.  Make sure to send the return information in your fraud system.  By tracking the total amount of returns by customer and the reason code, you can measure the lifetime value of the customer against returns.

4) Have negative files for your returns abuse customers.  Take those returns abuse customers from your naughty list and put them on your negative file.  Track the customers by email address, credit card, and device ID.

Implementing the strategy above, ultimately allows you to identify out-of-pattern returns and other delivery anomalies, improving your risk decisioning the next time an order is placed. 

About the Author

Mark has been with Accertify since 2008, and is the fearless leader of Accertify's Professional Services, Account Management and Managed Services teams.