- Modern-day customers exploit promotional loopholes, costing retailers over $100 billion annually.
- Riskified's study unveils the rising trend of return fraud and promo abuse, especially during peak seasons.
- Retail giants adopt innovative solutions to combat increasing policy abuse and safeguard their revenues.
For three years, Robert mastered the art of email rotation to snag Hulu's Black Friday deal, dropping the monthly subscription from $7.99 to a mere $1.99. It wasn't just Hulu; he applied the same magic to sports betting sites and Manga purchases. Speaking from his Long Island abode, Robert was unabashed, saying that in the digital age, it's quite hassle-free to create new accounts. Besides, it's not like he's duping a neighbor - these are colossal corporations!
However, this seemingly innocent act has its consequences. "Friendly fraud," as it's termed, combined with more malevolent scams, drains retailers of over $100 billion annually, reveals a study by Riskified. This firm, a vanguard in AI-driven anti-fraud solutions, surveyed 300 large enterprises. Their findings? Many retailers are witnessing an uptick in dubious activities, especially during the festive season or economic crunch periods.
Riskified's survey illustrated a glaring reality: while 90% of companies feel giveaways, promos, and flexible return policies are crucial for customer loyalty and sales, misuse of such schemes is severely impacting their bottom line. Eido Gal, Riskified's CEO, highlighted how today's fraudsters find it easier to exploit return policies than commit intricate financial thefts.
At the heart of these shenanigans are acts like using multiple emails for repeated promotions or buying in bulk with the primary intention of returns. Yet, the real concern stems from hardened fraudsters who amplify these tactics. In a staggering instance, Riskified discovered that just 4,000 sly customers crafted 137,000 fake accounts to avail a hefty discount, causing a company an annual loss of $14 million.
The malicious doesn't end there. Some even falsely claim they haven't received their orders, aiming to pocket both the product and refund. Others resort to bot-led purchase raids on exclusive items, only to resell them at exorbitant prices. Retailers are scrambling to counteract. A significant 65% manually review refund claims, an arduous and expensive task. However, smarter solutions are emerging. Companies like ThredUp are leveraging data and unique features, such as “Keep for Credit”, to minimize losses and ensure genuine customers enjoy the benefits they deserve.
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