As the UK retailers gear up for this year’s Black Friday shopping spree, two of the country’s biggest e-commerce brands reveal how they are tackling the growing problem of customer dishonesty. Fashion retailer River Island and ticketing service Trainline are partnering with fraud prevention platform Ravelin to address refund and return fraud.
Increasing numbers of shoppers are casually and blatantly taking advantage of returns and refund policies, costing brands millions yearly in lost revenue. Cheats and tips spread via social media give this activity a veneer of acceptability, though legitimate customers and businesses end up counting the cost.
To make matters worse, cybercriminals are now offering “refunds as a service,” with growing numbers of consumers hiring them to claim fraudulent refunds on their behalf in exchange for a share of the proceeds. These criminals socially engineer businesses into providing refunds by using third-party services to falsify tracking and returns information.
Analyst house GlobalData revealed that in 2022, the value of online clothing returns made by UK shoppers exceeded GBP 4.1 billion. Predictions suggest this figure will increase by 16.7% by 2027.
Up to half of clothing bought on websites is returned, with the biggest day for returns being the Monday after the Black Friday discount day.
“Refund fraud is far from friendly — it’s digital shoplifting,” River Island senior operational risk manager Grant Shipway said. “There is a casual normalization of wardrobing, fake returns, and returns abuse, and it’s costing retailers — and legitimate customers — dear.”
Ravelin is helping River Island, Trainline and other big e-commerce retailers fight back. It can spot suspicious activity in real-time, helping retailers stop bad actors while giving legitimate customers a better shopping experience. According to Ravelin, more than one-third of finance leaders describe first-party fraud, including “friendly fraud”, returns, and promotions abuse, as the number one risk factor facing their business.
Ravelin is partnering with two of its customers to raise awareness of and discuss solutions to the growing problem of dishonest customers.
“Most online shoppers are perfectly honest, but there is a growing minority who think nothing of defrauding brands week in and week out,” Ravelin CEO Martin Sweeney said. “There are also more and more shadowy outfits offering ‘returns as a service’ to shoppers. They are gaming rules put in place to protect consumers and cost retailers millions.
“To deal with this, forward-thinking businesses deploy a combination of specially trained fraud teams, artificial intelligence and powerful automation. This is an approach that makes a genuine difference, and we’re proud to be a part of it.”
The recent focus on in-store shoplifting incidents masks the fact that its online equivalent is also a challenge. River Island, the high street fashion retailer, regularly contends with criminal gangs offering “fraudulent returns as a service” via social media, along with people who think they can game the system.
“Significant change can only happen when merchants, banks, payment providers, the government and law enforcement collaborate,” Shipway said. “We can change the narrative and shift behaviours by raising awareness of the issue and educating people that this is criminal behaviour.”
“Technologies like Ravelin help contain customer fraud. It gives us a clear view of each transaction and the customer behind it so that we can identify and stop the fraudsters while safeguarding our thousands of genuine customers.”
Trainline, a ticketing service for trains and coaches, has a 30-strong fraud and payments team, many of whom have been trained by the police and cybercrime experts. The team has more than 15 years of experience in this space, and since working with Ravelin, the company has seen a 40% reduction in fraudulent activity.
“In a bid to tackle the more sophisticated fraudsters, we’re becoming stricter about what’s OK and what is not,” Trainline’s director of fraud and payments, Nick Aiken, said. “Our approach is to reach out directly to people, telling them what they are doing is wrong and that they’re on our radar. We find that this type of direct engagement works with most people.
“Persistently dishonest Customers will continue to be checked, picked up, and challenged. Our goal isn’t to throw people off; it’s to encourage them to change their behaviour.”
Aiken said some offenders are incredibly blatant and openly boast online about what they’re doing. They will boast about the fact that they have walked through a barrier, not had a ticket scanned, and instantly get it refunded.
“Behaviour change for dishonest customers is not going to happen overnight, but the considered and strategic approach being taken by companies such as Trainline and River Island draws a line in the sand,” Sweeney added. “Quite rightly, these businesses are not allowing dishonesty to be normalized, and they are tackling it head-on with approaches that are working.”