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

By Mark Michelon, President 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 recently been named President of Accertify. Since joining the company in 2008, Michelon has overseen several key functions at Accertify, including the creation of its Global Managed Services and Professional Services teams, which provide critical fraud screening, chargeback management and other fuctions to help merchants mitigate risks in digital commerce. Under Mark’s leadership, these teams have enabled Accertify to consistently grow revenue, attract new clients and retain existing customers. Prior to joining Accertify, Michelon was senior Director of Fraud Prevention for Orbitz Worldwide, where he oversaw the global fraud strategy for the online travel site and its sister websites in the EMEA and JAPA regions.