Return fraud costs Maritimers millions each year: Retail Council

AMHERST, N.S. – The days after Christmas are some of the busiest of the year for returns at retailers, and that means incidents of return fraud are higher.

That can pose a problem for many retailers.

At Mansour’s Menswear in Amherst N.S., most of their customers have been life-long shoppers, so when a customer wants to return an item, they’ll take it back even without a receipt.

“I’d take a look at the shirt and if I recognize my product because I know what’s in store, I’d say ‘Okay, would you like to pick out a different shirt? Different size?’ and if not we can give their money back,” said Mikhail Mansour.

Amherst is a town of roughly 9,000 people and the shop has been open for 90 years, so many customers are from the same families. Mansour said return fraud is not a big problem for them because he’s known many customers since he was born.

“A lot of them are my Dad’s friends. They were friends with his Dad. It’s a very personal feeling here at Mansour’s,” he said.

But Jim Cormier, Atlantic director for the Retail Council of Canada said it is a concern for the industry.

It’s estimated that six per cent of all returns in Canada are fraudulent and it’s particularly problematic at large chain retailers that sell a lot of identical products.

“You have a small percentage of your customers that will try to return something to a store where they didn’t buy it,” Cormier said. “They’ll buy the latest, greatest video game console, keep the box in good condition, put their three-year-old console in the box and try to return it.”

In New Brunswick, return fraud is estimated to have cost the retail industry between $28-$40 million in 2013, while the government lost between $3.7-$5 million in sales tax revenue.

In Nova Scotia, those numbers are even higher. Between $33-$48 million was lost in 2013 which means $5-$7 million was lost by the provincial government.

There are a few things retailers can do to try and reduce return fraud, Cormier said.

They include requiring all returns have a receipt, be in the original packaging and have original tags. The store could also ask for a name or even for a piece of photo identification of the customer.

Bottom line, according to Cormier, is having a receipt will make everything much easier, but he said retailers do understand that only a small per cent of customers are trying to defraud the system.

“Most retailers are going to go out of their way to make it as easy as possible to return whatever gift they want to return.”