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Happy Returns?

E-tailers are rethinking their policies to curb return fraud. Should you?

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This story appears in the April 2005 issue of Entrepreneur. Subscribe »

Brick-and-mortar retailers have always had to deal with return fraud. But with so many sales happening online, e-tailers are beginning to rethink their return policies to minimize fraud. "Return fraud is a big concern for retailers and e-tailers," says King Rogers, CEO of consulting firm KingRogers International in Cook, Minnesota.

According to "Consumer Returns in the Retail Industry," a report that Rogers' company published last fall with The Return Exchange Inc., an Irvine, California, company that provides retail fraud and abuse detection products, return fraud accounted for 9 percent of total returns in 2003. While return fraud may not be as widespread for e-tailers as it is for large brick-and-mortar retailers--especially since consumers have to ship items back instead of simply walking into a store--it's still something e-tailers can't afford to ignore.

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