Retail theft has received a lot of press in recent months as countless dramatic videos of large groups of thieves smashing glass and grabbing items out of stores have gone viral.
The trend has hurt the bottom lines of some of the biggest retailers in the country.
Related: Top retail boss has some drastic ideas to reduce theft (and keep you safer)
Last month, Dick's Sporting Goods (DKS) -) cut its full-year earnings forecast "due in large part to the impact of elevated inventory shrink (retail jargon for theft), an increasingly serious issue impacting many retailers," according to CEO Lauren Hobart.
But that view isn't universal.
In January, a top executive at Walgreens (WBA) -) acknowledged that the company may have overstated its concerns about theft. CFO James Kehoe said shrinkage was about 3.5% of sales last year, but the number is actually closer to the "mid twos."
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But the cost of overt theft for retailers may pale in comparison to the cost of fraud.
"Friendly fraud" — like using multiple emails to continually get 'new signup' discounts — and other types of fraud is costing retailers more than $100 billion a year, according to a new study from Riskified that surveyed more than 300 "leaders" from retailers around the world who report more than $500 million in annual revenue.
While 93% of merchants view a generous refund and return policy as vital to engaging and retaining customers, processing $100 of returned merchandise costs merchants an average of $26.50.
About two-thirds of retailers say they recoup less than half of the total value of a returned item and 70% told Riskified that they've seen an increase in return and refund abuse during the summer shopping season.
"We would have been better off financially if the customer had broken into our warehouse and stolen the item versus the expense of returning it," a merchant in a recent Wall Street Journal article said.
About 90% of retailers surveyed said their costs from returns abuse were either somewhat or very significant in 2022. More than half said their costs from "item not received" abuse were very significant.
"The widespread adoption of ecommerce makes it easier for buyers to abuse INR policies because merchants don’t have the time or resources to follow up on claims," according to Riskified.
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