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Spotting Return Fraud at Wireless Stores

Posted by Lauren Christin on Jul 6, 2015 7:00:00 AM

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Return fraud is one of the largest areas of loss for wireless retailers. The National Retail Federation estimates the loss for retailers from return scams alone runs almost 11 billion dollars per year. Today’s wireless retailers work hard to capture market share, improve operational consistency and increase profits through reduced loss. So what can wireless retailers do to spot the potential for fraud and prevent it? Here are some best practices for preventing return fraud, shrinkage and other potential hazards of the digital age.

Watch Your Inventory

A good rule of thumb is to carry only seven days worth of inventory unless it’s a super-hot new product or a closeout item. Use a point-of-sale (POS) system combined with a sophisticated video intelligence system to track electronic serial numbers (ESNs) and monitor for fraud, theft, and defective products. Stores with high walk-in traffic are even more vulnerable to theft, return fraud and other schemes, so video surveillance is key not only to identifying return fraud but also monitoring and improving store execution and profitability. Most product suppliers do not price-protect, so it’s important to keep on-hand inventory to a minimum to accommodate a few days’ worth of activation activity. Try ordering equipment and products twice a week on Thursday (to last the weekend) and then again on Monday to cover the first half of the week.

Watch for Counterfeits

Despite retailers’ best efforts, counterfeit goods—especially wireless accessories—remain a fertile and valuable market for criminals. This is the primary reason why it is important to acquire quality products from well-known suppliers. It is also important to understand your suppliers’ return policy so that you do not get stuck with defective merchandise that you are unable to return or sell.

Hire Trustworthy Employees

Internal fraud, theft or coercion can be dramatically undermined by investing in the right human resources and security measures. Sophisticated video intelligence systems can not only monitor all point-of-sale transactions but can also help you monitor the performance of each specific employee and identify unusual, frequent or fraudulent transactions on the part of specific employees. Hiring trustworthy employees who do not steal assets from your company or collude with others to perform fraudulent transactions can help boost profitability and reduce shrinkage.

Use Technology to Track Inventory

There are a wide variety of systems available to help retailers track inventory. Video intelligence systems can not only track a single product from the time it leaves the truck to the time it is purchased at your store but can also boost sales and marketing, operational excellence, and the customer experience. Use authentication systems to reduce fraud by confirming the identity of a phone to your wireless network. Radio-frequency fingerprinting systems are also available that have the ability to identify each individual wireless handset by examining its unique radio transmission characteristics. Fingerprinting is used to reduce fraud because an illegal phone cannot duplicate a legal phone’s radio-frequency fingerprint. Wireless retailers should also watch out for cloning, a process by which a wireless phone has been programmed to mimic another wireless phone. This scheme can be used to defraud a wireless carrier by placing illegal calls without any intention of payment.

Topics: Wireless Retail

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Envysion is a leading provider of cloud-based video driven business intelligence that helps companies deliver on their brand promise. At Envysion, we marry operational, financial and employee metrics together with video and sophisticated analytics and make it easy-to-use and accessible, offering visibility into every store…every location…every day…from anywhere.

Lauren Christin

Lauren Christin

Manager, National Accounts, Envysion

Lauren is responsible for assisting Envysion retail customers recognize greater operational efficiency and reduce loss through the use of video intelligence. She has assisted many clients in streamlining processes by using all components of the Envysion solution. Lauren has held senior sales roles at BroadVision, Oracle and MCI. She earned her Bachelor of Science in Finance from St. Joseph’s University and her MBA from University of Connecticut.

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