STORES Magazine - January 2010 - (Page 58)

LOSS PREVENTION / RETAIL FRAUD True Costs of Fraud Retailers are bearing the brunt: New report suggests what they can do to fight back BY M.V. GREENE U .S. merchants are taking some hard punches from retail fraud. In 2008, they incurred losses of $191 billion industry-wide from identify theft, stolen merchandise and lost interest and fees associated with chargebacks, according to a report from LexisNexis Risk Solutions. Addressing the problem requires aggressive action on the part of the three primary victims of retail fraud: merchants, financial institutions and consumers. Some key findings of the 2009 LexisNexis True Cost of Fraud Benchmark Study include: • Total merchant fraud losses are nearly 10 times those incurred by financial institutions. • Merchant fraud losses are more than 20 times the cost incurred by consumers. • One in five U.S. merchants experienced an increase in unauthorized transactions associated with identity fraud in 2008. • Credit card transaction crimes continue to rise sharply, but alternative payments are starting to represent a troubling new source of losses for large merchants. • Retail merchants need more education and improved industry standards to address the cost of fraud. 58 STORES / JANUARY 2010 LexisNexis Risk Solutions developed the study with Javelin Strategy & Research to examine how U.S. retail fraud affects the interdependency of merchants, financial institutions and consumers across multiple sales channels, says Jim Rice, director of market planning, retail markets, for LexisNexis Risk Solutions. HOW FRAUD IMPACTS RETAILERS Replacing or redistributing lost/stolen merchandise 48% 16% 36% Fraudulent transactions Fees and interest paid to financial institutions The survey solicited information from a retail merchant panel comprised of more than 1,000 risk and fraud decision-makers. Additionally, interviews were conducted with senior-level risk and fraud executives at financial institutions, and the study drew on identity fraud victim data from more than 4,800 U.S. adults. The study defined fraud from a merchant perspective as fraudulent and/or unauthorized transactions; fraudulent requests for refund/return; bounced checks; and lost or stolen merchandise, including redistribution costs associated with re-delivering purchased items. (The study did not consider insider or employee fraud.) The data focused on 18 merchant market segments, including housewares and home furnishings; computers and electronics; hardware and home improvement; food and beverage stores; drug, health and beauty; clothing and clothing accessories stores; books/CDs/videos/DVDs; general merchandise stores; and motor vehicle and parts dealers. Merchants absorbing burden More than half of industry-wide fraud losses in 2008 came from unauthorized WWW.STORES.ORG Source: 2009 LexisNexis True Cost of Fraud Study http://WWW.STORES.ORG

Table of Contents for the Digital Edition of STORES Magazine - January 2010

STORES Magazine - January 2010
Editor's Page
President’s Page
Retail People
CEO Profile
20 Ideas Worth Stealing
Digital Coupons
Customer Loyalty
Labor Scheduling
Data Management
Human Resources
Retail Fraud
Loeb Retail Letter
ARTS Update
NRF News
Point of View
Retail Industry Calendar
End Cap
Global Powers of Retailing

STORES Magazine - January 2010