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How Face Recognition Can Help Curb Skyrocketing Return Fraud

The NRF recently released a report on organized retail crime (ORC). While the entirety of the report painted a grim portrait of increased aggression by ORC gangs, one thing that stuck out was just how serious an issue return fraud has become. In 2017, retailers estimate that an average of 11% of returns have been fraudulent. This shows an increase since the last time they asked the question in their 2015 survey. Of course, return fraud gets far worse during the holidays. Retailers now expect an average of 13% of holiday returns to be fraudulent. 

Return fraud can be absolutely detrimental to a company’s bottom line. So what can be done? One simple way to slightly reduce return fraud is requiring a receipt for returns, since retailers estimate that when returns are made without receipts, 17% are fraudulent. But if you want to dramatically reduce fraudulent returns, consider using a face recognition system.

How Face Recognition Works

Face recognition starts with a database of known thieves, return fraud criminals and other individuals that potentially pose a risk. You can enroll individuals in your watchlist the moment you notice a crime. As an example, if your EAS technology sounds an alarm that merchandise has been stolen, you can often enroll that person in the database from surveillance footage. Through our data sharing service, we even offer retailers the ability to add individuals known to have stolen at other local retail stores.

The moment that they return to a store, their face will be captured by a surveillance camera at 30 frames per second. Our system can analyze the best image to use for matching automatically. And if they do match a perpetrator in the database, your security team will receive an instant alert.

How Face Recognition Fights Return Fraud

According to NRF’s study, the number one source of return fraud is stolen merchandise. With a face recognition system, you can instantly identify if an individual steals merchandise from one of your locations and then tries to return it at another location. If you catch a habitual return fraud, you can also identify when they enter one of your locations and then scrutinize their returns to make sure that they are credible. 

After examining the data on return fraud, the NRF concluded that “retailers and loss prevention professionals need to focus on creatively putting forth the resources needed to stop return fraud criminals in their tracks. Face recognition might just be the most creative and powerful solution available for stopping return fraud. 


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