The rise of digital shopping has been a boon to consumers and business owners alike. Customers get to shop from the comfort of home and can access a wide variety of shops and markets while businesses can reach more customers and cut down on their operating costs.  One of the main drawbacks of digital shopping, though, is the increased likelihood of needing to return a product. 

Consumers, especially those that are wealthy or younger, are now taking advantage of this need by participating in digital shoplifting.  A survey conducted by Socure notes that 55% of rich Gen Z online shoppers have participated in this practice within the last year. 

As more and more businesses take their products and services online, it’s imperative that they know how to minimize online shoplifting to maximize their profits and productivity. 

What is Online Shoplifting?

There are several types of online shoplifting, but the basic premise involves consumers defrauding a seller into believing that a product was never received or used. This type of theft might seem harmless, since it happens over a screen, but it can create serious complications for sellers and buyers alike.  Here are a few common types of digital shoplifting:

• Mail Fraud: Packages do get lost or broken in the mail sometimes, but online fraudsters have taken serious advantage of this.  Many online shoplifters will contact the seller saying they’ve never received their order or it arrived damaged so they will receive a secondary shipment or have their order and payment canceled. 
• Chargebacks: This type of fraud involves a consumer legally purchasing a product but after they receive the product, they dispute the charge with their credit card company saying they’ve never received it.
• Return Fraud: Return fraud is when consumers purchase an item online, use it, and return it like it has never been used.  Return fraud cost U.S. retailers over $101 billion in 2023 and 40% of online shoppers in the UK, France, and Germany admitted to committing friendly fraud. 

How to Minimize Digital Shoplifting

There’s no sign of digital commerce slowing down, so it’s important that online retailers know how to protect themselves from digital shoplifting.  Here are a few tips to help:

• Train your customer service team: It’s a lot harder for online fraudsters to feel like they’re committing a victimless crime if they’re communicating with a helpful customer service team.  Marshal Davis, co-founder of Texas-based Ascendly Marketing, suggests establishing a clear refund policy and training customer service on how to handle complaints effectively and efficiently.  
• Keep documentation: Organized records of transactions is one of the most important tools an online retailer can have when trying to minimize digital fraud.  Having customers verify their purchase, working with a delivery service that provides proof of delivery, and stringent verification methods are all helpful for keeping a paper trail to deter theft. 
• Reduce incentives for return fraud: By providing consumers with store credit for returned items instead of money back, retailers can retain their income.  Prevent “wardrobing,” the practice of using an item once to then return it for full credit or charge, with measures like anti-wardrobing tags, which increase the difficulty of returning objects. 
• Partner with identity verification services: With the rise of synthetic identity fraud, it is more important than ever to verify consumer identity.  Consumer data, government identification, and watch lists are all tools that can be used to validate your customer’s identity.  

Online Retailers Should Have a Partner with Integrity

Integrity, a division of Aristotle, is a leader in identity verification and anti-fraud protection.  We have a variety of solutions to protect you and your consumers with customized validation services to meet your needs. Here are just a few products for you to consider integrating into your e-commerce platform: 

• Integrity IDV-Direct: A web-based platform to verify the identity of online visitors across our database of 3.4 billion citizens across 135 countries allows you to quickly and efficiently. The platform is available through a single API allowing for an “integrate once, use anywhere” approach and is combined with several external gateways to deliver a best-of-class verification solution that leverages global data.  
• Integrity IdentityRep: An partner developed system that integrates biometrics, social engagement, and anti-fraud identity networks into a single platform. Real time anti-fraud signals allow you to catch fraudulent users at onboarding by connecting a consumer’s real-life information, such as name, address, and date of birth, with their device and Internet interaction and behavior.
• Integrity Quiz: Integrate knowledge-based authentication, leveraging KYC-compliant personal information, into your verification system. Integrity Quiz utilizes voter data to create diverse questions and offers customizable time and velocity constraints. The system also screens against financial watch lists and politically exposed persons across multiple databases for compliance and integrity.

How can Integrity help you address online shoplifting? Click the “FREE DEMO” button in the upper right corner and a representative will suggest the proper solution to meet your needs.