Retailers Pay More For Fraud-Related Costs

The cost of retail fraud is going up. For every dollar of fraudulent merchandise that's bought, retailers have to pay nearly $3 in fraud related costs. There's another price too, one many retailers aren't even aware of.

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And here in the U.S., for retailers, the cost they pay for consumer fraud is going up. Merchants who sell their products using mobile devices, or sell internationally, are seeing their costs climbing higher still - almost 40 percent over last year. NPR's Wendy Kaufman reports.

WENDY KAUFMAN, BYLINE: Retailers will pay $2.70 for every dollar in fraudulent transactions. That's a big increase over last year, according to a new survey. And the reason it's worse in the mobile and e-commerce space, is that the fraud is harder to detect; and what fraudsters buy is often expensive. The same is true of global transactions.

Jim Van Dyke, of Javelin Strategy and Research, conducted the survey for Lexis Nexis. He says retailers are not happy when they learn consumers were billed for things they didn't buy.

JIM VAN DYKE: There's a charge-back, where the consumer gets a credit; the merchant gets socked for the full value of the goods, and then has to buy replacement goods.

KAUFMAN: What's more, Van Dyke says, when consumers are the victims of fraud, they often blame the retailer.

DYKE: Consumers are often saying they'll never shop at a merchant again; merchants don't think that's going on at all.

KAUFMAN: Van Dyke's bottom line - merchants need to double down on fraud protection; both for the out-of-pocket expense, and the cost to their reputation.

Wendy Kaufman, NPR News.

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