Refund Fraud/Credit Card Skimming

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Identifying & PreventingRetail Frauds & Scams

Curtis Baillie, CSCSecurity Consulting Strategies, LLCwww.securityconsultingstrategies.com

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Refund Fraud

University of Florida 2010 NRSS study – • 140 Retail Respondents - $41 M – 0.09%• Nationwide - $31 B

Courtesy University of Florida,National Retail Security Survey, Dr. Richard Hollinger

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Customer Refund Fraud

• “Wardrobing” or “renting” clothing & tools – on the rise.

• According to a recent NRF survey 61.4 percent of retailers surveyed reported that they had experienced some form of wardrobing in 2011.

• Printing barcodes and purchasing at a lower price/return at higher price.

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Refund Fraud

Purchasing an item in order to receive a receipt. Refunder then selects an identical item to return, using the receipt as proof of purchase.

Picking receipts from a trash receptacle outside the store and then selecting the merchandise inside the store and obtaining a refund.

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Refund Fraud

• Picking up the merchandise from the display and directly returning it for cash or gift card. “I received it as a gift and I don’t have the receipt.”

• Returning boxed/sealed merchandise for a refund without the original merchandise in the box.

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Refund Fraud

Receipt refunders who print their own fraudulent receipts using authentic rolls of the retailer’s receipt paper.

There are over 20 fake receipt making websites and devices on the internet.

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Refund Fraud

• Returning damaged or salvaged merchandise sold by retailers and wholesale merchants to outlet stores.

• The retailer’s identifying marks are supposed to be removed, but often are not, thus allowing a refunder to return merchandise to the retailer.

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Detecting Refund Fraud

The best deterrent is…

Customer Service

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Preventing/Detecting Fraud

• If the customer doesn’t want a receipt – destroy it.

• Empty trash containers frequently.• Customer’s history of refunds.• Check refunds against employee

database. Customer Service

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Detecting Refund Fraud

• Ringing employee was not working at the time of the sale.

• Unsubstantiated refunds. • Multiple management overrides.• Customers with multiple refunds with

different addresses. • Sending customer refund “courtesy

surveys.”

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Gift Card Fraud

• Employees performing fraudulent refunds and placing them on gift cards for friends or family members

• “It’s easier than taking cash out of the register.”

• Most retailers sell gift cards.

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“Phishing” Gift/Credit Card Fraud

• Thief will swipe cards, record the numbers and place them back on the display.

• Calls 800 numbers to determine the balance on the cards and quickly redeems and balance.

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Gift & Credit Card SkimmingEmployee instances have increased in the retail Industry.Here’s an example of how it’s done:

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Source: Alberta Community Crime Prevention Association

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Credit/Gift Card Skimming Devices

How small?

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$1800. US DollarsHolds up to 32,000 cards

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Card Skimmers

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Recent Victims

Save Mart Supermarkets issues identity theft warning – 20 stores affected throughout California.

“Occurred at self-checkout lanes.”

Courtesy - SecurityInfoWatch.com

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Recent Victims

Olympia McDonald's 17 year old employee accused of skimming customers' cards.

“the boy obtained credit card information and PIN numbers from customers with a skimming device on a card swiping machine at an Olympia restaurant.”

“bought electronics and toys with the stolen information. He told them he resold the items on Craigslist.”

Courtesy – King5.com