Smart Retail Experience: Quick Loss & Fraud Detection in Retail

Quick Loss & Fraud Detection in Retail

Retail industry had witnessed a huge surge amid broken global supply chains in the wake of the pandemic. Though, it’s true it hasn’t risen like a phoenix, the retail industry is only set for growth as economies develop. Online retail sales went up by 48% during the height of the pandemic, as per global retail trends. However, there has existed a huge gap between customer demand and expectations in the industry even before the pandemic hit.

As per Martech Alliance, just 31% of retailers think they are exceeding customer’s expectations.

One huge chunk of this customer experience rests with information security and retail fraud prevention online. Despite technological adaptation taking roots in the sector, smart technology hasn’t yet made it to the norm. Now, more than ever customers are wary about sharing information, financial credentials or personal details online, as cybercrime has broken all records of existence in the past few years. Verizon’s 2021 data breach investigation report estimated that 1 in every 8 retail businesses in UK suffered a cyberattack

Going by the contact center trends, and the fast evolving world of cybercrimes, even businesses with the best intentions to secure their systems can lag behind the curve when it comes to being effectively protected, National Crime Agency reported.

What is Retail Fraud?

 

According to the LA Times, “the estimated portion of inventory losses from theft and fraud coming from organized retail crime grew from 0.045% to 0.07% in the same timeframe.”

Fraudsters are executing retail frauds online seamlessly through growing technology and cyber inventions. In the retail world, fraudsters make illegal transactions by using stolen credit card details. Loopholes in the payment system can also be a reason for retail frauds. So, being a retailer, you need to identify and understand the various loopholes in your system that are vulnerable to different retail frauds. Frauds and cyber crimes not only hamper the revenue realization potential of the sector but worse, lead to loss of customer loyalty. Customer service is inextricably linked to business revenue.

Types of Retail Fraud

Besides pricing war, situations like pandemic, and other challenging factors, the retail industry should be vigilant to retail frauds which may be executed within their workforce. It is crucial for you to gain the in-depth knowledge and understanding of a retailers’ security and how to prevent them. Before preparing yourself to pivot any retail fraud, you should know the different types of retail frauds exist in retail space.

Types of Retail Fraud
Let’s explore different retail frauds into two broad categories:
1: Internal Retail Fraud
2: External Retail Fraud

Internal Retail Fraud

There are various internal frauds and thefts that cannot be detected by alert systems and CCTV surveillance. Below are a few common forms of internal retail frauds:

1. Vendor thefts & frauds

In retail space, retailers rely on vendors for different services like product shipment, delivery, logistics, and housekeeping. When third-party vendors access external retail locations, then it can pose a risk of theft.

2. Inventory frauds

According to McKinsey, “among the 60% of consumers who have faced out-of-stock products in the last three months, only 13% say they waited for an item to come back in stock. About 70% switched retailers or brands instead.”

Losses in the industry can happen via theft, spoilage, supplier frauds, return frauds etc. An inaccurate inventory data can cause “out-of-stock” implications preventing the retailers from fulfilling online orders. While a single “out-of-stock” might not seem significant, if the primary item is not available, shoppers may shun the entire basket which can hamper business significantly.

3. Sliding

Sliding is another fraud done by an employee where he/she deliberately obstructs the barcode and shows as it was scanned. Usually these kinds of threats occur when an employee processes transactions for his/her friends or relatives. Sliding is difficult to detect.

4. Sweethearting

In this form of retail fraud, employees knowingly give indecorous discounts to their friends, relatives, and friends. Sweethearting also includes performing unbefitting refunds, voiding purchase, etc.

5. Ransomware

As per State of Ransomware in Retail report 2021, 44% of retail businesses were hit by a ransomware attack in 2020. 

The ransomware attack involves criminals using a malicious software to encrypt the victim’s data and demanding extortion payments in exchange for release of data. Though, the data may not be of any direct value to the criminal, it is of importance to the businesses, for which they are known to pay hefty amounts.

External Retail Fraud

It is not necessary that fraud is executed only internally, even customer fraud and theft also comes in many forms. So, retailer should also have in-depth knowledge of identifying and combat the risk of external frauds come in the following ways:

1: Credit card fraud

According to the global Report published in chargebacks911, “the number of digital transactions suspected to be fraud attempts rose 46% YoY in 2021. While the problem is global in scope, the US is the source of more than one-third of card fraud losses.”

Credit card fraud is a kind of payment fraud in which fraudsters steal card information or personal information for existing accounts to open accounts and make further purchases. For example, consumers falsely complain that the product they ordered was delivered defective or not at all, that they did not authorize the transaction, or that they had requested the cancellation of a recurring transaction and were charged anyway.

2. Refund fraud

According to NRF data, “for every $100 in returned merchandise accepted, retailers lose $10.30 to return fraud and overall, 10.6% of all online purchase returns were fraudulent.”

Ecommerce stores ensure easy refund policies for the convenience of their customers, in which they can return the defective or inappropriate products to the store owners. This return policy has now become an easy target for fraudsters to exploit customers and retailers as well. Refund fraud includes receipt fraud, wardrobing, bricking, price switching, price arbitrage, and many more.

3. Point of Sale(PoS) Attack

Along with the retail asset protection, every online retail store owners search different ways of pos fraud detection. As we transcend towards a cashless global economy, one thing common to retailers is the card payment system. Apart from streamlining the sales process, this has also given an opportunity to cybercriminals to target retail establishments, even the big names in the industry.

⦿ Malware and spyware:

Downloaded on a computer via phishing email, these malicious softwares are known to steal private card details from users as they shop online. This takes a toll on customer’s trust on the brand and can prevent their businesses from taking roots in new markets.

⦿ RFID skimming:

Criminals rely upon devices enabled with near field communication to steal encrypted card information from shoppers. Technological incompetencies induced attacks are sure to bring down brand reputation and hamper revenue realization.

4. Gift card fraud

According to the Federal Trade Commission (FTC), “more than 64,000 consumer complaints and collective losses of $233 million in 2021 to scams involving gift cards as the form of payment. This is an increase of 88% from 2020.” In this type of fraud, fraudsters steal credit card information and use it to purchase gift cards and quickly use the funds.

Loss Prevention & Fraud Detection in Retail

After encountering different types of frauds that are taking a toll on their reputation and revenue, retailers are quickly investing in technologies and security innovations to augment their loss prevention methods. According to the study published in Cisco, “over 50% of asset protection executives state that they plan to invest in Loss Prevention and fraud detection technology.”

Addressing Areas of Shrink at the Point-of-Sale (PoS): To address the areas of Shrink at PoS, you need to understand this term. Shrink refers to the actions like theft, return fraud, supplier fraud, administrative errors, etc negatively impact inventory. Furthermore, this inaccurate inventory leads to out-of-stock situations and prevents retailers from fulfilling customer demand. Ultimately this will hit the loyalty of your customers. Thus, retail loss prevention technologies help retailers to train themselves with certain vulnerabilities that enable them to quickly identify potential loss and fraud touchpoints.

Reduce Shrinkage with PoS Systems

You can easily reduce your shrinkage with an effective PoS system that enables you to efficiently track inventory, restrict and grant PoS access based on duties, and ensure mobility with Cloud-based PoS systems. It also provides a detailed transaction tracker that allows you to monitor every PoS efficiently. However, Cisco servicenow integration can also help you to identify and address several areas of shrink. Let’s see how?

Integrated Systems for Loss Prevention

Retailers today are increasingly turning to technology to augment their traditional LP systems that were just more effective in recording the losses than preventing them. Integrated systems make it easier to access information, streamline tasks and allow routine operational tasks to run independently in an automated workflow.

Cisco ServiceNow integration for fraud detection

The Cisco Servicenow integration, for example, is one such productivity tool that stalls retail frauds and allows CX to improve without burdening the agents with additional tasks. Let’s explore the dynamic application of Cisco Servicenow CTI connectors in the retail industry.

How Cisco Servicenow integration by NovelVox ensures Loss Prevention & Fraud Detection in Retail
1. Access to All the Right Information in One Place

Having all the information from inventory to devices and management databases in one place simplifies the retailing experience not only for the agents but also the customers. Waiting in queues to connect with the right agent or moving back and forth across the calls to track your package or return it, no longer hampers your customer experience. The Cisco Servicenow CTI connectors bring down burden on agents to switch back and forth through multiple screens and access information. The unified, single view of information makes for a delightful CX. When information sourced from different data/ communication points, retailing becomes an enjoyable experience rather than an arduous one.

2. Streamlines the Retail Process

Take a scenario where you get a message that your package has been dispatched and delivered while you haven’t received it. Or where you shop for a product online and pay for it while it has been out of stock and can’t be delivered on time. These are all situations that reek of a lack of process streamlining. The different departments are on different pages with regards to inventory stocks and sales flow. By integrating the entire retail scenario from inventory right down to the customer service, UCCX servicenow integration helps to bring every department on the same page, giving them access to the entire customer journey. This not only improves service delivery but also brings transparency about any frauds or bottlenecks impeding the customer shopping experience.

3. Automates Routine Workflows

Waiting around for actions and responses can be hampering to retailers. Further, manual processes make the bottlenecks worse. Automated workflows enabled by the Cisco ServiceNow integration helps to simplify interactions across different departments like inventory, customer service etc making it easier to understand bottlenecks. Activities ranging from record generation or notifying users about pending cart items or package tracking can be ramped up for agility and efficiency as opposed to manual or disconnected processes that open opportunities for frauds online.

4. Against Cyber Threats

The intuitive and transparent dashboards of cisco finesse servicenow integration enable comprehensive visibility of services on the retail website and strengthen cyber threat management capabilities of the retailers by:

⦾ Single screen for unified ticket management:

All information related to the customer interaction journey or anomaly incidents is available on the Cisco ServiceNow dashboard. This renders retail agents with flexibility to view, update, reassign and handle tickets as per their functional roles thus making operations and incident management far more smooth.

⦾ Reduced time for customer query resolution via automatic ticketing services:

The automation of incident management processes through conversational AI improves customer management and minimizes recovery time or customer ticket handing time. The tickets have all the requisite information to understand the root cause of the problem thus reducing downtime. Retailers can take up the ticket as per their availability and area of expertise making customer service smoother.

⦾ Comprehensive Visibility Across All the Incidents Over a Given Time Span:

The customizable visibility makes it easier to detect anomalies and helps retailers to filter out problems per their area of expertise. This helps in quickly understanding the problem and makes follow through on incidents easier with:

⮞ Updates on groups assigned to handle the incidents

⮞ To analyze anomalies over specified timelines

Wrap up

Integrated platforms make for an astounding alternative to disparate legacy systems for control and management of retail services. The Cisco ServiceNow integration with its comprehensive, unified dashboards and operational analytics helps improve customer retail experience and provides a safe and secure online shopping experience. Choose system integration to make your retailing experience smooth and IT operations more efficient in the face of burgeoning frauds.

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