Many of us may think that returning goods from a store is not illegal, but apparently if one returns goods one too many times then it may be considered a crime. This crime has been known as refund scam, refund theft or refund fraud. One may consider it as related to shoplifting. According to Webster's dictionary, the word refund means "to give or put back" or "to return (money) in restitution, repayment, or balancing of accounts" whereas the word scam means "a fraudulent or deceptive act or operation" or to "deprive of by deceit". What is refund scam and how is it committed?



The crime has been said to be committed by giving back to the retailer items or goods in exchange for money, other goods or shopping credits. It was placed in the limelight when President Bush's own personal adviser, Claude Allen, was apprehended for stealing up to $5,000.

Less common scams are when criminals buy products at a lesser price in a sale but return the item and refund for a full price from other stores or at a later date. Thieves also sometimes scavenge for broken or defective products from the garbage and return them to retailers for refund. Sometimes they intentionally look for receipts in the trash and go to the store, pick out the products listed in the receipt and return them for full refund. Other times it is the cashier that does the 'return'. After a sale, the cashier notes the product sold. He then notes that the product was 'returned'. He pockets the so-called refund money. The balance sheets balance out but the retailer would be missing some products. Refund scammers also target big companies such as Wal-Mart. The criminal buys an expensive product. His partner then goes back to the store with the receipt and gets another item identical to the one bought earlier. The partner leaves with the second product and tries to return it to another store thereby profiting from the scam and keeping the expensive product. Some scammers switch UPC's (Universal Product Code). They switch the UPC of a cheap product and place it on an expensive product. They then buy the product, at a lesser cost, and return it later on for refund of its actual price.

PREVENTING REFUND FRAUD

Refund scams may be prevalent but retailers have taken measures to prevent this crime and discourage future scammers. One of the more popular prevention method used by retailers is the use of databases that records the sales and returns made by the customers. A customer that has exceeded a certain number of returns will be recorded and the past security cameras will be reviewed to determine whether that customer has committed any previous theft.