Abstract
Purpose First-party fraud in which retail consumers commit fraud against retailers is a growing problem. However, to date studies on retail crime have focused almost entirely on fraudulent consumer behaviours in physical stores. With the growth of e-commerce, the losses to retailers from this fraud are growing so there is strong need to research this problem from multiple perspectives. The paper aims to discuss this issue. Design/methodology/approach The authors conducted three case studies and a total of 24 semi-structured interviews with retail managers, and evaluated their existing prevention-related documentation. Fraud management lifecycle theory was used to organise and discuss the findings. Findings The authors found that many retailers are treating this problem as just a cost of doing business online and have no detailed plans for dealing with this problem or any reporting to law enforcement agencies. However, they have begun working with delivery companies for delivery accuracy. Use of convenience stores as collection points is also showing early improvements. Research limitations/implications The small number of cases and interviews used is a limitation of this study. However, the authors believe that the findings are useful for advancing knowledge in this emerging research area. Practical implications This study provides insight into existing management practices in this domain, and makes recommendations on how to improve the management of first-party fraud. The study also makes a case for increased managerial interest and involvement in reducing first-party fraud. The study also helps bridge a glaring gap in existing literature and provides useful leads for further research. Originality/value To the authors’ knowledge, this is the first study to evaluate the existing practices employed to manage first-party fraud in e-retail.
Highlights
Advances in Information Technology have made e-commerce possible by eliminating the time and space limitations of traditional brick and mortar retailing
The case studies conducted as part of this study looked at existing management practices employed by the retailers to manage first party fraud
When first party fraud was suspected in some cases, without substantial evidence of the behaviour customers may deny their behaviour leaving the retailer in a vulnerable position
Summary
Advances in Information Technology have made e-commerce possible by eliminating the time and space limitations of traditional brick and mortar retailing. Whilst ecommerce provides many advantages over brick and mortar retailing, i.e. access to a global audience and convenience of shopping anytime and anywhere, it has generated new challenges/risks associated with information security, online frauds etc. Deshopping occurs when consumers purchase products with the intention to return them after use; chargeback fraud occurs when consumers deny receiving delivered goods or return different goods to those dispatched; bust out fraud occurs when consumers apply for and use retail credit facilities with the aim of not fulfilling their credit agreement e.g. when relocating abroad; misrepresentation of details occurs when consumers dishonestly misrepresent financial or personal details in order to get access to credit facilities they would otherwise not be entitled to. Returning products allow customers to reverse the purchase decision and provide competitive advantage to a retailer
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