Retail fraud has increased in Canada during pandemic, study suggests

The pandemic changed the way many companies had to do business as they switched to online sales or curbside pick-up, and there is a concern it has led to an increase in retail fraud.

According to a recent study by LexisNexis on the true cost of fraud, Canadian retail fraud is up about 15 per cent from pre-pandemic levels and that is costing retailers hundreds of millions of dollars a year.

"Shoplifting and return fraud is on the rise and professional return fraud is on the rise as well,” according to Rui Rodrigues, with the Retail Council of Canada. “The fraud has grown in so many ways, it's becoming difficult to keep up."

Retailers say there has been an increase in stealing in stores, with some shoplifters stealing items only to bring them back to return them without a receipt to get gift cards. They then take the gift cards to another store to buy items and them return those items for cash.

There is also an increase in organized delivery theft, where thieves use stolen credit cards to buy items to have them delivered and then call later to have them sent to a different address, or just have people steal the packages as they arrive.

Jeffry Chiasson is the Chief Financial Officer of SoftMoc, which has 130 shoe stores across Canada and a strong online presence. Chiasson said that while the chain wants to have a welcoming environment for it's customers, it also has to constantly be on the lookout for theft.

"All a fraudster has to do is find one hole in your armour and that's where they are going in. You’ve got to constantly protect yourself against every single aspect of fraud and find ways to deal with it,” said Chiasson.

Recently Durham Regional Police charged two suspects in an alleged shoplifting ring. Two 29-year-old suspects from Whitby, Ont. face numerous charges for fraudulent gift card transactions.

Det. Const. Taryn Snow told CTV News Toronto the accused allegedly stole items and then returned them to the store without receipts to get gift cards, which they took to other stores to buy items.

"We've determined a timeline of 20221 to February 2022 where they defrauded the retail corporation of over $200,000,” said Snow.

The charges have not been proven in court.

While police did not name the retailer, investigators seized $30,000 in property and $20,000 in gift cards at the residence of a suspect that belonged to the victim company.

Criminals are also abusing the chargeback system where a purchaser is able to dispute charges on their credit card.

Yale Holder is the Vice President of Customer Experience at Moneris and said a chargeback is when someone buys something online and then disputes the charge on a credit card saying they never received it.

“In 2021 we had over 300,000 chargebacks to businesses and that has led to tens of millions of dollars in losses," said Holder.

Police said retailers should keep a close eye on inventories and monitor excessive returns especially those without receipts.

The Retail Council is calling on stores to work together to prevent fraud and there is also a Loss Prevention Task Force that has been assembled to try and deal with the rise of professional fraudsters in retail.