GLIT fraud cost 10 per cent of delivery revenue, study reveals

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Fraudulent claims for goods lost in transit (GLIT) cost UK retailers some £405 million in 2012, research from Retail Knowledge and Transactis has revealed.
This amounts to some ten per cent of the £4 billion* which the UK e-retail sector generated in delivery revenues last year, excluding returns, two-man and grocery deliveries.
The research, entitled The Digital Shoplifting Survey, is based on interviews with leading retailers at a recent anti-fraud conference.
It showed that 93 per cent of these retailers believe GLIT fraud is a serious threat, with the majority, 64 per cent, of them stating that home shopping firms do not have strategies or processes in place for preventing false claims.
82 per cent of those questioned believe most retailers are unable to distinguish between legitimate and fraudulent GILT claims without alienating honest customers and over 70 per cent think most retailers do not have a process for recording and tracking claims or for investigating suspicious ones.
Further results showed that three-quarters of the retailers interviewed say fewer than ten per cent of cases of reported lost goods are actually investigated by home shopping firms.
Nearly 70 per cent claimed that most retailers are unaware of the growing margin loss caused by GILT claims, which involves calls to and from the complainant, handling the replacement items, redelivery, internal investigation, foregone profit on additional products sent out, as well as the initial cost of replacing the goods.
John Sharman, Transactis’ commercial director, said: “Tackling false GLIT claims can be a double edged sword: be too accepting of the customer’s word and fraudulent claims slip through the net; be too aggressive and honest customers with legitimate complaints feel treated like criminals and take their business elsewhere.
“But the problem cannot be allowed to continue to grow – professional fraudsters, amateur scammers and just plain unethical consumers will see failure to confront the practice as an open invitation,” he added.
* The £4bn figure for e-retail delivery revenues comes from to the Interactive Media in Retail Group’s Valuing Home Delivery Review 2012.

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