Saks CEO Marc Metrick on how he's tackling online return fraud, a growing industrywide issue

(AP Illustration/Jenni Sohn)

NEW YORK (AP) — At Saks Fifth Avenue’s return area at its Manhattan flagship, shoppers now see a camera and signage highlighting the enhanced video surveillance and a new policy: customers must now show a photo ID.

The company is also looking at ways to better scrutinize returned packages sent back to its warehouse.

Saks' increased measures, to be rolled out at all 39 stores in some form, are among the latest moves that a growing number of retailers including Macy's are undertaking to combat a rise of return fraud, particularly online, seen in the past two years. Other steps include mandating receipts and charging return fees. It's a problem worth $101 billion affecting 13.7% of all returns, according to the National Retail Federation. Luxury is a big target for return fraud because it involves big ticket items.

Online return fraud includes the return of stolen items, worn items, counterfeit versions and an item that's roughly the same weight as the one in the original box being returned. These items somehow turn up in the inventory system and then are sent back to customers. It also encompasses fraudsters claiming they never received an item they ordered online in attempt to get a product for free.

AP recently interviewed Marc Metrick, the CEO of Saks, Saks Fifth Avenue’s standalone online business, and a member of the executive committee of the National Retail Federation, about the industrywide issue and how it's being addressed. His answers have been edited for length and clarity.

Q. When did online return fraud start to be a problem?

A. We moved into problem territory over the last couple of years, as I think stores including Saks moved to protect goods, protect the customer. You're cabling goods more than you ever did before. So like every type of bad actor, as one door closes, they find another window to go through, and online was that door.

Q. How big of a problem is online return fraud problem at Saks?

A. It's a very small percentage. It’s not yet statistically a problem... We handle 9 million packages a year. But at Saks, one thing going out like that is too many.

Q. What’s feeding return fraud?

A. There are many ways that people are able to sell goods they’ve stolen ... all the marketplaces that are out there. They have just become a haven. Before, if you and I were stealing handbags, we’d have to go to some seedy part of town and (sell) them just like in the movies. Now, it’s like I’ll just open up a storefront on the market.

Q. ATikTok video by shopper Bailey Cormier chronicled her experience ordering a $275 Dolce & Gabbana ash tray on Saks.com and instead getting a can of Bumble Bee tuna fish wrapped in the designer packaging. How did you compensate Cormier?

A. We made it right with the customer, including through correcting her order.

Q. How does a can of tuna ending up in the hands of a good customer harm shoppers' trust?

A. It's bad enough that people are coming in and pulling out goods, stealing. But this is worse because it’s affecting a customer, like a good customer experience.

Q. How do you differentiate handling your good customer from an abuser?

A. We have to deal with them and handle that differently than either a first-time customer or a low-return customer who may have scuffed up a pair of shoes when she tried them on, but wanted to return them. That's OK.

Q. How will more scrutiny affect the time shoppers get their refunds for returns?

A. Right now, it might not add much time. But if this gets more and more pervasive, we’ll have to do it. And it’s not fast. This is an industry issue.