Saks CEO on return fraud

At Saks Fifth Avenue’s Manhattan flagship store, security cameras and signage enforce a new policy: customers must show a photo ID to return their purchases.

A growing number of retailers including Macy's are combating the rise of return fraud, particularly online. It’s a $101 billion problem, according to the National Retail Federation. But luxury is a big target given its high ticket price.

Marc Metrick, CEO of Saks.com, Saks Fifth Avenue’s standalone online business, spoke with The Associated Press about how it’s addressing the issue.

When did online return fraud become a problem?

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.

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

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.

What’s feeding return fraud?

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.

A TikTok 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 designer packaging. How did you compensate Cormier?

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

How does something like that harm shoppers’ trust?

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. Product that doesn’t deserve to be in our ecosystem now is in our ecosystem. And it’s going to create a negative consequence.

How do you handle your good customer versus an abuser?

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.

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

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.