Counterfeit headphones

Four Ways Counterfeit Electronics Damage Revenue and Reputation: Returns Fraud

Last week, we blogged about how brands can boost their bottom line when they leverage our technology platform to pull counterfeit electronics components off the market.

In this blog post, we’ll highlight the problem of returns fraud. Perhaps even worse than buyers who mistakenly purchase counterfeit products are those who buy counterfeit items intentionally, with the goal of defrauding the manufacturer through the returns process.

In this case, the buyer acquires a fake part knowing that it’s fake. Meanwhile, a real version of the product is also acquired. Then, the fake version is returned in the legitimate packaging from the real product. The buyer is refunded the cost of the real part while the retailer, distributor and manufacturer all get scammed, giving away a genuine product for free, while getting stuck with a useless fraud.

Until recently, there hasn’t been a simple way to easily identify counterfeit items during the returns process. Even with lengthy and costly training, it can be nearly impossible to detect counterfeits.

Solution: Unique Item Identifiers

Now, there is a way. By applying unique item identifiers to electronic products, retailers and brands can quickly and easily authenticate each product using a secure website or even a mobile app.

The process is simple enough that it requires almost zero training, but robust enough to stop return scammers in their tracks, allowing employees and supply chain partners to simply refuse the return or contact loss prevention staff to start an inquiry. Additionally, authentication software can generate product histories that detail life cycles and returns in order to identify trends and analyze the outcomes of anti-fraud initiatives.

Next blog post: We’ll examine how counterfeit items can drive up warranty costs.


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