Refund theft

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Refund theft; also known as 'the White House scam', 'refund fraud' or 'refund scam', is a type of crime, related to shoplifting, which involves returning goods to a retailer, in exchange for money or other goods. In some cases the goods returned may be stolen (from the retailer or another party), and the return provides cash or an exchange for more desired items. Other schemes involve recovering broken products from garbage bins and returning them as defective, returning weights or simulated merchandise sealed in original product packaging, or switching labels on items to purchase them at a lower price, before returning them at their original value.

A simple method is for the thief to gather items from the store itself, and present them for refund along with a receipt obtained from a prior purchase. Receipts can be found in trash cans outside the store. This technique allows the thief to acquire items at no cost.

A second method involves the cashier and items that are not carefully inventoried. The cashier will make a normal sale, noting what items are sold. After the customer leaves, the cashier will "return" one or more of the items that were just sold, pocketing the refund money. This method leaves the cash register balanced, but the store's inventory will be missing what was supposed to have been returned.

A third method which is used at larger retailers such as Wal-Mart involves a thief actually legally purchasing a high dollar item and leaving the store. The thief will then either return to the store or send a partner right back into the store with the receipt from the purchase and exits, or tries to exit, with an item identical to the original purchase. The subjects may then return the stolen item with the receipt at another store. This results in the thief receiving a refund for one of the two items, while keeping the second item. They then usually return the second item at yet another store without a receipt. Since most merchants will only issue gift cards for returns on items without a receipt, the gift card may be sold for cash.

A fourth method involves some UPC switching. A thief will take a UPC code from an inexpensive item and place it over the UPC for an expensive item. They will pay for the item (usually at self-scan registers) for the price of the inexpensive item. After the purchase they will remove the UPC code and return the item without the receipt for the regular selling price.

A fifth method is where a thief legally purchases an item, unwraps the packaging, takes the item out and then repackages it themselves while replacing the item's position with similarly weighted objects. The offender then takes the empty package back to the retailer and returns it; making away with both the item and the money.

Refund theft has been considered one of the most favorable methods chosen by professional shoplifters due to its relatively high success rate compared to other shoplifting methods such as 'grab and run'. Since the thief is not actually stealing anything from the store, there is very little chance of being caught.

[edit] Combating refund theft

While a popular scam in the past, refund theft has become harder to get away with due to digitalization and the ability of stores to easily keep databases of all sales and refunds. Many stores' systems will automatically flag a customer who returns over a certain number of items within a set amount of time. The footage of the flagged customer is then reviewed by Loss Prevention who will memorize their appearance and also see if any thefts have been captured on video. They can then watch the person as he or she enters and call the cashier that is executing the refund, and tell the cashier to deny the transaction.

In order to further combat theft, in instances where store credit is given without a receipt, the refunded credit is often more limited than a normal gift certificate. Many times the credit will be "section limited", for example if someone returns children's clothing without a receipt they will get credit that can only be used for the children's clothing section.

Some stores apply unique serial numbers to their items, embedded into the bar code or hidden elsewhere. If a serial number on an item about to be returned does not match the serial number on the receipt, the store can refuse the refund. This technique is often applied to DVDs and video games, not only to prevent piracy but to prevent customers from simply obtaining a refund using a receipt and the same item picked up in store.

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