The Sarasota Sheriff’s Office Economic Crimes Unit in Florida has arrested a man from Bradenton, Mark Tilley, on charges of defrauding athletic apparel company, Lululemon, to the tune of $200,000.
The suspect reportedly used multiple credit cards to place online orders on lululemon.com. He did this under various names, with orders shipped to different addresses within his apartment complex in Bradenton, Florida. To outwit Lululemon’s fraud detection system, the suspect used the same phone number for all the orders. However, most purchases were traced back to an IP address linked to his email address.
The scheme involved the suspect keeping items delivered by Lululemon while simultaneously initiating a return process that only involved sending back empty boxes. On scanning the return box, he would be credited with an e-gift card. Furthermore, he exploited the return policy by physically returning the same items to a Lululemon store, thereby receiving additional credit.
Six key takeaways for brick & mortar businesses with online platforms:
- Employ enhanced fraud detection systems: Fraudsters often use sophisticated techniques to trick systems. The ability to link purchases to IP addresses is an essential tool, but it should be supplemented with additional layers of detection, such as recognizing repeated use of a single phone number, tracking unusual return patterns, and scrutinizing bulk orders.
- Have a strict return policy: Maintaining a stringent and clear return policy is crucial. The company should enforce thorough checks on returned items, ensuring they match the original purchases and are not empty packages.
- Identity verification: To prevent the use of stolen or fabricated identities, businesses should enhance their identity verification processes. This might include two-factor authentication or requiring a matching billing and shipping address for first-time customers.
- Staff training: Educate customer service and fulfillment center staff about potential fraud patterns, such as repeated returns from the same customer or address, or returns of high-value items.
- Monitoring customer behavior: Keep an eye on customer behavior, particularly any high-volume purchases or repeated transactions that may signal fraudulent activity.
- Cross-channel coordination: Ensure strong communication and data sharing between online and physical stores. In this case, the suspect was able to exploit the disconnect between online and in-store returns.
Protecting a business from fraud is an ongoing effort. It requires constant monitoring, timely upgrades of fraud detection tools, and regular policy reviews.