Using AI to fight fraudulent returns: Here's what to know

Summary

CNBC's Courtney Reagan reports that retailers are using AI to reduce the cost of fraudulent returns. The segment highlights UPS-owned Happy Returns, which uses AI to detect return fraud, and Narvar, which uses AI to reduce fraudulent delivery-claim payouts for retailers including Lululemon and DSW. It also notes high online return rates and discusses vendor risk when retailers fail.

• Courtney Reagan reports from Valencia, California, on AI use in retail returns fraud detection.
• Fraudulent returns are estimated at about 9% of returned goods, or $75 billion.
• UPS-owned Happy Returns uses human and AI inspection to score fraud risk at the point of return.
• Happy Returns processes returns for major retailers and operates at thousands of return bars.
• Narvar uses AI to cut fraudulent delivery-claim payouts by 25% for 1,500 retailers.
• Online return rates are 25% to 30%, versus 10% to 12% in stores, with women's dresses as high as 90%.
• Joe Kernen comments on the risk to vendors when a retailer fails or misrepresents its finances.