Item Not Received (INR)

“Item Not Received” fraud is one of the top strategies scammers use to commit friendly fraud. As many as 32% of friendly fraud cases are cited as “order not received.” This type of fraud can be difficult for businesses to detect.

‘Item not received’ (INR) fraud, also known as “refund abuse” or “return abuse” fraud, is a type of fraudulent activity where a buyer claims that they did not receive the item they ordered online, with the intention of obtaining a refund or replacement while actually receiving the item. This type of fraud exploits the trust-based nature of eCommerce transactions and can result in financial loss for merchants.

Here’s how the scam typically works:

1. A fraudster makes a legitimate purchase from a merchant (intending to claim “item not received”).
2. The merchant ships the item to the fraudster using a trackable shipping method, providing a tracking number as proof of shipment.
3. The fraudster receives the item, but dishonestly claims they did not receive it or received an empty package.
4. The fraudster then contacts the merchant’s support team or opens a dispute, alleging that the item was not received or not as described.
5. In response, the merchant may issue a refund or be forced to provide a refund, based on the “customer’s” claim.

To mitigate the risk of INR fraud, merchants should provide (and keep thorough records of) tracking information, delivery confirmation, or proof of shipment. It’s not uncommon for scammers to provide fake or doctored evidence to support their false claims, so it’s important to have additional guardrails in place to protect your shop. Use fraud detection tools, require signature confirmation upon delivery for high-value items, and establish clear communication channels with customers as baseline best practices for fighting INR fraud. 

Customers should also be required to provide evidence of non-receipt, such as photographs of the package and any related correspondence. These measures help merchants make informed decisions when resolving disputes and ensure a fair outcome for both parties.

INR prevention best practices for merchants:

• Provide Accurate Descriptions: Describe the item accurately and provide clear, high-quality photos. This reduces the likelihood of a customer claiming the item is not as described.
• Use Reliable Shipping Services: Choose reputable and trackable shipping methods. This way, you can provide customers with tracking numbers as proof of shipment.
• Package Securely: Properly package items to prevent damage during transit and reduce the possibility of disputes over damaged goods.
• Keep Proof of Shipment: Retain records of shipping receipts, tracking numbers, and any communication with the customer regarding shipment.
• Communicate Proactively: Keep the customer informed about the status of their order, including shipping updates and estimated delivery dates.
• Respond to Inquiries: Be responsive to customer inquiries and address any concerns promptly. Open communication can help prevent misunderstandings.
• Consider Insurance: Depending on the value of the items you’re selling, consider purchasing shipping insurance to protect against loss or damage during transit.
• Monitor Disputes: Regularly check your platform’s messages and dispute resolution center to address any disputes or claims promptly.

Be sure to thoroughly communicate return and refund policies so customers are aware of guidelines for resolving disputes. Following these best practices can help create a safer and more trustworthy online shopping environment for everyone involved.

Don’t Overindex on ‘Item Not Received’ Fraud Prevention

While INR fraud prevention strategies are crucial for protecting businesses from financial losses and maintaining the security of online transactions, they can indeed have negative effects on customers if not implemented carefully. Here are ways in which these strategies might negatively affect shoppers:

• False positives: Fraud prevention systems can sometimes be too rigid, flagging legitimate transactions as potentially fraudulent due to various factors like unusual purchase patterns or geographic locations. This can result in legitimate customers having their orders declined or delayed, leading to frustration, inconvenience, and worse, they leave your shop for a competitor.
• Increased checkout friction: Depending on the tools you use, implementing rigorous fraud prevention measures can increase the complexity and length of the checkout process. Try to avoid solutions that make the checkout experience clunky and unnecessarily tedious for shoppers. A good checkout solution knows how to balance what’s needed to prevent fraud while delivering a great customer experience.
• Delayed processing: Some fraud prevention systems require manual review of flagged transactions, which can result in delays in order processing and delivery. Customers who expect quick service may be dissatisfied with these delays. Find a solution that provides proactive review in addition to their technology — a blend that enables your team to move quicker and with more precision in making pass/fail decisions. 
• Inconvenient verification requests: Customers may be required to provide additional information or documentation to verify their identity or payment method, which can be seen as intrusive and inconvenient. They may be wary of such requests, feel uncomfortable with the amount of personal information requested, and end up leaving the shop to find a better shopping experience elsewhere.
• An all-around negative customer experience: Cumulative negative experiences related to fraud prevention can result in customers having a poor overall shopping experience, leading them to shop elsewhere or avoid online shopping altogether.

Fraudsters committing “item not received” fraud may initiate a chargeback instead of reporting or waiting for a resolution from a merchant. When using a solution like NoFraud Chargeback Management, the burden of managing disputes is taken off your plate — even for non-fraud-related claims like “defective merchandise,” “item not as described, ”and “item not delivered.”

Effectively managing chargebacks means having a thorough process in place to successfully argue cases before issuers. The process is quite involved, often taking retailers an average of 1.8 hours to resolve each chargeback. NoFraud improves chargeback win rates and assumes 100% of the financial burden, providing merchants with:

• Professional, company-branded documents that help free up staff for higher-value tasks. Eliminate the tedious tasks of information gathering and document formatting. NoFraud does all the heavy lifting to dispute chargebacks on your behalf.
• Optimized formatting and templates tailored to each type of chargeback to maximize win rate. NoFraud’s proven techniques help merchants win more disputes. Our expert fraud analyst team has over a decade of experience and knows how to assemble evidence in a way that is most likely to produce a positive outcome. 
• Identity data from third-party providers are automatically added to response templates and help improve the strength of the merchant’s chargeback case.
• Expert recommendations based on industry best practices to stay ahead of dispute trends and win more cases. NoFraud assesses merchant practices to proactively alert you of any process changes you can make to prevent claims from happening in the first place.

See 5 Ways to Prevent Chargebacks for more tips that not only help minimize chargebacks but can help reduce INR fraud.