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Hardware Retailing reports that small retailers face fraud risks ranging from fraudulent returns and stolen payment cards to compromised customer accounts and fake supplier invoices. Its recommended safeguards include stronger point-of-sale controls, multi-factor authentication, independent verification of payment changes and regular reviews of transactions and inventory.
Hardware Retailing has outlined fraud risks facing small retailers and practical steps owners can take to limit losses, including securing point-of-sale systems, verifying refund and vendor-payment requests, and reviewing transaction records. The report says independent stores may be attractive targets because they can carry high-value, resalable merchandise while lacking dedicated fraud-prevention staff.
The report describes several ways retailers can lose money or merchandise. These include returns involving stolen goods, fake receipts used to obtain refunds, and counterfeit items returned for full-value refunds. It cites a 2025 projection that U.S. retailers would process $849.9 billion in merchandise returns, with 9% classified as fraudulent. That figure is a projection, not a confirmed final tally.
Payment and account fraud can also expose stores to losses. The report cites the Federal Reserve’s Economic Well-Being of U.S. Households in 2025, saying 16% of U.S. adults reported experiencing credit card fraud. Retailers may face chargebacks or lose goods when fraudulent card purchases are reversed. Gift cards can be bought with stolen payment information or physically tampered with to capture their numbers and balances, the report says.
Criminals may also use stolen login details to take over a customer’s loyalty or online account, making a fraudulent purchase appear to come from a known shopper. For business defenses, Hardware Retailing recommends keeping POS software updated, limiting administrative access and requiring manager approval for high-risk actions, such as large refunds. It also advises using multi-factor authentication on accounts that control payments or sensitive information.
Other measures in the report focus on staff procedures and oversight. Stores should set clear rules for refunds and vendor-payment changes, provide a way for employees to escalate suspicious requests, and review transactions and inventory records for patterns such as repeated high-value refunds or similar chargebacks. The report also warns that business email compromise, or BEC, scams can use messages that imitate familiar suppliers and routine invoices to redirect money or obtain sensitive information.
How Small Stores Can Limit Losses
For a small retailer, a single fraudulent refund, compromised payment account or chargeback can affect cash flow and inventory. The risks can span both online and in-store sales, while the business may not have a specialist team monitoring every transaction. The report cites e-commerce as 16.4% of total U.S. retail sales in 2025; that figure describes the online share of retail sales, not a measure of fraud. It helps explain why exposure can extend beyond the physical checkout.
The recommended controls are designed to make fraud harder to carry out and easier to detect. Access limits and approval rules can reduce opportunities for unauthorized refunds, while independent verification of payment changes can help counter impersonation. Reviewing transaction and inventory records may help owners spot repeated irregularities before losses continue. These are risk-reduction measures, not a guarantee against fraud.
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Fraud Across Retail Channels
The source report frames the issue as a mix of familiar retail fraud and newer ways to scale or disguise it. It says AI and automation can help bad actors make impersonation attempts more convincing and reach more targets. It does not provide a measured estimate of how much these tools have increased losses or identify particular systems used in the scams.
The examples cover both customer-facing transactions and internal business processes: returns, card payments, gift cards, account takeovers, point-of-sale access and supplier communications. The report’s central point is that small retailers should not rely on a single safeguard. It calls for layered controls that combine secure systems with clear employee procedures and routine review.
“no business is immune to modern fraud threats”
— Hardware Retailing report by Luke Vander Linden
What the Report Does Not Establish
The source material does not give a publication date, identify specific stores affected by these schemes, or report new enforcement actions or confirmed losses. The $849.9 billion returns figure is presented as a 2025 projection, and the report does not provide a final total or detail the method behind the 9% fraud classification. The Federal Reserve statistic concerns adults reporting credit card fraud; it is not a measure of fraud losses experienced by retailers.
The material also does not quantify how much AI or automation has changed fraud rates, or how effective each recommended control is for a typical small store. It introduces three common BEC scenarios but the supplied text only begins describing a fake supplier invoice, so further scenario details cannot be confirmed from the material provided.
Controls Owners Can Put in Place
The report points owners toward practical internal steps rather than a single product or policy: review who can access POS and financial systems, turn on multi-factor authentication, and set approval requirements for unusual or high-value refunds. Businesses can also establish a separate verification process for changes to supplier payment details and make sure staff know whom to contact when a request seems urgent or unusual.
Regular checks of refunds, chargebacks, inventory and account activity can help reveal patterns that warrant closer review. The source does not announce a specific deadline, follow-up study or regulatory action. Owners will need to adapt these practices to their operations and consult their payment providers or relevant advisers about system-specific security questions.
Key Questions
What fraud risks does the report identify for small retailers?
It describes fraudulent returns, stolen-card purchases, gift-card tampering, customer-account takeovers, POS misuse and fake supplier invoices. The report does not claim that every store faces each scheme.
What safeguards does Hardware Retailing recommend?
The report recommends updating POS software, limiting administrative access, requiring approval for high-risk actions, enabling multi-factor authentication, setting clear refund and vendor-payment procedures, and reviewing transactions and inventory.
Does the 9% figure mean 9% of all retail sales were fraudulent?
No. The source says 9% of projected 2025 merchandise returns were classified as fraudulent. It does not say that 9% of retail sales were fraudulent, and it provides no final year-end return total.
Why can a retailer be affected by stolen credit card details?
A store may lose merchandise or face a chargeback if a purchase made with stolen card information is later reversed. The report says the consumer fraud statistic it cites is not itself a measure of retailer losses.
What should staff do with an unusual refund or payment-change request?
The report advises following written procedures rather than making exceptions under pressure. Staff should use the store’s approval and escalation process and verify vendor-payment changes through an established, trusted channel.
Source: hardwareretailing.com
