8 Retail Fraud Schemes Every Business Should Be Watching

Across the world — and increasingly throughout Asia Pacific — retail businesses are facing a growing wave of fraud. Whether operating physical stores, e-commerce platforms, or omnichannel experiences, retailers must remain vigilant as fraudsters adapt quickly, deploying increasingly sophisticated and coordinated tactics.

What were once isolated scams have now become complex, cross-border operations, often involving stolen data, digital payment manipulation, and organized retail crime. These schemes not only threaten financial losses but can also erode customer trust, disrupt operations, and harm brand reputation.

Here are eight of the most concerning fraud schemes currently impacting the retail sector, along with practical ways businesses can prepare and respond.

1. Gift Card Fraud and Money Laundering

What’s happening: Criminals are exploiting gift cards as a fast, anonymous way to launder money or extract value. Some schemes involve draining gift card balances before the cards are even used, often going undetected until a customer tries to redeem them.

Why it matters: With the rising popularity of digital gift cards in Asia Pacific markets, this type of fraud has scaled quickly, especially through online resale platforms.

How to respond: Monitor gift card usage for unusual patterns like high-frequency redemptions, bulk purchases, or immediate balance checks. Implement real-time fraud detection tools and set thresholds to flag suspicious behavior.

2. Tap-to-Pay Exploits and Ghost Tapping

What’s happening: Stolen credit card information is loaded into mobile wallets and used to buy high-value items, especially gift cards. These are then resold or returned for cash.

Why it matters: As contactless payments grow more common across urban centers, so too does the potential for tap-to-pay fraud. These transactions are fast, making them difficult to trace or interrupt.

How to respond: Limit high-value transactions via contactless payments, especially when unusual behavior is detected. Use device fingerprinting and geolocation checks to identify anomalies.

3. Victim-Assisted Purchase Scams

What’s happening: Individuals — sometimes unknowingly — are manipulated into purchasing items like infant formula or cosmetics, which are then returned or resold for cash by organized crime groups.

Why it matters: This scam often targets socially vulnerable individuals and exploits return policies, especially in busy retail environments or areas with high foot traffic.

How to respond: Train store staff to identify potential red flags, such as confused or hesitant buyers making large or unusual purchases. Implement stricter return procedures and monitor frequent refund patterns.

4. Phishing, Smishing, and Impersonation Scams

What’s happening: Fraudsters impersonate trusted organizations, brands, or government agencies to trick customers and employees into sending money or gift cards. Tactics include emails, phone calls, and text messages requesting urgent payments or account updates.

Why it matters: These scams are growing in sophistication and targeting both consumers and staff. In some regions, phishing attacks disguised as toll fines, shipping fees, or charity donations are particularly common.

How to respond: Provide fraud education to both staff and customers. Include scam warnings at checkout points and on digital platforms. Encourage customers to verify suspicious messages through official channels.

5. Returns Fraud and Abuse

What’s happening: Fraudsters exploit generous return policies by claiming items didn’t arrive, returning counterfeits, or swapping product contents — sometimes replacing goods with worthless items.

Why it matters: With rising e-commerce volumes and increasing customer expectations around flexibility, return fraud can become a significant source of inventory loss and operational cost.

How to respond: Use technology to track shipments, record proof of delivery, and weigh packages. Analyze return patterns and block abusive returners or accounts linked to high fraud risk.

6. Quick Change Scams

What’s happening: In this classic scam, perpetrators distract employees during cash transactions, switching bills, requesting change repeatedly, or counting money in a confusing way — ultimately leaving with more cash than they paid.

Why it matters: These scams often take place in high-traffic areas like jewelry counters or tourist zones and rely on confusion and psychological manipulation.

How to respond: Educate frontline staff on scam tactics. For larger cash transactions, require second-person verification or supervisor approval. Surveillance footage can also support incident review and training.

7. Online Account Takeovers

What’s happening: Fraudsters gain access to customer accounts through stolen credentials or phishing. They place online orders for in-store pickup and impersonate the customer using forged IDs or confirmation emails.

Why it matters: Account takeover (ATO) fraud can damage customer trust and result in substantial merchandise losses, especially for retailers offering fast fulfillment or self-service pickup.

How to respond: Deploy multi-factor authentication (MFA), flag unusual login behavior, and review pickup procedures. Extra verification for high-value orders or new device logins can deter attackers.

8. Manually Keyed Card Fraud

What’s happening: When contactless or chip payments fail, scammers ask to manually enter stolen card numbers — often leading to chargebacks and losses for the retailer.

Why it matters: Manual entry bypasses some security controls, making it a favored tactic in both physical stores and call centers.

How to respond: Limit manual card entry for certain transaction types or amounts. Train staff to request valid identification or decline suspicious payment requests.

Conclusion: Fraud Prevention Is a Moving Target

Fraud in retail is not static — it evolves quickly, often outpacing the tools and processes designed to stop it. With many schemes now crossing borders and involving digital platforms, retailers need to adopt a layered approach to fraud defense that includes technology, training, policy, and real-time response.

While the nature of these schemes may vary from region to region, the underlying strategies remain similar: exploit trust, automate deception, and scale operations. Staying informed, sharing intelligence, and continuously adapting are critical to staying ahead.

In today’s environment, vigilance isn’t optional — it’s essential.