While returning the bright pink sweater your aunt gave you for the holidays may hurt her feelings, it's certainly not unusual. Retailers expect that nearly 9 percent of gifts will be returned from the holiday season -- a disappointment to sales? Yes. Illegal? No.


There is, however, an immoral and often illegal phenomenon that's costing retailers billions of dollars and, in turn, making shopping more expensive and inconvenient for all of us: return fraud. According to the National Retail Federation (NRF), "Criminals commonly take advantage of companies' return policies to receive cash for stolen merchandise, launder money or return an item after it has been used."

This return fraud cost retailers an estimated $3.5 billion during the 2006 holiday season, and a full $9.6 billion for the entire year, according to NRF. Some estimates even say return fraud amounts to $16 billion in losses to retailers each year.