Holding Up a Mirror to Consumers: How Brands Can Unobtrusively Combat Return Fraud and Counterfeiting

Consumer transgressions, such as return fraud and counterfeiting, are on the rise, and they are hurting businesses and the retail economy as a whole. Wardrobing, for example, which is the act of buying an outfit for a specific event and then returning it afterward, has contributed to an estimated $5 billion decrease in revenue. In fact, recent data estimate annual losses from any type of return fraud to approach $30 billion for U.S. retail brands alone.

Brands have adopted rather obtrusive methods to combat these transgressions, which often disrupt the consumer experience. Amazon, for example, recently banned customers who made too many returns, and L.L.Bean terminated its lifetime, no-questions-asked return policy. The problem is that these methods risk damaging consumer relationships and alienating customers who do follow the rules. That is why it is crucial to find unobtrusive or less disruptive methods that can prevent or reduce this transgressive behavior without harming customer relationships.

In his article “I See Me: The Role of Observer Imagery in Reducing Consumer Transgressions,” published in the Journal of Business Ethics, a Financial Times top 50 journal, Dr. Alexander Kull, assistant professor of marketing at the University of San Diego Knauss School of Business, does just that. Simply put, he studies different imagery perspectives and their effects on consumer morality.

“Preventing transgressions effectively is quite a challenging and multifaceted issue,” said Kull. “How can we help consumers reconsider their actions, which may sometimes be unethical, while also making sure that the relationships we’ve built with them as brands remain intact?”

Before obtaining his PhD and becoming a professor, Kull worked for nearly a decade in marketing and strategy, holding leadership positions at companies such as a McKinsey spin-off and the international advertising group BBDO, and working with Fortune Global 500 clients such as BMW, P&G, and Unilever.

A driving force in Kull’s decision to leave his successful corporate career and pursue a second career as a scientist was his motivation to provide businesses and consumers with empirical evidence that serving the common good is not only the right thing to do but also benefits firms’ bottom line and, in turn, the economy and society at large.

“This explains why much of my research seeks to unite brand management and social responsibility,” Kull said. “It is also this worldview that drew me to USD with its commitment to developing socially responsible leaders through values-based education and research.”

Affecting Consumer Morality Through Actor Versus Observer Imagery

In his study, Kull explored how two different imagery perspectives can affect consumer morality:

• Actor imagery: When consumers see their actions in the first person, so they are the ones purchasing or returning the product.
• Observer imagery: When consumers see their actions as an observer, so they are watching themselves purchase or return the product.

“The perspective consumers take can actually alter their judgment and behavior,” Kull said.

Across three experiments, Kull and his co-authors presented two different groups with the same scenario: purchasing counterfeit products (Experiments 1 and 3) or wardrobing return fraud (Experiment 2). One group was asked to imagine experiencing the scenario from their own perspective—an actor imagery perspective. The other group was asked to imagine experiencing the scenario as an outside viewer—an observer imagery perspective.

The results revealed that consumers primed with an actor perspective were more likely to assess their own transgression more leniently.

“Consumers who adopt an actor perspective tend to focus on their own needs and wants, so the consequences they see affect primarily themselves,” Kull said. “They tend to think that if they can avoid personal financial loss through return fraud or other transgressions, they can limit the negative consequences for themselves. This perspective makes them more likely to adopt an egoistic approach to morality and, in turn, commit a transgression.”

Meanwhile, consumers primed with an observer perspective were more likely to evaluate their own transgression more stringently.

“If you induce consumers to take on an observer perspective, you make it more likely for them to take a step back and see the bigger picture,” Kull said. “This makes them more inclined to follow absolute moral standards and adopt a so-called deontological approach to morality, where an action is perceived as either inherently right or inherently wrong. This should make it less likely for them to commit a transgression in the first place.”

Implications for Businesses and Consumers

Kull’s research has important implications for both retailers and buyers.

To combat return fraud, for example, businesses can create videos that illustrate the return process, and have consumers watch them before returning a product. Kull recommends using language and tonality that make consumers feel as if they are witnessing themselves in the return process as a third party.

“We think it’s possible for retailers to hold up a mirror to consumers,” he said. “The key is to subtly encourage consumers to take a moment to reevaluate their intentions as they consider committing a transgression.”

Consumers can also use this research to better educate themselves on growing retail transgressions and how businesses are struggling to adapt.

“Consumers need to be made aware,” Kull said. “This is not a guilt-driven approach. We’re not trying to guilt consumers into feeling bad about what they do; it’s more implicit.”

Perhaps most importantly, this research can help brands combat increased fraud and revenue loss in unobtrusive ways.

“Shifting consumer perspectives can help brands reduce consumer transgressions without being punitive or harming consumer–brand relationships,” Kull said. “It’s a win–win for both businesses and consumers.”

Advance Your Career in Business

At the University of San Diego Knauss School of Business, students can pursue their educational goals through a range of immersive degree programs and real-world experiences. Leading experts in their industries, including Dr. Alexander Kull, bring their research and career experience to each class, setting students on their own paths for success.

Learn more about how the University of San Diego Knauss School of Business can help you build your business career.

 

Recommended Readings

5 Inclusive Leadership Traits That Will Improve Organizational Diversity

Effective Data Presentation Techniques to Guide Data Strategy

What Can You Do with an MBA? 5 Rewarding Paths and Careers in Business

Prior to obtaining his PhD and joining the USD faculty in 2016, Dr. Alexander J. Kull worked for nearly a decade in the corporate sector, where he held leading positions at a spin-off of the management consulting firm McKinsey and at the international advertising group BBDO in Germany.