Returned Product
Table of Contents
Use Case:
Organizations need to monitor customer return activity to identify unusually high volumes or values of returned products that may indicate fraud, financial reporting issues, or other control concerns. While product returns may occur for legitimate reasons, excessive or unusual return activity can signal practices such as channel stuffing, fictitious returns, or the misuse of credits. For example, a customer returning significantly more product than comparable customers may warrant further review to confirm that the goods were actually returned and that the transaction was recorded accurately.
The Returned Product analytic identifies customers with a high value or volume of returned goods relative to their peers. By comparing return activity across similar customers over a historical period, the analytic highlights unusual patterns that may require further investigation. This helps organizations identify potential fraud, inaccurate books and records, improper credits, and other activity that could create financial, compliance, or reputational risk.
| Description | Identifies customers with an unusually high value or volume of returned products compared with similar customers over a historical period |
| Domain(s) | Customer Revenue |
| Analysis Type | Context Flag |
| Focus Area | Context Analysis |
| Score Methodology | The total value or volume of returned products is compared with peer customers over the configured historical period |
Default Scoring Criteria
Importance: 3 (default)
Enabled: True (default)
| Risk Result | Default Value | Notation |
|---|---|---|
| Weak | 90 | Percentile* |
| Moderate | 95 | |
| Strong | 99 | |
| Auto | Not set |
*A percentile notes the value below which a percentage of the historical data falls.
Unique Configuration
The Returned Product analytic identifies return transactions using the billing type provided in the source data.
Each customer’s Returns Ratio is calculated using one of the following measurement types:
- Value (default): compares the total value of return transactions with the total value of eligible sales and receivable increase transactions.
- Volume: compares the number of return billing documents with the total number of eligible billing documents.
Only transactions originating from billing documents are considered. Transactions originating from accounting documents are excluded.
Customers can be compared against:
- No comparison group
- Customer Classification 1 (Industry) (default)
- Customer Classification 2
- Customer Account Group
- Payer Customer Country
Because this is a Context Flag analytic, only return transactions are eligible for a risk result. Comparisons are based on the previous 365 days of transaction history.
Return activity is evaluated over the configured historical period and is not directly matched to the original related sale. As a result, some transactions may be flagged even when the return activity is legitimate.
Exclusions
You can configure exclusions based on:
- Subject ID
- Subject Account Group
The following default thresholds also apply:
- Customers with 12 or fewer historical transactions are not evaluated.
- Comparison groups with 10 or fewer customers are excluded because there is insufficient data to generate a reliable risk result.