Today's guest post is from Nancy Tanker, Managing Editor of Specialty Retail Report.

I was in a store over the weekend when a customer walked in and wanted to return a sweater, purchased with a check, for cash. Not knowing what to do, the new salesperson called in the manager, who recognized the loyal customer and processed a cash return on the spot.

In this case, it's likely that things worked out well. The manager recognized the customer and reacted accordingly, but this situation could have been one of the two most-prevalent types of return fraud: paying by bogus check and getting cash back, or "wardrobing" (wearing or using a purchased item then returning it—sometimes called "renting").

Think return fraud can't happen to you? Here are some sobering stats:

• The National Retail Federation estimates retailers will lose an estimated $3.7 billion this holiday due to return fraud (almost $11 billion for the year).

• The biggest targets of return fraud aren't mass retailers but smaller, independent shops. (In fact, return fraud thieves make it a point to hit smaller retailers who don't have the security systems that larger retailers do.)

• Return fraud normally occurs on Friday, Saturday and Sunday, when shops are busiest and staff is most likely to be rushed and distracted.

• Almost 1 out of 10 returns are fraudulent.

With a problem that big, it's time to take concrete steps. Security experts recommend:

• Every retailer should have, post and stick to a very clear return and refund policy.

• Don't accept returns without a receipt; if you must, issue store credit, not cash.

• Inspect returned merchandise carefully for signs of wardrobing, and to make sure the item in the package is what it should be (another big scam: replacing a higher-cost item with a lower-cost one in the same package).

• Keep a log of returned receipt numbers to prevent multiple returns from copied receipts (another common return fraud tactic; if you have a good POS system, it will automatically alert you to more than one attempted return on a single receipt.)

• Keep a log of customers with returns; if a customer racks up a large amount of returns, look into it. (Again, if you have a POS system to track returns, you'll be ahead of the game.)

• Require a store owner or manager password to process returns so as to cut down on the chances of your employees participating in a return fraud scheme.

Of course, none of these steps guarantee you won't be the victim of return fraud, but with a focused fraud-prevention system in place, you'll be in a much better position to maximize your holiday profits.

Our recent issue of Specialty Retail Report ran an article about preventing shoplifting and employee theft, two more profit-killers you should pay attention to.

If you have any other tips for fraud prevention, or personal experiences in your store that you'd like to share, we'd love to hear from you!