Startup Pitches X-Rays and AI to Catch Fraudulent Returns

Clarity says its screening machines help merchants find counterfeit merchandise more quickly and accurately

By Liz Young of The WSJ. Excerpts:

"A startup says its technology can help retailers identify counterfeit merchandise returned for a refund, a way for merchants to catch fraudsters trying to exploit their returns policies.

Clarity on Thursday emerged from stealth mode and said returns-management company ReturnPro will begin using its machines to screen returns in three of its U.S. facilities."

"The company’s machine is similar in concept to an airport security X-ray screener. It uses artificial intelligence to learn what a given product is supposed to look like by scanning an example of the genuine item. The machine can then alert whether a returned product contains any different organic materials inside—a red flag for possible counterfeits—or identify if there are missing parts such as a power cord that was left out of the box."

"Clarity says its system can verify whether goods are real or fake in about 3 seconds. Its goal is to supplement the work of warehouse employees who examine each item, which is an imperfect process: Workers aren’t typically trained on what every single item is supposed to look like, and they don’t usually have time to go through individual packages in depth."

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