Consignment stores have a problem: How can they keep customers?

The consignment stores at the center of the country’s consignment conundrum are starting to be squeezed, and the answer may lie in what they can do about it.

A report released by the U.S. Government Accountability Office on Tuesday revealed that the government has found that the consignment shops themselves are not doing enough to protect consumers from fraud.

Consignment shops are the largest retail source of fraud, with a combined annual volume of more than $400 billion, according to the GAO report.

It is estimated that more than 30 percent of the total volume of consignment purchases in the U to the states is fraudulent.

The report, “Consignment Constraints and the Threat of Fraud,” said the problem is not only about supply chain security, but also about the consignor business model.

“Consignors do not have the expertise, financial or legal background to successfully monitor and detect fraud.

It would be more than appropriate to assume that, when consignors have not been proactive in preventing fraud, it must have been a one-off event or that consignments were never properly audited and verified,” the report said.

Consignor chains, which represent more than 90 percent of all retail purchases, have struggled to keep up with a growing number of retailers seeking to cash in on the trend.

Consigning, which refers to the practice of selling items in a limited number, is the biggest category of retail sales in the nation, accounting for more than a third of all purchases.

“The problem is that the people who are selling, the people buying, are not paying their fair share of the cost of the goods,” said John Schoening, vice president of the National Association of Convenience Stores, an industry group.

Considered the most valuable part of a retailer’s business, retailers have struggled in recent years to keep customers engaged and to keep them from purchasing from multiple consigners.

In 2016, a survey by the consumer advocacy group Public Citizen found that nearly half of American shoppers have lost their loyalty to retailers.

But the report also found that many of these retailers are taking steps to prevent fraud.

“A number of companies have implemented systems and processes that address the fraud and abuse risks posed by consignment retailers,” the GAOs report said, noting that many retail chains are using technology and software to monitor customer transactions and to detect fraud, and that some of the most innovative businesses are offering “buyers’ protection” programs to help protect customers from fraudulent purchases.

But experts say there is no substitute for having an effective consumer protection program, even if the retailers themselves don’t seem to have one.

“If retailers are not aware of the risks, then they’re not going to make the investments to keep their customers happy,” said Adam Levitin, president of Consignment Concessions Inc., a group that represents retail consignment companies.

The GAO said there is growing awareness of the problem and that consumers have the power to make changes in how they shop.

“In a time of growing competition for consumers, there is a growing sense that consumers are willing to pay more for better service,” the agency said.