Online return fraud cost U.S. retailers $22.8 billion in 2022. For every $100 in returned merchandise accepted, U.S. retailers lose $10.40 to return fraud, the NRF has calculated.
While it is possible for shoppers to commit return fraud innocently simply by mis-reading the returns policy, a significant number of returns are the result of premeditation and malicious intent.
‘Serial returners’ are shoppers who deliberately buy several items knowing full well they won’t keep some of them. ‘Wardrobers’ abuse the system by wearing clothes for one occasion only, then sending them back. More overt scams include claiming that an item that arrived has never arrived, or that the item does not match the product description or was damaged in transit. Signifyd data shows that there was a 35% increase in false claims that an item never arrived in 2022 in Europe, and a 68% increase in false claims about the condition of a product. U.S. retailers are likely to be experiencing similar trends.
Other fraudulent activities include returning shoplifted items, and ‘merchandise exchange’ whereby shoppers purchase a new item, then return an older or non-working version of the same item using the packaging from the newer merchandise.
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Return fraud scams are not solely practiced by individuals. Large, multinational crime rings may be behind an attack.
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