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Returns fraud gripping retailers


Retailers are gripping with returns fraud in 2024

Returns fraud is when a customer manipulates the retailer’s return policy to gain undeserved financial benefit.

Stats from the National Retail Federation demonstrated that merchants lost a total of $101 billion due to return abuse and fraud in 2023. Additionally, for every $100 in returned items, businesses lose $13.70 due to return fraud.

As retailers prepare for this year's Black Friday, focus is on implementing ways to reduce the losses from returns. An emerging trend is "refunds as a service", where consumers are paying cybercriminals to make fake refund claims on their behalf in exchange for a cut of the sales.

According to Loop's survey findings, challenges faced by retailers in addressing returns fraud or policy abuse includes maintaining a good customer experience, accurately determining a fraudulent customer, proactively detecting fraud, reducing time spent on manual fraud identification and spike in operating costs. Sellers are combating returns fraud using ways like tightening return policy, modifying the return process to require more customer impact, highlighting negative environmental impact for returns, banning repeat offenders, implementing return fee.


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