Many shoppers think of returns as a no harm, no foul transaction. If they deem a purchase unnecessary, and the product is unused and easy to resell, they’re largely right.
However, retailers are now telling Business Insider that the returns are becoming a major issue. Especially as outright return fraud — in the form of empty packages, swapped out items, claiming failed deliveries, or abusing generous return polices — is ramping up.
“Consumers who would never go into a physical store and take an item off without paying and stealing are actually being trained socially that it’s actually acceptable to take advantage of retailers in these small ways,” Narvar Vice President of Consumer Strategy David Morin said. “They think it’s OK, right? Stick it to the man.”
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A 2024 report by Appriss Retail and Deloitte found that last year the total value of returned merchandise in the U.S. reached $685 billion, or 13.21% of total retail sales. Of those returns, 15.14% were fraudulent, resulting in a $103 billion loss for retailers.
Morin told Business Insider that it’s hard to determine exactly who is behind all of these fraudulent returns, but that it’s clear a pretty expansive group of people made up of both ordinary consumers and organized criminals is involved.
Last summer, Narvar’s 8th Annual State of Returns report found that 57% of shoppers said they had participated in return fraud at least once. Return fraud incidents, the report said, were up by 16 percentage points year-over-year.
“There seems to be this mentality that consumers feel entitled to do it,” Loop Senior Vice President of Marketing Jessica Meher told Business Insider.
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E-commerce has made return fraud easier to participate in, the outlet says, because overwhelmed warehouse employees who are receiving these packages are less likely to examine their contents closely. Meanwhile, employees at brick and mortar stores have the bandwidth to ensure the products are unused and match the original purchase.
Social media is also adding to the problem, as people take to platforms like TikTok and Reddit to post their best tips for getting free refunds.
“It’s almost like coupon sites where consumers have been trained to look for coupons and discounts,” Meher said. “That’s starting to happen with what companies offer loose return policies.”
For many people, this sort of low-level fraud feels like a victimless crime that only affects soulless corporations, Business Insider says. People assume that because these companies have extended such generous return policies, they really don’t care all that much.
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It turns out, that’s not the case. Many retailers, both large and small, have started changing their return policies in hopes of slowing their losses. Tightening return windows, implementing stricter policies, and even tailoring those policies for individual customers are among the most popular reactions to return fraud, the outlet found.
Progress is slow, though, because many companies are worried about alienating their most loyal customer base. “How do I make sure that I don’t piss off my good customers?,” is one of the most pressing questions retailers are considering when reassessing their return policies, Meher said.
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This article The Return Fraud Epidemic: How $103 Billion In Returns Are Costing Shopping And Sellers Big originally appeared on Benzinga.com
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