We might love those easy one click and no questioned asked return policies, but with that ease of use comes some major drawbacks for retailers. U.S. retailers are grappling with a steep rise in return fraud — those coming from customers who have chosen to stretch the limits on return windows, wear or use an item and send it back, or sometimes just return a different item entirely! The value of fraudulent returns reached a new high of $103 billion in 2024, according to research compiled by Appriss Retail and Deloitte Business Consulting.
In 2024, the total value of returned goods in the US was estimated at a total of $685bn. According to a recent article by Business Insider and estimated 15% or over $103 billion was paid back in the form of fraudulent returns. This staggering figure represents a serious challenge for the retail industry. This trend is fueled by a combination of factors, including the explosion of e-commerce, the increasing sophistication of fraudsters (both individuals and organized retail crime groups), and the ongoing challenges retailers face in balancing customer convenience with robust fraud prevention measures.
When it comes to trying to pull a fast one on Amazon or Wal-Mart many dismiss the overall negative impacts. All of which are eventually felts directly by other consumers.. 𝐉𝐮𝐬𝐭 𝐭𝐨 𝐫𝐞𝐜𝐞𝐢𝐯𝐞 & 𝐩𝐫𝐨𝐜𝐞𝐬𝐬 𝐚 𝐫𝐞𝐭𝐮𝐫𝐧 𝐢𝐬 𝐞𝐱𝐩𝐞𝐧𝐬𝐢𝐯𝐞 (𝐰𝐢𝐭𝐡𝐨𝐮𝐭 𝐫𝐞𝐯𝐞𝐧𝐮𝐞 𝐨𝐟𝐟𝐬𝐞𝐭). Sellers have to bear the costs associated with:
- Customer Service
- Packaging
- Logistics
- Processing
𝐓𝐡𝐨𝐬𝐞 𝐜𝐨𝐬𝐭𝐬 can 𝐭𝐲𝐩𝐢𝐜𝐚𝐥𝐥𝐲 𝐚𝐝𝐝 𝐮𝐩 𝐭𝐨 $𝟐𝟎-$𝟔𝟎 𝐩𝐞𝐫 𝐢𝐭𝐞m𝐦:
- 15% of returns are fraudulent (write off).
- A portion of returns are lost in transit.
- Returned items sell for cents in the dollar.
- Seller fees are incurred (for a second time).
Many categories often see return rates of 10-30%, with buyers’ remorse (no fault of the seller). It doesn’t matter how efficiently you reprocess and remarket returns, there is a major sustainability issue here - stemming from returns policies themselves. Many retailers are drawing back on their very lenient polices and updating their return policies, with a trend towards shorter return windows and stricter rules, particularly when it comes to select item categories. In may cases theyare placig strict controls over their once favoravble 'no recipet' returns and even limited the numbers of returns a single customer can make in a given time frame!
