How to Combat Retail Returns Fraud
The value of merchandise being fraudulently returned to retailers hit an all-time high in 2023. As reported by the National Retail Federation (NRF), 13.7% of returns to retailers in the U.S. were fraudulent, equating to $101 billion.1 The value of fraudulent returns was nearly 20% higher than in 20222 and a staggering 374% higher than five years ago (see Figure 1).
The main types of returns fraud fall into four categories: consumer behavior, physical, financial and internal. The most frequent examples within each category are discussed below.
Consumer behavior:
- Wardrobing or free renting: Consumers purchase items, use them and then return them, even though they are not defective. While consumers may consider this a victimless crime, such actions contravene most retailers’ policies.
- Item not received: Consumers wrongfully claim their order never arrived and request a refund.
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