Many Unhappy Returns

Fraudulent returns and claims resulted in a $103 billion loss for retailers in the just-completed year, according to Appriss Retail’s just-released “Consumer Returns in the Retail Industry Report,” which it compiled in collaboration with Deloitte Consulting LLP. That translates into 15.14% of all $685 billion in returns being deemed fraudulent, which is defined as a customer attempting to return an item to a retailer for a refund, knowing the item did not qualify for one in accordance to store policy.

The Appriss Retail research highlights that despite growing efforts by retailers to curb retail returns fraud through stricter returns policies, the problem remains prevalent. Some specific findings include:

• 60% of retailers surveyed reported incidents of “wardrobing,” or the act of consumers buying an item, using the merchandise, and then returning it.
• 55% cited cases of returning an item obtained through fraudulent or stolen tender, such as stolen credit cards, counterfeit bills, gift cards obtained through fraudulent means or fraudulent checks.
• 48% of retailers faced occurrences of returning stolen merchandise.

“It’s clear why retailers want to limit bad actors that exhibit fraudulent and abusive returns behavior, but the reality is that they are finding stricter returns policies are not reducing the returns fraud they face,” said Appriss Retail CEO Michael Osborne. “Our annual research highlights the serious problem of returns fraud, and why an AI-powered, data-driven approach to loss prevention can reduce fraud and keep consumers loyal.”

Said Kevin Mahoney, Deloitte Consulting Managing Director, Retail. “Returns are a significant cost for retailers, and the rise of online shopping could increase this trend. As retailers implement policies to address this issue, they should avoid negatively affecting customer loyalty and retention. Effective policies should reduce losses for the retailer while minimally impacting the customer experience. This approach can be crucial for long-term success.”

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