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IRVINE, Calif. – A new report from Appriss Retail, in collaboration with Deloitte, highlights the growing challenge of fraudulent and abusive returns in the retail industry, costing retailers $103 billion in 2024 alone. Representing 15.14% of all returns, these activities significantly impact retail profitability, with total merchandise returns reaching $685 billion—13.21% of total retail sales of $5.19 trillion.
The "2024 Consumer Returns in the Retail Industry" report integrates data from surveys of 150 retail executives, 1,000 consumers, and the U.S. Census Bureau, offering insights into the complex dynamics of returns across physical and online channels.
Fraudulent Return Trends and Challenges
The study reveals that common types of fraudulent and abusive return behaviors include:
- Wardrobing (used merchandise returned): 60%
- Gift card fraud: 55%
- Return of shoplifted goods: 48%
- Counterfeit receipts/e-receipts: 48%
- Bracketing (buying multiple items, returning some): 47%
- Employee fraud or collusion: 39%
Online shopping continues to influence return patterns, with in-store purchase return rates at 8.72% compared to online return rates at 24.52%. Combined, Buy Online Return Instore (BORIS) and Buy Online Return Online (BORO) transactions now account for over 52% of all return dollars.
Retailers Respond with Mixed Results
In response to increasing fraud, 84% of retail executives reported implementing stricter return policies, such as requiring proof of purchase (67%) and limiting return windows to 30 days or less (59%). However, these measures have unintended consequences:
- 55% of consumers avoided retailers with restrictive return policies.
- 31% of consumers stopped shopping at certain retailers due to poor return experiences.
Michael Osborne, CEO of Appriss Retail, notes, "Stricter return policies are not reducing the fraud retailers face. An AI-powered, data-driven approach is essential to prevent losses while maintaining consumer loyalty."
Technology and Innovation in Fraud Prevention
Retailers are leveraging advanced tools to tackle fraud, including:
- Real-time return technology to approve or deny claims (35%).
- Manual monitoring of transaction data (54%).
For more information, visit Appriss Retail.
