Peak Season returns fraud: An inside look at Loop’s data
Tara Daly
·February 21, 2025
The peak shopping season around the holidays is a prime time for ecommerce merchants: During Cyber Week alone, Loop merchants saw over $1.62 billion in sales.
Unfortunately, as sales numbers go up, so do return fraud attempts. During 2024’s peak season (Nov. 28, 2024 - Jan. 12, 2025), we flagged a much higher than average volume of “high risk” return transactions across all three of our key geographic regions, the US, Australia/New Zealand, and the UK.
Ready to learn what we uncovered? Let’s dig into the data below.
High-risk return attempts are up globally
Across all three regions, we saw a double-digit increase in high-risk return attempts.
Loop’s Fraud Model identified and blocked those that met high-risk criteria before they could be completed.
US: +22%
In the US, there was an average fraud attempt rate of .74% during the prior six months, jumping to .90% during Peak Season.
Australia: +22%
Australia has a lower rate of fraud incidence, with .22% during the prior six months. However, the % of increase was identical to the US’, jumping to .27%.
UK: +33%
While the UK’s rate of fraud incidence is also lower than the US’s, the region saw a more substantial increase over Peak Season, jumping from .33% to .44% during that period.
Fraud attempts hit hard—especially in the US
While potential fraud attempts are increasing across all three regions, we’re seeing the biggest impact on stores in the US.
Over $28.9M USD in value was flagged as high risk for fraud, accounting for 7.7% of all returns to US Loop merchants.
How does that compare globally?
In the UK, just $412,528 USD of return value was flagged as fraud, representing 2% of returns.
In Australia, $300,322 USD worth of transactions were flagged as fraud, equating to 2.2% of return value.
The good news? We flagged all of these transactions before the merchants approved the return request—helping them safeguard their revenue from con artists.
High-risk return value jumps during Peak Season
During Peak Season, fraudsters are focusing their efforts on high-value transactions to generate income from returns scams. In both the US and UK, the value associated with flagged transactions is more than double during Peak Season compared to pre-Peak Season, with ANZ close behind.
US: 3.5% -> 7.7% (220% increase)
UK: 1.0% -> 2.0% (200% increase)
ANZ: 1.2% -> 2.2% (183% increase)
Changes in suspicious behavior
Finally, what trends are we seeing, and how do they vary across each of our key regions?
We discovered a few interesting stats…
- US-based fraudsters move fast
Among confirmed cases of Peak Season fraud, US-based fraudsters were submitting their returns for refunds 18% faster than they were before Peak Season. (Fortunately, we were still able to shut them down before the transactions went through!) - Higher value returns fraud attempts in the US and UK
Fraudsters in the US and the UK were submitting returns that were worth, on average, 30% more than the average value of confirmed cases of fraud in the months prior to peak season. - Australian fraudsters have their own style
The average value of confirmed-fraud returns in Australia went down by 30% during peak season; they took about 8% longer to initiate their returns, and tried to defraud Loop merchants of, on average, 1 item fewer per return.
Fighting back against returns fraud
While these stats show a lot of returned product value flagged as fraud in all three regions, the good news is, we were able to catch all of these cases using our AI algorithms before they impacted our merchants. That means they were able to block automatic refunds or set up manual review processes. As a result, they could protect their profits and avoid getting scammed.
Loop’s Fraud Model is based on reviewing millions of unique transactions, including cases of confirmed fraud. We use that data to identify potentially “high risk” transactions, and halt those transactions so that your team can review them manually. To date, our Model has successfully identified $0.87 out of every dollar of confirmed returns fraud.
Once you know what fraud looks like in your business, our Workflows tool also makes it easy for you to set up custom rules around return conditions, so you can build controls to block common types of high-risk transactions. For instance, by setting up a policy that requires manual review for items that are often flagged in high-risk return situations, you’ll be able to build a solid defense strategy against returns fraud.No matter where you are, returns fraud is on the rise—so it’s crucial to put safeguards in place to identify it and mitigate its impact on your business. By choosing a best-in-class returns operations platform like Loop, your brand will be well-equipped to fight back against fraud while ensuring a great customer experience for your legitimate shoppers.
Ready to learn more about how Loop can help you fight returns fraud? Get a demo.
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