Why does returns abuse take place?
Carly Greenberg
·January 19, 2024
Return policy abuse and fraud are on the rise, jumping to 13.7% of all returns last year and costing merchants in the United States an estimated $101 billion.
Returns abuse and fraud covers a broad spectrum of customer behavior, ranging from minor policy-bending behavior to outright attempts to deceive or defraud merchants. In our new survey of 1,000 U.S.-based online shoppers, we drilled down on what types of returns abuse and fraud they’ve taken part in – and discovered that certain types of returns abuse behaviors are far more prevalent than you might have guessed.
We also looked into the why behind these behaviors, and discovered insights that merchants can use to proactively enhance their returns abuse and fraud detection strategy, helping you protect your bottom line.
Learn more about online returns abuse and fraud. Download the full report here.
In this blog, we’ll cover key findings from our survey, including:
- How frequently shoppers engage in returns abuse and fraud
- Why they engage in these behaviors
- Factors that discourage shoppers from committing these behaviors
How often do shoppers engage in returns abuse and fraud?
The good news is that 60% of customers never engage in returns abuse or fraud, nor are they aware of anyone in their lives who’s done so.
On the other hand, nearly four in 10 respondents say that either they, or someone they know, has engaged in returns abuse or fraud within the past year.
To start, let’s define what behaviors are covered within that statement. The category is broad enough to include all of these activities:
Unfavorable consumer return-related behavior
- Ordering multiple items to try out knowing most will be returned, also known as bracketing
- Attempting to return an item ineligible for return (e.g., final sale, past the allowed return window)
Abuse
- Wearing/using an item with the intention of returning it after the fact (i.e. wardrobing)
- Buying an item with the intention of requesting a return and still being allowed to keep the product
- Claiming that a functional item is defective to receive a discount/refund
Fraud
- Returning an empty box or less expensive item than the original item purchased
- Purchasing items with a stolen/virtual credit card, then attempting to have the refund processed to a different credit card
- Claiming an item never arrived to receive a second product and/or refund
Our study found that out of the 39% of respondents who’d either engaged in one of these behaviors themselves, or knew someone who had, the behaviors occurred with alarming frequency. Between 20% and 30% of those who’ve committed returns abuse or fraud admit to participating in those behaviors at least once a week.
Why do shoppers abuse return policies?
Returns abuse is on the rise – and we wanted to know why.
We asked shoppers what compelled them to participate in these behaviors, and they responded with a variety of reasons. The most common rationales included:
- I needed to determine the size/fit of the item (54%)
- I planned to use the item for a specific event and then return it (36%)
- I wanted to keep the item but needed the money I’d already spent (31%)
- I took advantage of a lenient return policy (23%)
- I was frustrated by an overly strict return policy (19%)
However, some forms of returns abuse – such as bracketing and wardrobing – are not always perceived as abuse by customers. A majority of shoppers cited the ability to order duplicates to determine the right selection (51%), “try before you buy” policies (82%), and flexible returns (96%) as elements of a great customer experience.
While shoppers may view such behaviors as innocent, it doesn’t change the fact that they have a big impact on merchants’ profit margins, especially when customers become repeat offenders.
What would prevent shoppers from abusing return policies?
In order to curb all kinds of returns abuse – including more innocuous types like bracketing and wardrobing – it’s important to create a comprehensive returns strategy that outlines repercussions for abuse of your policy. Additionally, optimizing your product pages with detailed photographs, videos, and sizing details can help your customers feel more confident in their purchasing decisions, cutting down on more innocent behavior like bracketing. Building the right policy and deterrents can help you ensure flexibility for loyal customers, while curbing the behaviors of shoppers who intend to take advantage of your business.
Some of the top repercussions that shoppers say would stop them from abusing returns policies include:
- If I had to pay a fee to make the return (37%)
- If I was aware the behavior would result in a permanent ban from making future purchases with that retailer / If I knew there would be legal consequences for my actions (26%)
- If I was to only receive a store credit or exchange instead of a refund (24%)
- If I knew the behavior had a negative environmental impact (23%)
- If I knew the behavior contributed to the retailer experiencing financial losses and potentially needing to close (22%)
How can merchants empower their businesses to proactively take a stand against returns abuse and fraud, while still creating a welcoming post-purchase experience for well-intentioned shoppers?
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