The era of online shopping has resulted in a massive spike in the number of items being returned after purchase, leading many retailers to discontinue free return options or reduce the window of time in which they will accept returned items.
While legitimate returns are costly and wasteful enough, mounting evidence reflects a growing trend of fraudulent returns that has only gotten worse in the aftermath of the holidays.
From scammers attempting to use forged receipts to boxes filled with bricks instead of actual merchandise, retailers indicate that they have been inundated with a host of fraudulent activity.
Well, over $100 billion worth of merchandise returned over the course of 2023 was done so with some type of fraud, according to the National Retail Federation. That total was more than double the amount recorded just three years earlier and amounted to a whopping 14% of all returns made last year.
Mark Mathews, the organization’s executive director of research, explained that many businesses find themselves behind the eight ball and are now struggling to respond to the fraud without alienating consumers.
“Retailers continue to test and implement new ways to minimize losses from returns, particularly those that are fraudulent, while at the same time optimizing the shopping experience for their customers,” he said.
Some of those steps, Mathews added, involve “providing greater detailed descriptions on sizing and fit of products for online purchases and requiring a receipt with returned items.”
Although these measures are not foolproof, he noted that there is an industry-wide shift underway aimed at “prioritizing efforts to reduce the amount of merchandise returned in stores and online.”
Retailers say more goods are coming back as fraudulent returns, including items that have been outright stolen https://t.co/G8DyZySzB6 https://t.co/G8DyZySzB6
— The Wall Street Journal (@WSJ) January 10, 2024
Since many online retailers approve returns upon receiving the notification that a shipping label has been created, and some do not even require that a product be returned at all, many unscrupulous consumers have discovered how easy it is to essentially rake in free money. In fact, a survey conducted in November found that more than one-third of respondents admitted having used fraudulent means — such as embellishing a problem with a product — when returning an item.
Industry insider Tom Enright predicted that, at this rate, the retail industry is “headed for a trillion-dollar problem here.”
