In 2024, retailers faced a staggering $103 billion loss due to fraudulent returns, according to a recent report by Appriss Retail in collaboration with Deloitte. This alarming figure highlights a growing issue in the retail industry, where fraudulent returns accounted for 15.14 percent of all returns this year.
The total merchandise returns for 2024 reached $685 billion, representing 13.21 percent of total retail sales, which amounted to $5.19 trillion. This significant volume of returns underscores the scale of the problem and the urgent need for retailers to address it.
One of the most common forms of return fraud is “wardrobing,” where consumers buy an item, use it, and then return it. This practice was reported by 60 percent of retailers surveyed. Additionally, 55 percent of retailers cited cases of returning items obtained through fraudulent or stolen tender, such as stolen credit cards, counterfeit bills, or fraudulent gift cards. Another 48 percent faced occurrences of returning stolen merchandise.
Michael Osborne, CEO of Appriss Retail, emphasized the importance of using an AI-powered, data-driven approach to loss prevention. “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,” Osborne said.
Kevin Mahoney, managing director of retail at Deloitte Consulting LLP, added that the rise of online shopping could increase fraudulent returns. He stressed the need for effective policies that reduce losses for retailers while minimally impacting the customer experience. “Effective policies should reduce losses for the retailer while minimally impacting the customer experience. This approach can be crucial for long-term success,” Mahoney said.
As retailers continue to navigate the challenges of return fraud, it is clear that innovative solutions and effective policies are essential to mitigate losses and maintain customer loyalty.
