As retailers enter 2025, they continue struggling to slow the flood of returns fraud, which represented 15.14%--or nearly one-sixth—of all product returns in 2024, according to a report from Appriss Retail and Deloitte.
That percentage is even greater than the 13.21% of total retail sales that were returned. Measured in dollars, returns (including both legitimate and fraudulent) last year reached $685 billion out of the $5.19 trillion in total retail sales.
“It’s clear why retailers want to limit bad actors that exhibit fraudulent and abusive returns behavior, but the reality is that they are finding stricter returns policies are not reducing the returns fraud they face,” Michael Osborne, CEO of Appriss Retail, said in a release.
The study defined fraudulent returns as occurring when a customer attempted to return an item to a retailer for a refund, knowing the item did not qualify for a refund according to the store's policy, researchers said in the paper, “2024 Consumer Returns in the Retail Industry Report.”
Specifically, the report lists the leading types of returns fraud and abuse reported by retailers in 2024, including findings that:
- 60% of retailers surveyed reported incidents of “wardrobing,” or the act of consumers buying an item, using the merchandise, and then returning it.
- 55% cited cases of returning an item obtained through fraudulent or stolen tender, such as stolen credit cards, counterfeit bills, gift cards obtained through fraudulent means or fraudulent checks.
- 48% of retailers faced occurrences of returning stolen merchandise.
Together, those statistics show that the problem remains prevalent despite growing efforts by retailers to curb retail returns fraud through stricter returns policies, while still offering a sufficiently open returns policy to keep customers loyal, they said.
“Returns are a significant cost for retailers, and the rise of online shopping could increase this trend,” Kevin Mahoney, managing director, retail, Deloitte Consulting LLP, said. “As retailers implement policies to address this issue, they should avoid negatively affecting customer loyalty and retention. Effective policies should reduce losses for the retailer while minimally impacting the customer experience. This approach can be crucial for long-term success.”
