Return Fraud Is on the Rise: What E-Commerce Brands Need to Know
- Fahim Mojawalla
- Jul 22
- 2 min read
Helping businesses rise above the challenges of modern retail.
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“America is becoming a nation of small-time return fraudsters, one box of fibs at a time.”
— Emily Stewart, Business Insider, July 2025
In 2024, U.S. retailers saw a jaw-dropping $685 billion in returned merchandise. According to a joint report by Appriss Retail and Deloitte, $103 billion of that was fraudulent—products that never should have been refunded under store policies.
Let that sink in.
That means 15% of returns were dishonest, whether due to organized retail crime or a consumer stretching the truth about why they no longer want that item.
And it’s not just hardened criminals doing it. A 2024 survey from Narvar found over half of U.S. consumers admitted to engaging in fraudulent returns at least once. Loop Returns, a popular returns management software, reported that nearly 4 in 10 shoppers either committed return abuse or knew someone who had.
At AYM High, we work with retail and e-commerce businesses navigating the ever-changing challenges of the digital age—and return fraud is now top of mind.
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Why This Matters for E-Commerce Brands
Return fraud doesn’t just chip away at profits. It erodes trust, inflates logistics costs, and forces businesses to create stricter return policies that often punish honest customers. In an era where flexible returns are part of the buying decision, this creates a dangerous tradeoff.
Here’s how return fraud shows up:
Wardrobing: Buying items to wear once and return (common in fashion and events).
Switch fraud: Returning a counterfeit or damaged item in place of the real product.
False damage claims: Reporting a product as defective to avoid return shipping fees.
Empty box scams: Claiming a shipment arrived empty or never at all.
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What E-Commerce Brands Can Do
If you’re running an online store, now is the time to tighten your returns strategy—without alienating loyal clients and guests.
Here are five smart moves to consider:
1. Track Return Patterns
Use data to flag frequent returners and suspicious behavior. Tools like Loop, Narvar, or Returnly can help.
2. Implement Return Windows & Restocking Fees
Set clear timelines (e.g. 14–30 days) and consider a nominal restocking fee for certain high-return categories.
3. Require Proof for Damage Claims
A quick photo or video requirement can deter false damage reports.
4. Segment Your Policies
Treat VIP customers differently from new or high-risk accounts. Loyalty programs can be your shield and reward system.
5. Educate Your Guests
Make return policies visible, easy to understand, and fair—but firm. Transparency reduces confusion and misuse.
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AYM High Can Help
At AYM High Consultants, we help small businesses and independent e-commerce operators design bulletproof return policies and integrate fraud detection tools into their operations. Whether you’re overwhelmed by chargebacks or need to strike the right balance between customer service and policy enforcement, we can guide you through.
Fraud may be on the rise—but with the right strategy, you don’t have to be a victim of it.
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Need help reviewing or upgrading your returns policy? Let’s talk. Contact us today for a consultation.
