In 2021, total retail returns accounted for $769 billion in lost sales for U.S. retailers or about 16.6% of all sales. Of those returns, over 10% are return fraud, a growing concern for all retailers.
For years, return policies have built brand trust and encouraged a higher per-ticket sale. Costco, who originally had a flat return policy without an end date, eventually shifted computer sale returns to a 90-day window. The change likely was put into place when some bad actors returned their computers yearly for the latest model. Poor moral character is a different issue than fraud and theft, however.
In the fall of 2021, a Charlotte, NC, man pled guilty to wire fraud in a return scam involving Amazon. A Department of Justice press release revealed the 31-year-old man had defrauded Amazon of nearly $300,000 in over 300 transactions from 2016 to 2020. The crime is known as price arbitrage—when someone returns a less expensive, similar-looking product in place of what they bought. Other scammers will claim the box they received was empty or strip a product’s interior parts before returning it, known as bricking.
Other scams on retailers include returning merchandise that was stolen/shoplifted for a full refund, or returning an item purchased on sale at one store and profiting off the difference when returning to a store selling the item at a higher price (receipt fraud.)
With just a quick web search query, hundreds of sites offering advice on retail scams and outright thefts flood your browser’s screen. As the criminals become more brazen and creative, retailers will need to adapt and regularly review policies and security methods.