Fraudulent Returns and Claims Cost Retailers Billions in 2024: Research

Appriss Retail releases the annual 2024 Consumer Returns in the Retail Industry Report, in collaboration with Deloitte*. Appriss led this comprehensive analysis; total merchandise returns for the year reached $685 billion, representing 13.21% of total retail sales, which amounted to $5.19 trillion in 2024, according to the report.

The report reveals fraudulent returns and claims resulted in a $103 billion loss for retailers in 2024, with 15.14% of all returns deemed fraudulent, meaning 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.

 “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,” says Michael Osborne, CEO, Appriss Retail. “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.”

Key Takeaways:

• The Appriss Retail research highlights that despite growing efforts by retailers to curb retail returns fraud through stricter returns policies, the problem remains prevalent. The report includes insights on the leading types of returns fraud and abuse reported by retailers in 2024 such as:
• 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.