False claims about damaged or missing items are the most common form of returns fraud, affecting 62% of U.S. retailers, while shoppers increasingly abandon brands with poor return policies, creating both a customer retention risk and a $2 billion opportunity for retailers who invest in better returns experiences and fraud detection tools.
- 63% of U.S. shoppers have stopped shopping with or abandoned purchases from retailers due to poor return policies
- False claims about damaged or missing items are the top returns fraud concern for 62% of retailers, followed by item substitution (54%) and wardrobing (38%)
- 44% of consumers admit to providing false reasons for returns, while 31% substitute items when returning purchases
- Only 43% of retailers use fraud detection tools, and just 19% use AI or machine learning—50% still rely on manual reviews
- 87% of shoppers would accept exchanges under the right circumstances, representing over $2 billion in growth opportunity globally
New research from Loop found that almost two-thirds (63%) of U.S. shoppers have either stopped shopping with a retailer or abandoned a purchase because of its return policy.
"Shoppers are judging brands on what happens after the sale, and that judgment turns into action. Looking at the data, shoppers are saying that a bad returns policy has made them walk away from a brand, whereas many retailers still aren’t recognizing or acknowledging this risk. This gap represents a significant opportunity for the brands that do see returns as a driver of growth, rather than a cost center,” says Hannah Bravo, CEO of Loop. “The ultimate outcome of a return experience is a major driver of customer retention, good or bad. A staggering 87% of shoppers report a willingness to take an exchange under the right circumstances, and the value of that opportunity is eye-popping: over $2 billion globally to the brands Loop serves today."
Key takeaways:
· More than four in 10 consumers (44%) admit they have previously provided a different reason for making a return rather than the exact truth, while almost one in three (31%) admit to substituting the original item with something else when making a return.
· Almost two-thirds (62%) of U.S. retailers say false claims relating to damaged or missing items are among the most common forms of returns fraud they encounter, while more than half (54%) regularly deal with customers returning different or damaged items.
· Wardrobing – where shoppers wear an item before returning it – is also encountered by 38% of U.S. retailers.
· Only 43% of U.S. retailers use fraud detection tools and less than one in five (19%) use AI or machine learning-driven fraud detection. In fact, half (50%) of U.S. retailers still rely on manual reviews to help identify suspicious returns.
· Almost two-thirds (65%) of U.S. retailers agree that the returns experience has a significant impact on customer loyalty. At the same time, 56% are concerned that tightening returns policies could result in customers leaving their brand altogether, while 57% worry about potential backlash on social media or public forums if they make returns more restrictive.
