REI, Target, and ASOS among retailers cracking down on return fraud

The trend: While plenty of retailers have rolled back free returns to protect their bottom lines, a growing share have adopted more targeted measures to combat return fraud.

• ASOS in October began charging UK shoppers who frequently return items a return fee of £3.95 ($5.26) if they keep less than £40 ($53.22) worth of items, per the BBC.
• Nordic department store Boozt banned roughly 60,000 so-called “serial returners” who it claimed “exploit high service levels of free shipping and returns at the expense of our business, other customers, and the environment.” Those customers represented just 0.68% of the retailer’s total customer base, but about 20% of its returns last year.
• REI no longer accepts returns from a small subset of its members who have repeatedly abused its generous return policies, per Retail Dive.
• Target updated the language on its website to clarify its stance that it can deny returns for “fraud, suspected fraud or abuse,” per Business Insider.

Why is this happening? Return fraud is on the rise. 13.7% of retail returns were fraudulent last year, up from 10.4% in 2022, per the National Retail Federation and Appriss Retail.

The most common challenges retailers reported experiencing over the prior year were:

• “Wardrobing,” or when shoppers buy an item, use it, then return it even though it is not defective.
• Consumers returning shoplifted or stolen merchandise.

The challenge: While stringent return policies keep retailers’ costs in check, they also cause consumers to think twice before clicking the buy button:

• The majority (83%) of consumers check a retailers’ return policy when shopping for holiday gifts, Narvar found.
• 69% of consumers say stringent return policies deter them from making a purchase, up from 59% in 2023, per Blue Yonder.

Our take: Retailers’ return policies take center stage in November and December as 46% of consumers make more returns during the holidays than they do at other times of the year, per a Narvar consumer survey. As merchants duke it out to drive shoppers to spend, they also need to find ways to combat fraud without pushing consumers away.

Luckily there are solutions at hand. Narvar has found that relatively simple steps such as asking shoppers to provide a photo of the item and/or packaging to prove damage can help prevent fraud.

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