U.S. shoppers fraudulently returned $101 billion in merchandise in 2023, with a holiday season surge in fraudulent returns, according to an estimate by the National Retail Federation, the NRF said in a year-end report.
Fraudulent returns accounted for nearly 14% of last year’s returns, over twice the percentage of return fraud the industry experienced in 2020. Retailers estimate through the NRF that they have lost $13.70 in fraudulent returns for every $100 in returned inventory last year.
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For every $1 billion in retail sales, retailers average $145 million in merchandise returns. The 13.7% in fraudulent returns was on the 14% of total items returned. Online shoppers return items at a higher rate than the 10% of physical store returns, with 17.6% of online merchandise returned, totaling $247 billion in returns of merchandise purchased online in 2023.
Examples of fraud on expensive, high-end merchandise include counterfeit items returned, fake receipts and badly damaged goods sent back by customers. There have even been cases of returned television boxes filled with bricks or stolen merchandise.
“Wardrobing” is another common form of retail fraud, in which customers return clothing items after wearing them, not just trying them on — sometimes with tears or stains left by the fraudster.
“Retailers continue to test and implement new ways to minimize losses from returns, particularly those that are fraudulent, while at the same time optimizing the shopping experience for their customers,” said NRF Executive Director of Research Mark Mathews.
More than 2,000 security experts, 250 retail companies and 129 international attendees gathered at #NRFPROTECT to discuss key topics including combating #organizedretailcrime, mitigating fraud, tackling theft and much more. https://t.co/YIzuIkK0CQ
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“Retailers’ efforts include providing greater detailed descriptions on sizing and fit of products for online purchases and requiring a receipt with returned items,” Mathews added. “As a whole, the industry is prioritizing efforts to reduce the amount of merchandise returned in stores and online.”
A November survey of more than 1,000 adult consumers found over 33% have embellished or exaggerated the reason for a return to get a refund or duck paying return fees. The poll conducted by returns technology company Optoro found 43% of respondents admitting they commit wardrobing more than once a year. 23% of wardrobers said they do it once a month.
