What is return abuse?

Return abuse describes fraud types that involve criminals taking advantage of an ecommerce company’s return policy.

Not every fraudster knows how to perpetrate return abuse. It’s typically the calling card of an expert fraudster who spends time studying a business’ policies to find the loopholes and creating tactics to exploit them.

The most common types of return abuse include:

Stolen merchandise returns – Shoplifters return stolen merchandise for the full price.

Receipt fraud – Criminals use stolen or fake receipts to return merchandise. Even more clever, they may purchase a product on sale at one store and return it to another for a higher price.

Employee fraud – Also known as “insider fraud,” employees help fraudsters return stolen goods.

Price arbitrage – Fraudsters purchase similar products that are priced differently and return the cheaper one at a higher price.

Switch fraud – Criminals purchase a replacement product and return the damaged or defective item.

Bricking – Fraudsters purchase and strip an electronic product, then return it without the valuable components intact.

Wardrobing – Criminals purchase products (often apparel) to use or wear once and then return.

Return abuse is increasing and costs retailers in the U.S. more than $12 billion each year.

Related Topics

Ecommerce Fraud Basics

Chargeback Management

Related Resources

The dark side of returns and refunds: How policy abuse damages CX and what to do about it

How to Create a Free Return Policy That Doesn't Hurt Your Bottom Line

Ecommerce Returns: Cost Center or Competitive Advantage?

Best Practices for Mitigating Evolving Ecommerce Fraud Risks