Loop, a leading return management platform, has released its latest report on industry data, shedding light on how retailers are grappling with the growing issue of returns fraud and policy abuse. The report offers a comprehensive analysis of the preventive measures that retailers have implemented or are considering to combat these challenges.
The survey, conducted between June 5 and June 11, 2024, involved over 600 full-time associates and analysts in the U.S., U.K., and Australia, all of whom have responsibility for their brand’s return process within the retail industry.
Key findings from the report reveal that returns fraud (44%) and policy abuse (43%) are now the most pressing concerns for retailers, surpassing traditional challenges like operational costs and supply chain issues. Notably, 99% of the surveyed companies reported experiencing some form of returns fraud or policy abuse in the past year.
Retailers attribute the rise in returns fraud primarily to the current economic climate, which they believe is driving consumers to exploit return policies to improve their financial situations (43%). Other contributing factors include dissatisfaction with product quality (41%) and the intent to use items temporarily before returning them (35%).
Additional insights from the report include:
- Quality disputes (53%) emerged as the most prevalent type of fraud or policy abuse encountered by companies, followed by attempts to return ineligible items (44%) and wardrobing (38%).
- Despite the seriousness of the issue, only 46% of respondents rate their company’s fraud detection and prevention measures as highly effective.
- A significant 55% of respondents stated that their company prioritizes customer experience over fraud and abuse prevention, with 52% indicating that maintaining a positive customer experience is the biggest challenge when addressing these issues.
- Common actions taken by retailers in response to returns fraud and policy abuse include tightening return policies (47%), banning repeat offenders (41%), and implementing return fees (37%).
The report provides actionable recommendations for retailers to better manage returns fraud and policy abuse. These include analyzing consumer behavior as a primary defense, educating customers on what constitutes fraud, establishing clear consequences for violations, and thoroughly reviewing returns data, including item condition and disposition from returns warehouses, to detect fraudulent activities.
“Our latest report highlights the significant increase in returns fraud and policy abuse over the past year, emphasizing the need for retailers to understand consumer behavior not only in purchasing but also in returns,” said Jonathan Poma, CEO of Loop. “The financial impact is substantial: for every $100 in returned merchandise, retailers lose $10.40 to returns fraud. To address this, retailers are making significant changes, and our findings suggest that a data-driven, tailored approach is crucial to reducing fraud while maintaining customer satisfaction. Utilizing advanced fraud detection tools and return fees can equip merchants with the necessary resources to mitigate these challenges and enhance their overall return processes.”
For a detailed view of Loop’s survey findings, visit: Loop Survey Findings.
To learn more about how Loop helps retail brands combat returns abuse and secure profitability, click here: Loop Solutions.
About Loop
Loop is the leading post-purchase platform specializing in optimizing returns, exchanges, and reverse logistics for over 4,000 Shopify brands worldwide. Through innovative features like Workflows, Instant Exchanges, Shop Now, Bonus Credit, and Offset, Loop helps brands achieve cost savings, increase customer lifetime value, and retain more revenue. With over 40 million returns processed and more than $1 billion in revenue retained over the past five years, Loop continues to drive profitability for merchants. Discover more at www.loopreturns.com.
