The findings reveal the major operational challenge that returns fraud and abuse pose to retailers
MELBOURNE, Australia: Loop, the leading return management platform, announced today the launch of its latest returns industry data report. The results from the survey provide insights into how retailers feel about the escalation of returns fraud and policy abuse, as well as the preventive measures they’ve already taken or would be willing to take moving forward to combat the issue.
Loop surveyed 600+ full-time associates/analysts based in the U.S., U.K. and Australia, working in the retail industry and with responsibility over their brand’s return process. The survey was conducted between June 5 and June 11, 2024.
The survey found that 99 per cent of retailers, globally, have experienced some type of returns fraud or policy abuse in the past 12 months. This compares to 60 per cent in Australia, which may be a result of reduced spending on non-essential items and an uptick in essential only spending year over year.
Retailers believe the primary reason consumers engage in returns fraud is because the current economic climate is leading shoppers to try to exploit return policies to improve their financial situation (43 per cent). Other factors include dissatisfaction with product quality (41 per cent) and an intent to use items only temporarily (35 per cent).
Additional key findings from the report include:
- In Australia, quality disputes (66 per cent, versus 53 per cent globally) was the most common type of fraud/policy abuse companies experienced in the past 12 months, followed by wardrobing and returning an item with the intention of keeping it (both 47 per cent).
- Majority of Australian retailers (65 per cent) agree their company is taking this rise in returns fraud and policy abuse seriously. However, only half of retailers (53 per cent) rate their company’s detection and prevention measures as very effective.
- Nearly three-fourths (74 per cent) of Australian retailers say their company prioritises customer experience over fraud and abuse prevention, and 51 per cent indicated that “maintaining a good customer experience” was the top challenge their company faces when addressing returns fraud or policy abuse.
- Permanently banning repeat offenders from making future purchases (46 per cent) and highlighting the negative environmental impact of returns (40 per cent) are the top actions Australian retailers are taking to combat returns abuse.
The report also offers actionable insights for retailers and details the steps they can take to better cope with the issue of returns fraud and policy abuse. These include examining consumer behaviour as a primary defense mechanism, improving education for consumers about what constitutes fraud, establishing clear consequences for returns fraud versus policy abuse and reviewing all returns data. This includes item grade and disposition data from the returns warehouse, which can make it easier to spot deceitful shoppers.
“Our latest industry data report reveals a notable rise in returns fraud and policy abuse over the past year, highlighting the importance of understanding consumer behaviour not just in purchasing, but also in returns,” said Loop CEO, Jonathan Poma. “The challenge is enormous: for every $100 in returned merchandise, retailers lose $10.40 to returns fraud. Retailers are implementing sweeping changes to address this drain on their bottom line, and our insights show that a data-driven, customised approach is key to reducing fraud while delighting genuine customers. Leveraging tools like advanced fraud detection models and return fees can provide merchants with the resources they need to not only mitigate these issues, but also improve their return processes as a whole.”
