Long Island Toy Store Owner Fights Back Against Costly Return Fraud: A small business owner on Long Island is losing hundreds of dollars each month due to customers abusing generous return policies. He details how customers return damaged or used items, falsely claiming defects, resulting in significant losses and unusable inventory. One recent example involved a Scooby Doo Mystery Machine model kit returned broken and incomplete, highlighting the financial burden of return fraud on small businesses using platforms like Walmart Marketplace
Small business owner Bill Stewart lost $55 on a single Walmart Marketplace return – a significant hit for his LI Toy and Game shop. The customer returned a damaged Scooby Doo toy kit, forcing Stewart to absorb the item cost, two-way shipping fees, and Walmart's merchant fees. This highlights the financial burden of return fraud on small businesses selling on third-party platforms, leaving them with little recourse. "With Walmart, the customer's always right," he notes, illustrating the challenges of navigating generous return policies
Return fraud is costing retailers billions. While generous return policies boost sales, consumers are exploiting them, leading to increased losses from empty boxes, item swaps, and false claims. From extended return windows to outright scams, the abuse affects small businesses and large corporations alike. Learn how easy return policies, financial hardship, and a lack of accountability contribute to this growing problem
Retail return fraud: Are generous return policies enabling customer theft? Retailers report a surge in fraudulent returns, with everyday consumers abusing lenient policies. From swapping items to falsely claiming damaged goods, the cost to small businesses is significant, impacting profitability and sustainability. Learn how easy return policies inadvertently encourage unethical behavior and the financial burden it places on retailers
Return Fraud: How Easy Returns Fuel a Rise in Small-Business Losses. More consumers are abusing generous return policies, costing small businesses like LI Toy and Game significant revenue. From empty boxes to damaged goods, learn how return fraud impacts retailers and what can be done to curb this growing problem
US retail return fraud soared to $103 billion in 2024, representing 15% of the total $685 billion in merchandise returns, according to a joint Appriss Retail and Deloitte report. This surge highlights the significant financial impact of fraudulent returns on businesses, from small online sellers to large retailers, who face losses from damaged goods, shipping costs, and processing fees. Consumers are exploiting generous return policies, leading to increased losses for retailers and impacting profitability
Return fraud is surging, impacting businesses of all sizes. A 2024 Narvar survey revealed over half of US consumers admitted to fraudulent returns, while a 2023 Loop Returns study found nearly 40% of online shoppers admitted to return policy abuse. This widespread issue, involving both everyday consumers and organized criminals, costs retailers millions annually in lost revenue and damaged goods, highlighting the urgent need for improved return policies and fraud prevention strategies
Retail return fraud: Consumers exploit generous return policies, costing businesses like LI Toy and Game significant losses. Loop's SVP of marketing, Jessica Meher, notes a consumer entitlement mentality driving this issue, impacting small businesses and large retailers alike. Learn how abusive returns—including damaged goods, false claims, and extended return windows—are impacting the retail landscape
Return fraud: From "wardrobing" to outright scams. Retailers face rising losses from abusive return policies. Learn about common return scams like bracketing and wardrobing, where consumers exploit generous return windows for free rentals or to try before they buy. Discover how this impacts businesses, especially small retailers, and the significant financial and environmental costs involved. Explore the challenges of combating return abuse and its impact on the retail industry
Retailers often issue refunds before inspecting returned items, leading to premature payouts and significant losses. This "customer-first" approach, while aiming to avoid dissatisfaction, leaves businesses vulnerable to return fraud and abuse, including damaged or used goods being returned for a full refund. This impacts small businesses disproportionately, resulting in financial losses from shipping, fees, and unsalvageable merchandise
Online return abuse: E-commerce's lenient return policies are fueling a surge in fraudulent returns. Unlike brick-and-mortar stores, warehouse employees often lack the time for thorough item inspections, leaving retailers vulnerable to damaged or used goods being returned. This results in significant financial losses for businesses, especially small retailers, due to restocking fees, shipping costs, and the inability to resell returned items. Examples include customers returning opened, damaged, or missing-piece products after extended use, costing businesses money and resources
Return Fraud: How Consumers Cheat Retailers with Empty Boxes & Swapped Items. Online shoppers are exploiting generous return policies, costing businesses millions. Learn about common return scams like sending back empty boxes, substituting products, and falsely claiming non-delivery. Discover how this impacts small businesses and the strategies retailers are using to combat return fraud
Online sellers face a surge in return fraud. Hilary Koziol of Cellar Sellers details how dishonest buyers cost her money, from eBay disputes over swapped trading cards and jeans to Depop returns of makeup-stained dresses. These fraudulent returns, often involving claims of damaged or incorrect items, create significant losses and impact her business, especially with higher-priced goods. She battles these issues with the USPS and online marketplaces, highlighting the challenges small businesses face in combating return abuse and protecting their profits
Easy Returns or Return Fraud? The Rise of "Return Shenanigans" on Social Media. TikTok, Reddit, and other platforms are buzzing with tips and tricks for maximizing return policies at major retailers like Amazon, Target (Cat & Jack), Costco, and REI. While some shoppers simply utilize generous return windows, others are engaging in return fraud, prompting debates about what constitutes abuse and the impact on small businesses. Learn how social media fuels return shenanigans and the financial consequences for retailers
“It’s almost like coupon sites where consumers have been trained to look for coupons and discounts,” Meher says. “That’s starting to happen with what companies offer loose return policies.”
I don’t think my social circle is the most crime-prone group in the world, but the more I chat with people in my life about return fraud and abuse, especially in online shopping, the more I realize how prevalent it is. A coworker told me about a friend of theirs who’d returned a box of rocks to a retailer instead of a television. A friend told me they’d never steal — only to acknowledge they’d once returned a big-ticket item they broke to Amazon and claimed it arrived broken, while their partner regularly sends back items they’ve worn. Another friend said that whenever they send back used items to replace new ones and get the refund, they make sure the seller is a big corporation, not a small mom-and-pop shop. I tried to do the bracketing thing with two sets of curtains last summer but failed. I was too lazy to return the set I didn’t want within the return window, so it’s accumulating dust under my bed.
To many people, low-level return fraud feels like a victimless crime — they’re not exactly losing sleep over a giant corporation losing a few dollars here and there. People assume retailers don’t really care that much, since they’ll often send a refund before getting the item back, if they bother to recollect an item at all. Companies have also given people such a long leash on accepting returns that consumers may not blink at hauling grass shears smeared with clippings back to the Target counter after six months of use.
Megan Wyatt, the owner of Wit & Whimsy Toys, a brick-and-mortar retailer in California, says the lax return policies the big guys offer customers have been a headache for her. “They’ll just take pretty much any return, it feels like, these days. And so customers feel like they can do that at small businesses as well,” she says. Her store has to essentially “train customers that you can’t expect to return things at a small business the way that you would at Target, Walmart, Amazon, places like that.”
Retailers big and small aren’t having a good time with return fraud and are cracking down. Many are axing free returns, tightening return windows, or otherwise implementing stricter returns policies. Companies such as REI and ASOS have started to ban certain customers over return abuse. Some retailers are using aggregated data to try to identify bad actors, whether they’re a previous customer or not. If a consumer is continually taking advantage of return policies at X retailer, Y retailer may know even before they click to buy.
Meher, from Loop, says personalized return policies are starting to become more common, too. “So, being able to incentivize good customers and giving them good return policies and disincentivize bad consumers and people who return a lot and giving them different return windows or different return policies,” she says. “That is also starting to become more important as retailers look into, ‘How do I make sure that I don’t piss off my good customers?'”
Across the consumer economy, there’s a pervasive us-versus-them sentiment between companies and their customers. Many consumers feel like businesses — especially the big ones — are swindling them and squeezing them for every penny, so when they have a chance to strike back, why not? Maybe that means putting a brick in a return box and hoping nobody notices it’s not an iPad. Or maybe it’s just seeing that package you’d already declared stolen arrived three days late and not trying too hard to give back that refund that already came through.
Emily Stewart is a senior correspondent at Business Insider, writing about business and the economy.
Business Insider’s Discourse stories provide perspectives on the day’s most pressing issues, informed by analysis, reporting, and expertise.
Source: Original Article