Product Return Scams Cost Retailers $43 Billion in 2020



product return scams

Scams involving the return of products costs retailers $43 billion in 2020. As the pandemic forced people to shop online, the nature of commerce changed significantly in 2020, and with it came rising fraud.

A report compiled by Signifyd, providers of an end-to-end commerce protection platform, show that retailers lost $43 billion last year on shipping, inspecting and return fraud scams.



Cost of Product Return Scams on Retailers

Signifyd’s ‘Stage of Fraud Report 2021: A New Age of Fraud – A New Age of Commerce Protection’ confirms the escalating impact fraud is having on retailers.

Return fraud is becoming increasingly more sophisticated and common, posing huge challenges for retailers.

Signifyd’s analysis was based on findings from the National Retail Federation (NRF) that revealed retailers lost $11.6 billion in 2020 to return fraud in the cost of goods alone. When accounting for shipping, inspecting and the disposing of bogus returns, return scams in 2020 equated to around $43 billion.

It is vital that small businesses are aware of the tactics scammers use in relation to returning products. As the report notes:



“Methods vary, but sending back a counterfeit copy of the product or a damaged version are popular approaches.

“Many retailers endeavor to provide an excellent return experience by crediting an account as soon as a return is scanned in for shipment back to the merchant. That’s an opening for fraudsters to ship back anything that weighs about what the original product did.”

Be Adaptable and Agile Throughout the Whole Order Cycle

As we have seen with the prolific changes in retail trends in recent months, the commerce landscape is constantly changing. As Signifyd notes, as commerce trends change and evolve, so too do the fraudsters and their tactics.

To help combat being victim of fraud, it is important businesses are adaptable and agile in their anti-fraud strategies in the whole of the order’s lifecycle to help prevent costly revenue leakage.



This should include the anti-fraud efforts at the payment gateway, the card processor, and after delivery, through returns and chargebacks.

Assess and Identify Areas of Improvement

Signifyd recommends that retailers take the time to assess and identify areas of improvement in anti-fraud measures. Signifyd’s Fraud and Abuse Maturity Assessment for Revenue Optimization is designed to help organizations understand their ability to prevent leakage and optimize revenue by making meaningful improvements to anti-fraud efforts.

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Gabrielle Pickard-Whitehead Gabrielle Pickard-Whitehead is a professional freelance writer and journalist based in the United Kingdom. Since 2006, Gabrielle has been writing articles, blogs and news pieces for a diverse range of publications and sites. You can read "Gabrielle’s blog here.".

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