Return fraud is a scam in which a customer attempts to return merchandise for a refund or exchange under false pretenses. This fraudulent practice can take many forms, such as returning stolen goods, using counterfeit receipts, or claiming that the product was defective when it wasn’t. In some cases, customers may purchase items, use them, and then return them as if they were unused, a practice known as "wardrobing." Other forms include returning items after the return policy period or returning merchandise bought elsewhere.
Return fraud negatively impacts retailers by causing financial losses, depleting inventory, and disrupting normal return processes. Retailers may find it difficult to distinguish between legitimate returns and fraudulent ones, making it harder to provide good customer service while protecting themselves from scams.
To combat return fraud, retailers should implement clear and consistent return policies, use return tracking software, and consider requiring identification for returns. Some businesses also employ restocking fees, limit return windows, or tag high-value items to discourage fraudulent returns.