US online retailers will lose billions in 2023 due to return fraud

In 2023, US retailers lost as much as $35 billion due to fraudulent online returns.

By tracking online sales data from 60 leading U.S. retailers over the past year, risk management platform Appriss Retail found that return fraud increased 1.5% year-over-year in 2023, estimating 10. 5% of all return claims were fraudulent. As online sales have increased, fraudsters have become even more sophisticated.

Appriss claims that organized retail theft rings “unleash a connected group of professional repeaters” who buy items online, resell them and then seek a refund from the original seller. There are an estimated 1,600 ads on dark web forums offering professional refund services, where scammers also share templates they use for complaint letters, as well as scripts designed to fool chatbots and call centers.

Data provided to Appriss by one merchant shows that one criminal made 119 transactions using 105 different email addresses and 113 customer IDs. Another collected more than $4,500 in refunds on false price adjustment claims.

There is no doubt that the problem of fraudulent returns of goods purchased online is a serious problem. Nearly half of the 500 e-commerce sellers surveyed by UPS Capital over the past 12 months said they suspected more than 20% of their returns were fraudulent.