New Survey From Loop Shows Fraud and Policy Abuse are Outpacing Operational Costs and Supply Chain Issues as Major Concerns for Retailers
99% of respondents’ companies have experienced some type of returns fraud or policy abuse in the past 12 months
Loop, the leading return management platform, announced 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.
“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 behavior not just in purchasing, but also in returns”
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.
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The report revealed that retailers identify returns fraud (44%) and policy abuse (43%) as the top trends having the most significant impact on their companies — even outranking factors like operational costs and supply chain challenges. The survey also found that 99% of respondents’ companies have experienced some type of returns fraud or policy abuse in the past 12 months.
Respondents 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%). Other factors include dissatisfaction with product quality (41%) and an intent to use items only temporarily (35%).
Additional key findings from the report include:
- Quality disputes (53%) was the most common type of fraud/policy abuse companies experienced in the past 12 months, followed by customers attempting to return items that weren’t eligible for a return (44%) and wardrobing (38%).
- 94% of respondents agree their company is taking this rise in returns fraud and policy abuse seriously. However, less than half of respondents (46%) rate their company’s detection and prevention measures as very effective.
- A majority (55%) of respondents say their company prioritizes customer experience over fraud and abuse prevention, and 52% indicated that “maintaining a good customer experience” was the top challenge their company faces when addressing returns fraud or policy abuse.
- Tightened return policies (47%), permanently banning repeat offenders from making future purchases (41%) and implementing return fees (37%) are the most common actions taken in response to returns fraud or policy 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 behavior 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.
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“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 behavior not just in purchasing, but also in returns,” said 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, customized 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.”
