Bogus returns

Retailers are grappling with their costly problem of returns and sometimes worse: fraudulent returns. In 2023, total returns for the US retail industry amounted to USD 743 billion. As a percentage of sales, the return rate is 14.5%, with a return rate of 17.6% for online sales and 10.0% for brick-and-mortar sales. The returns eat into profit margins due to the high handling costs and chance items cannot be resold. Gartner estimates that it costs merchants USD 27 to handle a return for a USD 100 online order. Adding to the costs are fraudulent returns e.g., used merchandise, stolen merchandise, returns of counterfeit receipts and returns by organized crime groups. Fraudulent returns amounted to USD 102 billion in 2023 up more than four times from USD 25 billion in 2020, according to a survey by the US National Retail Federation.

Source: US National Retail Federation, December 2023.