Reduce the hidden costs of returns abuse
The state of returns
With a shifting global commerce climate, flexible returns policies are no longer the exception, but the rule. Your returns policy helps determine how and where consumers shop.
• 80% of shoppers are deterred by inconvenient policies and expect free returns
• 56% report Buy Online Return in Store (BORIS) options to be very important
• 75% said returns experiences impact whether they would shop with a retailer again
COVID-19 conditions propelled all businesses to double down on their digital and omnichannel strategies including extending their returns policy timelines to better accommodate shoppers’ needs. However, without the proper precautions in place, returns abuse is costing apparel merchants significant revenue.
$25.3B
Annual cost of returns abuse to US retailers
8%
of returns are fraudulent
23%
will abandon their carts if returns options are poor
Gift with purchase
TYPES OF RETURNS ABUSE
Abusers return a different (and less valuable) item while collecting the value of the original item.
This user created multiple accounts and purchased items that would typically include a gift with purchase. The user would then return the item without the gift to reap the reward of the return.
strawber**@hotmail.com
TOTAL PURCHASES:
$455,000
TOTAL RETURNS:
$255,000
50% of all online order attempts contained a gift with purchase item
What is returns abuse?
Returns abuse is different from fraud perpetrated by cyber criminals. Instead this abuse occurs when good customers (or those who may look like “good” customers), take advantage of a merchant’s returns program or policies for their own gain.
Identity manipulation
TYPES OF RETURNS ABUSE
Sophisticated abusers set up multiple accounts and use multiple payment methods to hide their identities and avoid detection.
This pesky repeat offender returned 66% of their purchases.
jamie***@gmail.com
TOTAL PURCHASES:
$79,000
TOTAL RETURNS:
$52,000 (66%)
Te***7@yahoo.com
TOTAL PURCHASES:
$75,000
TOTAL RETURNS:
$59,000
Free shipping abuse
TYPES OF RETURNS ABUSE
Consumers return a high percentage of their orders back to the merchant for a variety of reasons. 30% of users buy items with the intention of returning them, just to qualify for free shipping.
This free shipping abuser returned 79% of all items purchased.
will abandon their carts if returns options are poor
LOCATIONS:
2 households
# OF CARDS:
6 (4 in-store)
jam**49@gmail.com
jami****13@gmail.com
# OF CARDS:
4
Renting/Wardrobing
TYPES OF RETURNS ABUSE
Abusers purchase items, wear them, and then return the items back to the store for a refund. 53% of merchants have reported issues with renting and wardrobing.
A shopper at a global retailer was discovered to have returned 83% of all purchased items. As an amateur fashion blogger, she purchased items, wore them once to feature on her social media accounts, and then returned them to the retailer.
b***8@yahoo.com
TOTAL PURCHASES:
$78,000 (online & in-store)
TOTAL RETURNS:
$65,000 (83% of all purchases)
What does returns abuse cost you?
jamie12***@gmail.com
The tension between offering returns benefits while accurately identifying and preventing abusive behaviors has proven a struggle for merchants. Returns abuse can impact your business in the following ways:
Lost profit. For every $100 of returned items, this is costing merchants approximately $5.90 in returns fraud.
Operational overhead. Costs associated with processing, shipping, and restocking inventory cut into potential revenue. The average return represents 30% of the purchase price.
Poor customer experience. The costs of returns abuse can stop merchants from being able to offer differentiated returns policies. L.L.Bean, once known for its lifetime returns policy, ended this offering in 2018 citing high rates of abuse. The policy now extends only for one year, negatively impacting retention and reducing lifetime value.
58%
of merchants say that reducing returns abuse is a high priority for their company, but only...
17%
say that they have made major changes to address returns abuse or fraud.
The way forward for the apparel industry
Cyber-criminal fraud is no longer the only vulnerable area of your business. Customers are taking advantage of unprotected policies for their own benefit. And you are bearing the costs. To protect your business, ensure that you can accurately identify returns abuse (especially when abusers are trying to hide their identity) and effectively enforce your business policies.
1
Identify returns abuse
Proactively identify and stop abusers by tapping into Forter’s robust global merchant network that processes over $200B in transactions and knows over 850M unique identities globally.
Identify abusers that are attempting to hide their identity or behaviors to avoid detection with Forter’s patented identity linking technology, (e.g. using different email addresses, channels, credit cards, etc.).
2
Detect hidden serial abusers
Returns abuse looks different for each merchant. Tailor your approach to handling returns abuse according to your business needs – business policies, risk appetite, how you want to handle abuse, and more.
3
Tailor policy enforcement
Offer flexible returns, without abuse
Armed with these capabilities, you can deliver a best-in-class returns abuse program – all while protecting your profits and enhancing your customer expe rience. The time is now to invest in an enterprise-grade platform that delivers the most accurate decisions in real time to protect your business and your legitimate customers.
Learn more at www.forter.com to see how we can help you keep returns abuse at bay.
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Table of Contents
The state of returns
Types of returns abuse
What does returns abuse cost you?
The way forward
