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Item returns are also a fact of life for retailers, but they are also a difficult balance to maintain as they try to make their customers happy even if they don’t lose money.
For consumers, generous return policies play a major role in where they buy. But then there is also a dark side to return, with crime rings being set up to take advantage of these generous return policies.
A December 2024 report by the National Federation of Retails shows that revenue costs retailers to cost a lot. The retailer estimated that 16.9% of its annual revenue in 2024 would be returned.
However, shoppers also say it will affect the return policy of where they shop. 67% of shoppers say a negative return experience will affect whether or not they return to the retailer.
Shoppers allow us to abuse our generous return policy
A survey by Folter, a total of 4,000 shoppers in both the US and the UK, found that 68% believe retailers are easily abused by flexible return policies. In fact, 49% admitted to abuse policy last year. Another 29% said they use the policy to avoid paying the full price. 30% responded that they returned using expensive wardrobe items that they otherwise couldn’t afford, and that number would skyrocket to younger consumers by half or nearly 46%.
More than half, or 58%, also said they would open multiple online accounts to take advantage of the promotion.
Doriel Abrahams, a leading technician at Forter, a software company that helps the Digital Commerce brand block fraud, says retailers need to navigate ways to please their customers.
“If you tighten your policy too hard to curb abuse, good customers may disappear,” Abrahams added that nearly one in five consumers in the survey have stopped shopping with brands that have launched stricter return policies.
“Ultimately, the blanket policy is bad for the business, whether it charges all returns or has zero limits. The goal is to block abuse rather than loyal customers,” Abraham said.
The return of abuse is on the rise
Lauren Beitelspacher, a professor of marketing at Babson University in Wellesley, Massachusetts, said that returning to the research and inclusion of policies was not surprising that shoppers were abused by abused policies, but that a considerable number were recognized in it.
The numbers are probably even higher than 49% of those who have admitted to using generous policies in the survey, she said.
“Returns have always been an issue, but since the pandemic, it’s been really bad,” Beitelspacher said.
Return policies have become very generous during the Covid-19 pandemic when shoppers were unable to go to physical stores and online e-commerce began to explode, Beitelspacher said. However, online e-commerce can sometimes not be felt or tried out items.
“So, to help retailers minimize the risk to consumers, they offered free returns and free shipping, and people used it to use it,” she said.
Some retailers have begun quietly dialing their return policies and charging returns or return fees during the 2023 holiday season, but have not done much to avoid alienating customers.
“Returns are a big cost for online retailers, but without a doubt they are part of the price they do business in the e-commerce space. The problem is that consumers rarely cover the entire cost of revenue, so it’s harming the final cost of revenue.” Though stricter policies on returns, such as paying consumers, can help offset some of the costs, there’s a balance to get hit because it can block customers and harm sales.
Are shoppers using or misusing target loopholes?
Social media is full of videos of mothers who have returned to Target for a refund or exchange for new clothes, boasting that they’ve had years of used children’s clothing from the Target Cat & Jack brand. However, some shoppers say it is at the discretion of the Target Store Manager.
Are shoppers receiving refunds or exchanges exchanging smart consumers or are using generous targeting policies?
Target customers can return CAT & Jack items or Target brand items for up to one year using their Target App receipt or proof of purchase, a Target spokesman confirmed.
The guarantee is being introduced for the confidence that retailers have in the quality of what guests offer when shopping for their target’s own brand, the spokesman said.
Retailers say a good return policy is a good business
Some retailers don’t even want to get back their returned products.
An Amazon spokesperson said that customers are allowed to receive a refund without returning some products, as it is convenient for them. This is allowed with very few returns and helps keep customers price low, the spokesman said.
Some shoppers share on social media that Walmart also allows consumers to return items and keep them.
Retailers will not specifically address that claim when asked, referring to a return policy that has no details regarding maintaining returned items.
A Walmart spokesperson added that there was nothing to add a return policy, but pointed out the retailer’s return policy.
However, in online guides on markets or online sites that include sales from third-party sellers, Walmart offers tips on how these resellers implement “Keep IT rules” to help customers maintain returned items.
Marketing professor Beitelspacher said retailers would allow customers to return items with the theory that “the joy you may be feeling may make you a more lifelong customer.” The cost of that item to acquire lifelong customers is greater than the cost of absorbing the cost of returning the item, she said.
But Beitelspacher also pointed out Amazon’s generous return policy, which may help shoppers feel better about Amazon, but could hurt many third-party sellers on the platform that are actually taking a comeback hit.
The dark side is coming back from retail
There is a huge difference between shoppers who take advantage of retailer generous return policies and criminals who create businesses that make retailer business through returns, and participating consumers.
Some shoppers intentionally purchase the item and buy a “wardrobe” or wear it with a tag and then return it.
However, criminals exist to scam retailers, and some consumers are taking part in the scam, he said.
Real shoppers use cybercriminals to handle their return process, but with a twist, Elazar said. Criminals fraudulent retailers using methods such as erasing ink with return labels. This indicates that some packages have been scanned on the way back to the retailer.
If that package doesn’t arrive, criminals can pressure retailers to give a refund. Customers can maintain some of the items and refunds, but criminals will also be reduced, he said.
Criminals love this method because they don’t have to invest in purchasing stolen credit cards or stolen inventory and still make money from fraudulent revenues, Elazar said.
This new return scam really increased when people stopped having to sign delivery and when retailers tried to find ways to satisfy consumers with increased e-commerce and returns, he said.
Betty Lin-Fisher is a consumer reporter for USA Today. Contact her at blinfisher @usatoday.com or follow her on X, Facebook, or Instagram @Blinfisher, @Blinfisher.bsky.social.. Sign up for our free daily money newsletter. This includes Friday’s Consumer News.
