Return Fraud: Types & Ways To Prevent It In 2023
Do you know, 80% of customers believe that a bad return experience can break their loyalty? Thus, it’s important to provide a seamless product return option to your customers to upscale their experience in your store.
However, providing an easy product return on your store might lead to an increase in return fraud. To help you understand different types of return fraud and prevent your store from it, we have compiled this post. Here we have also mentioned some businesses that have the highest return rate.
So, let’s check the content in this post-
- What Is Return Fraud?
- 5 Types Of Return Fraud
- Businesses That Have The Highest Return Rate
- How To Prevent Return Fraud?
What Is Return Fraud?
Return fraud is an ecommerce fraud that occurs when a customer purchases a product to return it immediately. Fraudsters can use duplicate slips or products to get their money back which causes a hefty loss to the retailers.
However, accepting a return is a fundamental policy that every business has to offer to achieve a great customer experience in their store.
5 Types Of Return Fraud
Here we have listed 5 different types of return fraud that you might witness at any time in your store.
Free Renting Or Wardrobe Fraud
In this fraud, the customers buy the product with the motive of returning it. The customers use the product once for a particular event and then raise a return request as soon as the event is over.
This is a popular and most practiced form of fraud and one-fifth of UK shoppers have admitted to having carried it.
Item Never Received Fraud
In this type of fraud, the customer raises a refund request under the category “Item not received”. However, they have received the product but still is raising a return request. Now either the customer can use the product or can sell it to gain more profit.
To Avail Of Free Product Delivery
If your store has a free delivery option on the purchase of a certain amount of products then there are chances that the customer might purchase an additional product just to get the waiver on the delivery.
Once they have received the product on free delivery, they will return the additional product. This way you have to pay for both product delivery and product return.
This fraud is usually carried out on electronic products, in this the customer purchases a working electronic product and then strips it apart to sell some of its parts.
Then the customer returns the product and raises a refund request.
Product Switch Fraud
When a customer orders a product and returns a similar but broken product that they might have had beforehand, is known as product switch fraud.
Businesses That Have The Highest Return Rate
The apparel industry has the highest return rate (10%) whereas the lowest is of the health and wellness industry (4.20%)
|Category||Return Rate (%)|
|Sports & Outdoor||6.10|
|Health & Wellness||4.20|
How To Prevent Return Fraud?
To prevent your store from return fraud you can follow these steps-
Clearly Define Your Return Policy
The first step in managing your product return is to mention your return policy and that you won’t hesitate on taking an action against fraudsters. Below we have mentioned some steps that will help you build your return policy-
- List reasons for returning items.
- Set a return window of say 15 days, and only accepts returns within this period.
- Include proper instructions on how an order can be returned. (Whether the customer has to parcel the order or a delivery boy will collect it, what are the transportation fees, and so on.)
Ask For Proof (Product ID/Purchase ID)
You should train your delivery boys to always ask for purchase proof from the customer. This reduces the chance of identity theft. You can ask for a photo ID to check the customer’s name, and so on.
Develop Your Own Return Management Portal
Instead of paying to different return portals you can develop your own return management portal and integrate it with your store. If you are planning to build an app for your store then too you can ask the app development company to additionally add a return management portal to your application.
Although it would cost you more in front but will be fruitful for you in the longer run. As you would save on paying the subscription amount monthly.
We hope that through this post you were able to gain insights into the different types of return frauds and how you can effectively manage them.
However, if you are looking for an e-commerce app development company, then you should check out Appic Softwares. We have an experienced team of developers that can use all the latest technologies like Flutter, Ionic, Angular, AI, and more to craft your application.
Our developers can also develop a return management portal for your application. Furthermore, we are currently running a free project prototyping in which we can design your application without any charge.
So, what are you waiting for?