Returning an item these days is as easy as a click — but that’s also making it easier for scammers. Pandemic-era shopping habits — like buying in bulk and easy refunds — are now proving costly as retail fraud rises. Fraudsters are leveraging the relative anonymity and ease of online shopping to orchestrate return scams without ever facing a store clerk. According to David Johnston of the National Retail Federation, organized criminal groups “are taking advantage of the omnichannel retail environment.”

• Fraudulent returns hit over $100B in 2023 — accounting for 13.7% of total returns — more than double the level in 2020.
• Online returns also surged, reaching 17.6% of purchases in 2023 — compared to 8.8% in 2019 — with a total value of $247B.

The fraud playbook: Scammers exploit weaknesses in retail systems by using fake shipping labels, replacing items with counterfeits, or even sending back empty boxes. These tactics are shared in Telegram groups and websites offering “refunding services” that promise full refunds without actually returning the merchandise. In response, some retailers are adapting. For example, PacSun temporarily stopped mail-in returns in June to combat fraud and now charges $10 for mail-in returns of items. Larger retailers are also fighting back, with Amazon suing refunding group REKK for allegedly stealing millions through return abuse schemes.