Omnichannel retailers and their fraud teams cannot fix what they cannot see—a challenge that becomes especially evident when battling retail returns and claims fraud and abuse.
Complete visibility is a requirement of modern retail, and retailers need holistic solutions to address returns and claims. Too often, siloed policies in stores that differ from online rules engines create a poor experience for legitimate shoppers, while being ineffective in deterring or stopping return fraud and abuse.
For example, in-store associates are easily persuaded to override policy, and online controls can be studied and circumvented. As a result, buy online, return in-store (BORIS) return rates are 14.58%, meaning that almost 15% of in-store returns originated online. Yet, in-store associates are tasked with enforcing policy without a full understanding of the customer’s lifetime value.
These are all good reasons to close gaps in return authorization systems. The only way to provide a consistent shopper experience and control mechanism across all channels is to have tools that help make decisions based on consumer data from all channels in real time. This holistic approach to return authorization provides a balance between a great customer experience and fraud protection. It also benefits from removing the associate from the decision process, which can lead to an inconsistent experience across the retailer’s footprint.
The Current State of Retail Returns Fraud
In 2024, returns and claims abuse and fraud cost retailers a staggering $103 billion, according to comprehensive research from Deloitte and Appriss Retail. The study analyzes omnichannel transaction data from 60 of the top 100 retailers. Additionally, the study found:
-
In 2024, total retail returns reached $685 billion, accounting for 13.21% of total sales.
-
Fraudulent returns made up 15.14% of all returns.
-
Return rates varied by channel, with in-store sales at 8.72% and online sales at 24.52%.
-
BORIS accounted for 14.58% of total returns, while Buy Online, Return Online (BORO) made up 9.94%.
A retailer’s first instinct might be to test a stricter returns policy, like a “no receipt, no return” rule, but rigid mandates can hurt customer loyalty. Meanwhile, fraudsters are becoming more skilled at bypassing these policies. A more effective long-term approach is to evaluate the returns authorization system and implement an end-to-end strategy that supports loss prevention teams while maintaining consumer trust.
Tips for Building a Holistic Approach
Total visibility in the returns process is not an easy feat for any retailer. The journey toward unified commerce will be a long one, and even then, it may not solve all challenges. Data, systems, and various points of contact all need to come together, and it might require multiple tactics and partners to achieve. When setting out to implement a holistic approach to returns management, some foundational pieces include:
1.Streamlined Data
Awarding teams with a fully visible, end-to-end system is only as good as the data flowing through it. Retailers need data solutions that streamline sales, inventory, assortments, and shopper transaction information across online and offline channels. Making data available to all parts of the business enables better and faster decision-making at each step of the way.
2. Strategic Partnerships
A seamless and secure returns process requires more than just isolated solutions—it thrives on strategic partnerships. By bringing together a Card Not Present (CNP) provider, a returns and claims authorization solution, a returns management solution, and a reverse logistics company, retailers gain a full-spectrum view of the buying journey—from purchase to return—while reinforcing fraud protection at every step:
- CNP providers are optimized for pre-presentment, preventing credit card chargebacks. With data from a return authorization solution, they can reduce chargeback claims post-presentment.
- Returns and claims authorization solutions leverage AI and data analytics to prevent returns fraud and abuse and prevent illegitimate claims from impacting the bottom line. They integrate with the other solutions to approve or decline the return and provide data to CNPs to reduce chargebacks.
- Return management solutions can be built in-house or by a third party and provide the consumer with options on how to return products to the retailer for BORO returns.
- Reverse logistics providers streamline the physical return process, ensuring efficiency in restocking, refurbishing, and reselling while minimizing operational costs.
3. AI-powered Insights
As data funnels through various complementary and connected systems, AI can assist fraud and reverse logistics teams by analyzing mountains of transaction data, shopper history insights, and returns data, providing real-time recommendations through the various systems to stop returns fraud and abuse. Additionally, GenAI technology can be incorporated to help analysts identify and study new behaviors, which can then be fed back into the real-time AI models.
In total, a holistic strategy best relies on unified data, integrated tools and partners, and real-time visibility that enables retailers to manage the complete returns process while monitoring for returns fraud and abuse. By integrating these technologies—whether through pre-built connections or strategic alliances—retailers can create a cohesive, data-driven defense against fraud while also optimizing operations and delivering a frictionless customer experience.
No More Silos: A Unified Approach to Returns Management
Who owns returns in a retail organization? It’s not a simple answer. Loss prevention, operations, reverse logistics, digital fraud, and finance all play a role, yet they often work in silos—leading to inefficiencies and blind spots. To tackle rising fraud and claims abuse, retailers need a connected, data-driven strategy that unifies these teams and provides full visibility into the returns process.
By integrating data across all omnichannel touchpoints—including sales, loyalty programs, and shopper history—retailers can gain a comprehensive view of returns activity. AI and GenAI tools further enhance fraud detection by spotting patterns, flagging repeat offenders, and uncovering hidden connections. These insights not only stop fraud in its tracks but also strengthen future prevention strategies.
A holistic returns strategy is essential for retailers looking to combat returns fraud, optimize operations, and enhance customer satisfaction. By breaking down silos and leveraging strategic partnerships, retailers can build a seamless, end-to-end returns management system that integrates fraud prevention, logistics, and customer service.
Pedro Ramos is chief revenue officer of Appriss Retail. He has more than 20 years of experience in fraud and loss prevention, extensive knowledge of the retail space, and experience managing revenue-generating organizations. Ramos oversees Appriss Retail’s customer growth and retention departments, including sales, customer success, and marketing.
