Some customers exploit e-commerce return policies for financial gain. Understanding common return fraud scams can help businesses detect abuse and protect their margins.
Key Takeaways
- Return scams like falsely claiming an item wasn’t received, wardrobing, and returning empty boxes can look like normal returns, which makes them harder for e-commerce businesses to spot.
- Scams such as bricking electronics or swapping return labels often work when returns are processed quickly and items aren’t carefully checked before a refund is issued.
- Charging restocking fees, shortening return windows, and using clear return policies can help reduce return fraud while still keeping the process fair for honest customers.
Returns are part of doing business online. Customers sometimes order the wrong size, change their mind, or decide a product isn’t the right fit. But when customers abuse returns, they can quickly cut into profits. Return fraud turns a routine process into a costly problem for e-commerce brands.
This guide breaks down common return scams and explains how to spot and prevent them so you can protect your online business while still offering a smooth customer experience.
What Is Return Fraud?
Return fraud happens when someone intentionally abuses a store’s return or refund process to gain money, store credit, or replacement products they aren’t entitled to. Instead of sending back the correct item in good faith, the person may keep the product, send back something else, or make a false claim to receive a refund.
What Are Common E-Commerce Return Scams?
Industry data shows that typical return rates for online purchases hover around 20%, with categories like clothing returning even more often. Fraudulent returns blend in with normal ones, which makes them harder to detect. Here are some of the most common scams online retailers should watch for.
1. “Item Not Received” Claims
Claiming that an item was never delivered is a common type of return fraud, even when tracking information shows otherwise. The goal of the customer is simple: receive a refund while still keeping the product. These claims often rely on the fact that many e-commerce businesses issue refunds quickly to maintain good customer service.
Fraudsters may say the package was stolen from their porch, delivered to the wrong address, or missing items inside the box. Some repeat this tactic across multiple retailers. Because delivery disputes can be difficult to verify, scammers often rely on the assumption that brands will issue a refund rather than risk upsetting a legitimate customer.
2. Wardrobing
Wardrobing is a type of return scam that happens when a customer buys a product, uses it once, and then returns it as if it were new. It’s common with apparel, accessories, and electronics.
A shopper might wear a dress to an event, carry a handbag for a weekend trip, or use a device for a short time before sending it back with the tags or packaging. Retailers try to reduce returns like these because the items often can’t be resold as new, which leads to lost revenue.
In many cases, the customer repackages the product so it appears unused at first glance. Some people tuck tags back into the garment or fold clothing in a way that hides signs of wear. When warehouses process large volumes of returns, lightly used items can slip through inspection and still receive a refund.
If the item is mistakenly restocked and sold again, the next customer may receive a product that is worn, stained, or damaged. This creates a poor experience for someone who expected a new item and can lead to complaints, refunds, or negative reviews. In some cases, a retailer may even lose a legitimate customer because of a product that was returned dishonestly.
3. Bricking
Bricking is a more technical form of return fraud that often targets electronics and other high-value devices. With this tactic, a customer removes valuable internal components from a product before sending it back. For example, someone might take parts out of a laptop or gaming console and return only the outer shell.
If the returned item isn’t carefully inspected or tested, the warehouse may accept it and issue a refund. By the time the problem is discovered, the business is left with a device that no longer works and has little resale value.
4. Empty Box or Decoy Returns
Empty box or decoy returns are return scams in which the fraudulent customer keeps the product they purchased but sends a return package to the retailer. The box may be completely empty, or it may be filled with low-value objects, random household items, or a different product to give the package weight.
Meanwhile, the company receives the return and processes it through the normal returns workflow. Because many warehouses process large volumes of returns quickly, these decoy packages can slip through without detailed checks. As a result, the fraudster keeps the original item and still gets their money back, leaving the retailer with a financial loss.
Implementing strong returns management processes can help businesses catch these scams before they issue refunds. For example, warehouses can compare the expected shipping weight of the product with the weight of the returned package to flag suspicious shipments.
Staff can also inspect returned items to confirm the correct product was sent back and that it matches the return request. Taking these extra verification steps before issuing a refund makes it much harder for empty or decoy packages to slip through the system unnoticed.
5. Label Swapping
Label swapping is a type of return fraud where someone misuses a legitimate return label to send back the wrong package. A fraudster might request a return for one item but send back a completely different product—or nothing of value at all. In other cases, the same label is printed multiple times and used across several packages.
These tactics are difficult to catch because the shipping label itself appears valid in the system. If warehouse teams only verify the label and not the contents of the box, they may still process the return. This allows the person to keep the original product while the business unknowingly issues a refund.
How Can You Prevent Return Fraud?
Stopping return fraud doesn’t mean eliminating returns. Instead, the goal is to create policies and processes that discourage abuse while still serving honest customers. Here are a few practical steps e-commerce businesses can take.
1. Charge a Restocking Fee
Charging a small restocking fee can discourage fraudulent or careless returns while helping cover inspection and processing costs when items come back to the warehouse. For lower-margin products, even a modest fee can make a real difference. The fee signals that returns still carry a cost, which may make someone think twice before trying to game the system.
2. Shorten the Return Window
Shortening the return window reduces the opportunity for return scams like wardrobing. The less time someone has to use a product before sending it back, the harder it becomes to treat your store like a rental service.
Many businesses have found that implementing tighter return timelines also helps them better understand the reasons for returns. When returns happen shortly after a sale, it’s easier to identify patterns, spot suspicious activity, and address product issues before they become bigger problems.
3. Have Clear Return Policies (and Stick to Them)
Having clear return policies helps customers understand what to expect and gives your team a consistent way to handle returns and suspicious claims. Your return policy should clearly explain:
- How long customers have to return an item
- What condition the product must be in before returning
- Whether refunds are issued before or after inspection
When your team follows the same return process every time, it becomes much harder for fraudsters to find gaps they can exploit.
Kiwi Sizing Is a Smarter Way To Reduce Unnecessary Returns
Return fraud is a growing challenge for e-commerce businesses, but improving the shopping experience can also prevent unnecessary returns in the first place. Providing clear product information, better sizing guidance, and useful data insights all help customers make confident buying decisions.
Kiwi Sizing makes this easier by providing easy-to-read size charts, customizable fit guides, and machine-learning powered size recommendations that help shoppers choose the right fit the first time. If you’re looking for a simple way to reduce returns on Shopify, install Kiwi to start helping customers find their perfect fit while protecting your margins.
