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The Wall Street Journal reports this morning on the degree to which returns - especially fraudulent returns - continue to be a problem for retailers.

"The National Retail Federation estimates more than $100 billion in merchandise was returned fraudulently in the U.S. in 2023. That amounted to about 13.7% of the overall returned goods retailers received last year, more than twice the level of bogus returns in 2020, according to a report from the NRF, which noted its methodology changed in 2023 to include customer returns data from software provider Appriss Retail.

"Shoppers this year are expected to return about 15% of merchandise purchased during the holiday season, valued at $148 billion, according to the NRF. Retailers anticipate nearly 17% of those returns will be fraudulent."

According to the story, "Fraudsters are looking to capitalize on policies such as free online returns that retailers rolled out over the past four years with the goal of attracting customers amid a pandemic-driven surge in e-commerce. Those policies have led to an increase in overall returned merchandise as consumers have become accustomed to ordering items online in several sizes and colors, then returning what they don’t want … Industry experts say more people are trying to game the returns system, betting they will get a refund for mailing back a package as soon as the return shipping label is scanned by a parcel carrier, well before the retailer has confirmed the correct item is inside."

KC's View:

It always is amazing to me that usually when we have to return something, the money is returned to our account long before the warehouse could possibly have received back the item.  I love it, but it does make it a lot easier to defraud the retailer.  At the very least, I think online retailers should draw the line on this - they only should process the refund once the box has been opened and the item has been verified.