Returns Abuse Running Rampant

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By Published On: May 14, 20241 Comment

Australian shoppers have admitted to abusing return policies in a variety of ways, but could it be the retailer is at fault?

Under Australian Consumer Law, Consumers have the right to return a product if they think there’s a problem. However, some people are taking advantage of these consumer rights.

According to research from Loop, 39 percent of Australian consumers have admitted to committing retail returns abuse, or knowing someone who has in the past 12 months. 

Twenty-three percent of shoppers openly admitted to engaging in these behaviours at a high frequency—saying they have worn or used an item while planning to send it back – at least once a week.

From policy exploitation such as intentionally pushing policy limits, to returns abuse such as bracketing (ordering multiple items with the intention of just keeping some), wardrobing (wearing an item out before sending it back), and quality disputes, retail return abuse is a spectrum. On the furthest end of the spectrum we have return fraud, which  involves deliberate deception and often violates laws. Chargeback fraud falls under this category.

A significant majority of online shoppers (79 percent) stated they had engaged in “bracketing” at least once — ordering multiple items to determine size/fit, with the intention of returning at least one item. This isn’t necessarily a concern for retailers as when asked why they engage in this type of behaviour, 62 percent said they needed to determine the size/fit of the item. 

Retailers need to ensure that product information is clear, and policies and processes are in place in order to prevent returns abuse from getting out of control. If not managed properly, this can affect retailer’s margins.

“Retail merchants are finding their profit margins under deep scrutiny in today’s environment, and returns are receiving dramatic focus,” said Jonathan Poma, CEO at Loop. “Because of this, merchants are increasingly seeking guidance to help them optimise their returns processes. There is no one-size-fits-all approach to returns, and each brand needs to understand their shoppers’ behaviour to craft a targeted strategy that reduces costly fraud while balancing the need for an exceptional customer experience.”

Ecommerce fraud prevention experts Riskified recommend reviewing returns policies and making them clear, and streamlining internal policies.

About the Author: Rosalea Catterson

Rosalea is the Editor of Power Retail. With a keen interest in consumer behaviour and tech, she covers everything ecommerce and hosts the Power Retail Power Talks Podcast.

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One Comment

  1. Michael Coates May 15, 2024 at 12:32 PM - Reply

    We sell tricycles (adult bicycles with 3 wheels) we have had occasions where a customer will order a tricycle, it gets delivered to their location, you find out it is where they are vacationing for a couple of weeks, they will ride it around on their holiday and then request a return saying it is not fit for purpose. They lodge it with the office of fair trading and just leave the tricycle at their accommodation and go back home. Even with access to their social media showing photos of them having fun and riding along the beach and so on it seems to be impossible to force so we A. Lose the product because they say it is up to us to return and B. Lose the cost of the sale and the cost of shipping.

    This type of fraud runs rampant, the police say it is a civil dispute, the credit card company or PayPal give them an instant refund and situations like this are killing small business. There needs to be a way where they can face civil prosecution for fraud but it all gets too hard. In small businesses with hundreds of percent markups it may be affordable losses but when your average product only has a 30% margin it is really difficult.

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