By JD Klausner, GM International at Loop.
As peak season approaches, retailers are entering a tricky landscape. Shoppers are watching their spending more closely, making deliberate choices as they await the outcomes of the UK budget and brace for an expensive few months. But beyond sales, another challenge looms large: the surge in returns policy abuse and returns fraud. If left unchecked, it can quietly eat into margins and undo much of the success retailers work so hard to achieve during the festive season.
In the UK, 9% of retailers say returns abuse has increased over the past year, costing the sector £11.3 billion. And nearly two-thirds (64%) of UK-based brands said rising returns fraud was the trend having the biggest financial impact on their business.
There is a sliding scale between policy abuse and fraud. Returns policy abuse includes bracketing which is ordering multiple sizes or colours to keep just one, and wardrobing, where shoppers wear items once and return them as new. Among Gen Z UK shoppers, a huge 69% admit to bracketing , meanwhile, a small group of “serial returners”, 11% of UK consumers, are responsible for a staggering £6.6 billion in annual online returns . Returns fraud, which is illegal, includes returning an empty box or using a stolen card to purchase an item.
When return volumes spike during November and December, even a modest fraud rate can wipe out peak-season profit. UK research by Cifas found that one in five adults admit to, or know someone who has, falsely claimed a failed delivery to get a refund . The result: rising costs, lost inventory value, and operational strain right when retailers can least afford it.
To fight back, brands must combine technology, data, and policy clarity to get ahead.
1. Automate fraud detection
Manual fraud checks can’t keep pace with modern ecommerce volumes. Retailers are increasingly turning to automation to flag high-risk transactions, identifying patterns like mismatched IPs, unusual return attributes, or repeated refund requests. In fact, Loop’s fraud tools catch £87 in every £100 of fraud attempts allowing teams to focus on growth instead of loss prevention. Real-time analysis of transactional data allows suspicious returns to be reviewed before refunds are issued, preventing costly mistakes.
2. Use strategic return fees to curb abuse
Free returns may boost conversion, but they also incentivise careless purchasing. Introducing small, strategic fees or offering customers the option to offset potential return costs at checkout, helps discourage over-ordering without hurting overall sales. Even a modest charge can make customers think twice before purchasing items they don’t intend to keep.
3. Tighten workflows for high-risk products and serial returners
Not every return deserves the same scrutiny. Certain categories like luxury apparel or high-demand electronics are more prone to fraud. Retailers can apply extra checks or inspection requirements before issuing refunds. Likewise, identifying and monitoring serial returners allows for fairer, more controlled policies that protect margins without penalising honest shoppers.
4. Improve visibility across the returns process
Transparency is one of the most effective deterrents to policy abuse and returns fraud. By improving visibility into the condition and grading of returned items, retailers gain the data needed to make confident refund decisions. Integrating return inspection data into order systems also enables more accurate fraud tracking and trend detection over time.
Guard your profits this Peak Season
Returns fraud is no longer an inevitable cost of doing business, it’s a challenge that can be managed with the right blend of data, process, and policy. By combining smarter technology with clear communication and operational discipline, retailers can protect their profits while maintaining a fair and frictionless customer experience.
