As January sales give way to February returns, new research shows fashion items are topping the refunds list in the UK, with nearly 40% of Brits requesting refunds or disputing charges via their bank for clothes, shoes, or fashion accessories.
While fashion leads the way, electronics like mobile phones (11.2%) and accessories (10.2%) also rank highly. Meanwhile recharging for items that cannot necessarily be returned, like takeaways (11.3%), subscriptions (9%) or services like taxi journeys (6%), were also a common feature of the nation’s spending habits.
The findings, from the Digital Solutions team at Equifax which specialises in fraud detection and chargeback management solutions offered on its Kount-branded platform, come amidst growing concerns about so-called ‘friendly’ chargeback fraud and refund abuse in Britain – particularly in the wake of seasonal spending peaks.
Chargebacks occur when a cardholder disputes a transaction and initiates a refund process typically through their bank. While an important consumer protection mechanism, chargebacks are also susceptible to abuse, including by a merchants’ own customers in so-called ‘friendly’ fraud.
Unsatisfactory condition (29.6%) is the most common reason given by consumers, followed by misdescription (27.6%) and failure to deliver (25.3%), showing most Brits are using refunds and chargebacks appropriately.
However, in a more worrying sign for retailers, 6.5% of UK adults – or the equivalent of 3.5 million consumers – admit to requesting refunds or disputing charges even for items they deem satisfactory. This figure jumps to 9.4% for 18-24-year-olds, highlighting a potential shift in online purchasing and refund culture among younger demographics.
“Recent thinking around how consumers justify returns demonstrates that many frame buying and refunding items more as renting rather than purchasing – or ‘try after you buy’”, said Professor Giana M. Eckhardt, consumer behaviour expert at King’s College London. “This can invoke a different set of norms and give consumers license to behave in ways they would not typically consider, which could explain these attitudes towards chargebacks. The behavioural shift could also be linked to increased cost-of-living concerns and today’s social media and fast fashion pressures.”
Simon Vallis, head of international partnerships for the digital solutions team at Equifax, said: “Most consumers will be using chargebacks and refunds responsibly, but the disproportionate impact of refund abuse and ‘friendly’ fraud on businesses will be front of mind for many retailers as a traditionally busy period for reclaims comes to an end. Merchants must look to data-driven solutions to distinguish dubious chargebacks and help protect themselves – whether from seasoned bad actors or those consumers who might be tempted to take a chance.”
