With holiday shopping ramping up, major retailers like REI, Target and Amazon are revising return policies to combat fraud.
REI confirmed to ABC News that a small fraction of frequent returners will be banned from any exchanges or returns. The update from REI comes on the heels of Target recently reserving the right to refuse refunds suspected of fraud, and Amazon adding processing fees for high-return items.
Speaking to ABC’s Good Morning America, retail analyst and financial expert Hitha Herzog said return fraud has cost retailers billions of dollars, prompting them to take the action.
“When customers buy a product and return it, this tacks on more money to the product and it actually ends up costing the retailer more money per product sold,” she explained. “Retailers want to mitigate that cost. Therefore, they are now turning to the customer to cover that cost.”
The National Retail Federation estimates over $100 billion lost to return scams in 2023 alone. Common tactics include “wardrobing” (returning used items), fake receipts for stolen goods and switching high-value items with knockoffs.
With holiday shopping underway, consumers depend on flexible return policies to purchase gifts with confidence.
However, as return fraud increases, retailers are setting stricter rules, giving them the option to reject suspicious returns. This makes it more important than ever for shoppers to understand each store’s return policy to avoid surprises.
“Retailers don’t want to lose any more revenue than they have to, especially going into the holiday season,” Herzog added. “Customers shouldn’t be concerned, but they should be diligent about what they are buying and what the return policy is.”