U.S. retailers lost more to retail returns abuse and fraud in 2024 than the year before, according to a new report.

Appriss Retail and Deloitte released the report, 2024 Consumer Returns in the Retail Industry, Dec. 30. It uses insights from both physical stores and online channels, data from surveys of 150 North American retail executives, surveys of 1,000 consumers, and U.S. Census Bureau data.

More than half of retail returns dollars in 2024 came from online purchases, with buy online, return in store (BORIS) and buy online, return online (BORO) combining to account for more than 52% of U.S. returns, according to the report.

Appriss Retail says it serves 60 of the top 100 U.S. retailers, supporting one-third of all omnichannel sales in the country across 150,000 locations.

Online and in-store retail returns in 2024

U.S. consumers returned $685 billion in merchandise in 2024. That’s a decrease from $743 billion the year before.

Additionally, the total returns rate as a percentage of 2024 U.S. retail sales is 13.21%. That’s also a decrease from 2023, when it was 14.5%.

However, the total dollar amount retailers lost to “fraudulent and abusive returns and claims” increased year-over-year in 2024. It grew to $103 billion in 2024 from $101 billion in 2023. The percentage of abuse and fraud impacting total U.S. retail returns is 15.14%, according to Appriss Retail data.

Using U.S. Census Bureau data for Q1 through Q3 of 2024 in addition to Q4 2023 data, Appriss Retail estimates the return rate from in-store retail sales is 8.72%. That would come out to $323.727 billion. Meanwhile, for online retail sales (including BORIS and BORO), Appriss Retail estimates the return rate to be 24.52%. That comes out to $363.16 billion.

It estimates total U.S. retail sales reached $5.192 trillion in 2024, which 71.55% of those coming from physical stores. That equates to $3.715 trillion from in-store sales. Meanwhile, online retail sales accounted for the remainder — 28.45%, or $1.477 trillion.

Returns management software provider Loop Returns shared with Digital Commerce 360 that the more than 4,300 merchants using its technology managed returns valuing $3.49 billion. Of that, they retained $871.3 million in revenue while generating $32.1 million in upsell opportunities. The average return value in 2024 for merchants using Loop Returns was $149.

For the merchants who used Loop Returns both in 2024 and 2023, it saw a 3.3% increase in return volume year over year. Meanwhile, the value of returned items increased 5.6% in the same time frame.

The retailers and brands using Loop Returns also retained 4.39% more revenue year over year, it said. That indicates that brands have gotten “even smarter about their post-purchase strategies” in 2024, Loop Returns said.

The average return volume for those merchants was $139 in merchandise value, a 2.2% increase over 2023. Loop Returns also generated a 9% increase in upsells in 2024 over 2023.

Holiday retail returns in 2024

During the 2024 holiday shopping season, from Nov. 1 through Dec. 31, Loop Returns tracked 4.87 million items submitted for return from more than 3,800 merchants. The total value of those returns was $723.3 million, and of that, the merchants retained $184.6 million in revenue. The average return value for all Loop Returns merchants during the 2024 holiday shopping season was $149.

For merchants that used Loop Returns during both the 2024 and 2024 holiday shopping seasons, the technology provider tracked 4.12 million items submitted for return. That’s a 3.3% year-over-year increase. For that same set of merchants, the average return value was $151 during that period, rising 5.9% from the 2023 holiday shopping season.

At the same time, the total value of returns during the 2024 holiday shopping season reached $624.8 million. That’s a 9.4% year-over-year increase. Still, retailers using Loop Returns retained $162.4 million in revenue during the 2024 holiday shopping season. That’s 9.6% more than retailers using Loop Returns retained in the same period in 2023.

Post-Christmas 2024 retail returns

In the post-Christmas period from Dec. 26, 2024, through Jan. 1, 2025, Loop Returns tracked 623,400 items in submitted return volume. That’s a 12.2% increase year over year.

The total value of returns during that time frame was $83.5 million (up 14.5% over 2023), of which brands retained $28.6 million in revenue (up 15% year over year). Those same brands also generated $1.2 million in upsells. That’s a 26.8% year-over-year increase.

Meanwhile, the average return volume during that post-Christmas 2024 period was $134. That’s a 2% year-over-year increase.

The number of Loop Returns merchants charging fees for returns increased 5% year over year. The average returns fee among them sat at about $8.50 in both 2024 and 2023. The fees for apparel and home goods merchandise increased about 5% on average, according to Loop Returns. On the other hand, the average fees for footwear and accessories returns decreased 15% and 18%, respectively.

Loop Returns also tracked a 20% increase in the number of its merchants that allowed consumers to keep items when making returns. The apparel category has the largest increase in that regard, with 27% more merchants in it using “keep item” returns this season than last year.

Cosmetics saw a 10% increase in the number of merchants implementing that policy. There was also a 5% increase in the percentage of returns in which cosmetics consumers kept items.

The overall rate of returns in which consumers could keep items decreased 1.5% year over year. That suggests “merchants are cracking down on which returns qualify for the feature,” Loop Returns said.

What are examples of returns fraud and abuse?

The Appriss Retail and Deloitte report identified six key types of returns fraud and abuse, surveying 150 retail executives to identify which were the most common types they faced.

• Wardrobing, or the returning of used merchandise — typically referring to apparel and accessories (60% said they faced this)
• Returns from fraudulent or stolen tender, such as gift card fraud (55%)
• Returns of stolen merchandise, such as shoplifted items (48%)
• Returns with counterfeit receipts and e-receipts (48%)
• Bracketing, or buying multiple items and returning some — a common practice for apparel bought online, as consumers try on different sizes at home (47%)
• Employee return fraud or collusion (39%)

Report data shows that 83% of surveyed companies have tightened their return policies to decrease returns, and 84% of them did so to combat fraud.

“What the data suggests is that policy changes are having little effect on deterring fraud and abuse,” according to the report. “Policies can be subject to human error, bias, and are frequently bypassed to appease the consumer.”

Examples of those fraud-prevention and returns policies include requiring receipts or proof of purchase (which 67% of surveyed companies deployed) and limiting return windows to 30 days or less (which 59% implemented). Additionally, 54% of retailers made an effort to manually monitor transaction data for fraudulent behavior. Meanwhile, 35% implemented real-time return technology to approve, warn, or deny a return or claim based on behavior patterns, according to the report.

Still, 1% of respondents reported that they didn’t deploy any of those measures.

How do consumers respond to stricter retail return policies?

The aforementioned changes to return policies can have “long-term negative impacts on consumer loyalty and future spend,” according to the report. Inversely, positive retail return experiences can improve customer satisfaction and retention.

For example, the report showed that 55% of consumers have decided not to purchase from retailers that implement restrictive return policies. More than a third of consumers (36%) have had a negative return experience. Tangentially, 31% of consumers stopped shopping at certain retailers because of negative return experiences.

On the other hand, 70% of consumers said they made additional purchases due to positive return experiences. Similarly, 89% said they would make more purchases if they had positive return experiences.

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