What is Return Fraud?

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  • Written By: Jessica Ellis
  • Edited By: Bronwyn Harris
  • Last Modified Date: 11 February 2020
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Return fraud is a crime that occurs when a person attempts to return fraudulently purchased products to a store for a refund. According to retail experts, return fraud cost American retailers nearly $14 billion US dollars (USD) in the year 2010. Retailers often try to guard against return fraud by imposing strict return guidelines, which can make returning merchandise a frustrating process for many lawful customers.

One of the most common methods for committing return fraud is by using theft. Items are stolen from a store, then brought back in and returned for a refund. This is beneficial to thieves because it saves them the trouble of having to fence stolen material, instead simply trading the product for cash at the retail store. The most common ways to fight against fraud through theft are by requiring receipts with all returns, or by putting anti-theft devices on products that will set off store alarms if they are taken through the doors.


A more ambiguous means of return fraud is known as “wardrobing” by retail experts. This type of fraud involves purchasing an item with the intention of using it once and returning it. This may be common with items that may only be needed once, such as a formal dress for a prom or wedding. While this type of fraud is not technically stealing, and usually involves returning the product in pristine condition, it is still frowned upon both by retailers and the law. Retailers may attempt to get around wardrobing by insisting that returned items have all tags attached or are in original packaging.

Counterfeiting may sometimes be involved in return theft. Purchases may be made using counterfeit funds, then returned for cash. Sometimes, fraudsters may also manufacture fake receipts to use for the purpose of returning an item. Counterfeited currency can be hard to spot, especially with low-value bills and coins. Cashiers simply do not have the time to check every bill handed to them by a customer, but stores can help prevent counterfeiting by requiring clerks to examine high value bills for telltale watermarks and other security features. Fraudulent receipts may be avoided by building security measures into receipts, such as purchase numbers or clerk ID codes.

Retailers have to walk a fine line between protecting against return fraud and instituting complicated return procedures. While fraudsters may avoid a store with good security and tough return policies, lawful customers may be driven away if return policies are too strict or confusing. Some companies attempt to reduce return fraud by instituting tougher policies for more valuable items, while smaller purchases may go through an expedited return process. Unfortunately, return fraud seems to be a constant concern of the retail industry that causes numerous problems for both the business and the law-abiding public.


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Post 1

I lost my tag and used another identical one for the cashier to scan. Is this wrong? When it was the same price?

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