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Fraudulent Returns: Fake News!

March 27, 2018

According to the American Marketing Association, “Lenient return policies can lead to an increase in purchasing”.

Which makes perfect sense.  Think about it... Brands which advertise a lifetime guarantee or ‘no-questions-asked’ return policy show customers that they A. Have confidence in their products.  And B. that they prioritise customer satisfaction over the bottom line (or at least appear to).

So the news that L.L Bean have put and end to their unlimited return policy was so surprising. Why would a brand which prided itself on their 100% customer satisfaction, suddenly redact such a well-loved policy in favour of a more conservative return policy?

The answer is the all-encompassing, and terrifying sounding, Returns Fraud. *dun dun duuun*

But let’s look at the facts before anyone starts thinking of putting up barriers to prevent returns. We took a look at our returns data for 2017 to uncover where the return problems lie. I have some good news and some bad news...let's get the bad news out of the way first: 

Fraudulent Returns Are a Fact of Life.

As long as brick-and-mortar retailers have offered customer-centric service, there have been those who seek to take advantage of it. From criminal shoplifters, to people simply taking too many free samples at the cosmetics counters, you'll always find the occasional bad egg.

The same goes for the eCommerce industry.  Some shoppers will try to return an item they’ve damaged or deliberately send back the wrong item of lesser-value than the refund amount. For clothing, the fraudulent returns behavior can be more subtle. A shopper can purchase an item, keep the labels attached, wear it out, then return it later (this is sometimes referred to as ‘wardrobing’) and this is harder to spot.

Bricks and Mortar retailers do not close their doors to avoid the threat of shoplifting, so neither should online retailers. Putting up barriers to deter returns and avoid the dreaded ‘wardrobers’ by implementing stricter return policies is the wrong move.

Good News:  Fraudulent Returns Are Pretty Rare

We wanted to take a look at just how common Returns Fraud really is.  We pulled data from 1 Million returns transaction over the past 12 months looking for any returns marked as rejected for discrepancies (ie. the shopper said they were returning something different to what was actually received in the warehouse).

We found the rate of fraudulent returns to be surprisingly low: 0.07% of 1 Million Returns were non-refundable due to discrepancies. That's only 675 out of 1,000,000 parcels where the parcel contents were inspected and found to be different to the returns form.

So what should retailers take from this?

Don't give in to fraudulent returns scaremongering. There is far more to be gained from offering a ‘customer-first’ returns policy, than there is to be lost. Rather than fearing the 0.06% of returners who will try to take advantage, focus on the other 99.93% and offer them a phenomenal return experience with a lengthy return window and a hassle-free process.

If you are thinking about trialing a longer returns window, get in touch to find out how ReBOUND can help you offer a more flexible return policy which is tailored to suit your international markets. 

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