How retailers can reduce return fraud in 2026

The one thing that’s more frustrating than high return rates is return fraud. According to NRF’s Retail Returns Landscape report, 9% of all returns are fraudulent. 

Every retailer could probably think of a crazy return fraud story that’s happened to them. Trust us, we have heard a few. From the warehouse receiving rocks instead of a product to fake receipts stolen off of TikTok videos, fraudsters know how to be creative in hopes that your brand falls for their tricks.

The good news is that retailers have found successful ways to reduce the likelihood of return fraud, and we have the inside scoop.

Let’s jump in.

1. Use clear communication to set expectations

While this may seem the most obvious, return fraud thrives in ambiguity. Clear policies, communicated in plain language, remove gray areas without sounding threatening. It is also best practice to make sure your brand’s return policy is easily accessible. This means that you have it findable in post-purchase communication, on the tracking page, and on the return portal.

For the most cohesive return policy, we recommend

• Explaining why certain return rules exist
• Reinforcing fairness (“to keep prices fair for everyone”)
• Keeping the tone human, not legal, so everyone can understand

These practices not only make it easier for customers to understand but also ease the burden on your customer service team. Customers are far more likely to follow the rules when they understand them, and your agents can better enforce polices when they’re written in plain language.

2. Define and create smart, segmented rules

When a return policy is vague or one-size-fits-all, the chances of fraud increase dramatically. Fraudsters thrive when rules are predictable and universally generous. But you also wouldn’t want to create a strict return policy, as it can alienate loyal and genuine customers who want to shop with your brand.

Instead, we recommend that retailers should leverage a self-service return portal where they can configure different return rules based on:

• Customer lifetime value
• Purchase and return history
• Product category (high-risk SKUs vs. low-risk items)
• Reason for return

Retailers that use this best practice offer loyal customers options like free returns or instant refunds. Then, first-time or unknown shoppers are shown options like store credit, exchanges, or potentially a fee for the return. This depends on the return policy, of course, and can be used to recover revenue during the returns journey while still keeping loyal customers happy.

If you are a brand that sees a lot of return fraud, you can try adding rules for restocking fees once a shopper passes a certain threshold. This works well with shoppers who may purchase a lot of different sizes for clothes (repeatedly), then choose to return the ones that don’t fit.

While return policies and rules can be tricky, it is helpful to know there are ways you can make loyal customers never feel the friction and make bad actors quickly lose the incentive.

3. Require return validation

Fraud often happens because returns are too easy to game. When resources are tight, adding manual checks everywhere sounds like a logistical nightmare. There is a good middle ground, though.

Here are a few better alternatives that won’t take up all of your team’s time:

• Require reason codes with structured options (not just free text)
• Trigger photo uploads only for high-risk items or customers
• Validate serial numbers, barcodes, or SKU-level data on select products

The goal isn’t to interrogate every customer. It’s to apply guardrails selectively where the risk is highest. This way, loyal customers continue to come back time and time again.

4. Track return behavior patterns

Sometimes fraud doesn’t show up as a big red flag. It’s usually a pattern over time. While brands may not be able to block every instance of fraud, there are ways to monitor trends that display fraudulent behavior.

Here are some common signs to look for:

• Customers who repeatedly return after promotions
• High-value items that are returned at unusually high rates
• “Wardrobing” behavior (used items returned as new)
• Claims of “item not as described” across multiple orders

Returns data plays a powerful role in improving the returns experience for your customers and for your brand. This can only be accomplished when the data is centralized, searchable, and actionable. If you can’t currently access data like this, o

5. Time refunds to confirmation, not drop-off

Instant refunds are great for loyal customers, but they should never be applied universally. Just like with any personalization tactic, there should be rules in place to ensure that your customers don’t start abusing certain policies.

This means:

• Charging for returns until a customer passes a certain threshold or can be deemed as “trusted” and loyal
• Delaying refunds until item scan or warehouse receipt for higher-risk profiles
• Transparent refund timelines so customers aren’t left guessing

When your brand is as transparent as you can be, you reduce the likelihood of fraud happening and reduce costs as well.

6. Treat return fraud as a CX problem

Fraud prevention shouldn’t live only with finance or ops. It’s a post-purchase experience challenge. While it may feel like all roads lead back to the customer experience team, hopefully, by looking at fraud from a new angle, you can make small efforts over time that can bring a dramatic impact.

Retailers that reduce fraud most effectively:

• Embed fraud logic into their returns flow
• Use data to personalize decisions in real time
• Balance protection with empathy
• Leverage technical resources where necessary, i.e., a returns management platform and/or a fraud prevention tool

A returns experience is never one size fits all

What works for other brands may not work for you, and that’s okay!

This is the time to think about new approaches to your post-purchase and returns journey. Take the time to look through your return data from last year and see if you can spot any trends that can help improve for this year. See if the returns management platform you are currently using is actually working with you and for you. Trust us, if you need to make a switch, it’s easier than you think with the right partner.