With refund fraud costing UK retailers billions of pounds, Wouter ten Heggeler, Product Manager at ReBound, looks at how to strengthen returns fraud prevention, without causing friction for shoppers.
An expensive risk
Recent research from the UK’s fraud prevention service Cifas and the University of Portsmouth shows refund fraud could be costing UK retailers over £5billion a year. Common methods of refund fraud include returning substitute or counterfeit goods to retailers, as well as wardrobing, where clothing and accessories are returned after being worn and used.
The Cifas research shows the growing threat of returns fraud faced by retailers and mirrors new ReBound data. Analysis of one million real-world shopper returns from July 2025 to May 2026 found £29million worth of potentially fraudulent activity. This type of fraud is becoming more of a problem, because criminals see opportunity to exploit both the popularity of e-commerce and the genuine behaviour of honest shoppers sending items back.
Returns, the new norm
E-commerce is expanding in the UK, and as the volume and value of internet shopping grows, so do return rates. Consumers want the freedom to check how items physically match up to what they’ve seen and read on screen. And if a product isn’t 100% right for them, they want to return it hassle-free. Returns rates average about 20% of total retail sales and can be higher during busy shopping events like Black Friday and Cyber Monday.
Returning items is the new norm and the pressure is on for retailers to do this quickly for shoppers. The fast processing of products sent back can mean fast refunds, which increases the chances of a shopper spending again with the same retailer. Put simply, it means a returned item is not the end of the shopping journey. The challenge is that operating at speed can compromise quality control during the inspection of returns and create gaps that fraudsters look to exploit.
Opportunistic exploitation
The types and levels of returns fraud will often vary, but all forms tend to share the same opportunistic nature. They aim to take advantage of busy retailers processing high volumes of returns in shorter timeframes. There are outright criminals who work on an almost professional scale. Fraudulent activity can involve returning boxes filled with materials intended to replicate the exact weight of the original order. Or they might substitute genuine goods for counterfeits, sending back the cheap imitations in an attempt to con retailers.
Returns abuse often proves a complex form of fraud, with the returner’s intent more difficult to prove. Wardrobing comes into play here and can range from individuals that order clothing with the sole intention of wearing items and sending them back, through to shoppers purchasing outfits simply to photo for social media posts and then returning. These types of serial returners can contribute significantly to returns volumes, piling further pressure on quality control processes.
There are also shoppers who may commit what they think is ‘friendly fraud’. They will bend the rules by sending back an item after they’ve decided they no longer like it, even after getting plenty of use out of it. Or they may decide they can no longer afford a product and would prefer to have their money back – again, this happens after they’ve repeatedly used an item. Rising costs of living and financial pressures can sometimes cause shoppers to bend the rules, as they test the generosity and flexibility of returns policies.
A retailer and shopper-focused solution
New solution ReBound Radar is a breakthrough fraud prevention technology, which is purpose-built to protect retailers’ revenues against financial losses caused by returns fraud, while safeguarding shopper experience.
The solution combines physical verification, photographic evidence, and data-driven decisioning to detect and stop refund fraud in real time. This is achieved without accessing sensitive customer data.
Practically, the system helps operators to quickly inspect parcels, flag suspicious items, and capture photos with contextual operator comments. This evidence is shared instantly via a custom-built API or through an enhanced Customer Support Portal, giving retailers clear, defensible proof for refund decisions.
A retailer involved in pilot programmes using ReBound Radar noted that the solution’s evidence-first approach sets it apart from alternative systems. In some cases, other forms of fraud detection rely heavily on behavioural assumptions, whereas Radar provides concrete proof, and quickly shares this across teams and networks so fast, reliable decisions can be made and actions taken.
Accessible and accurate returns data, collaboration between retailers and returns partners, and advances in software and AI, are all helping to tackle the growing problem of returns fraud.
Technology and data analytics are combining to flag problems and stop returns fraud at source and are underpinning robust quality control inspections that quickly distinguish between genuine returns and fraud. LLMs are being trained to analyse returns data and detect patterns and anomalies to create risk scores. Prevention of returns fraud is increasingly shifting toward the identification of suspect transactions as soon as they are logged as a return in reverse logistics systems.
Solutions will advance further in 2026, supporting retailers and brands with their goals to satisfy shopper demand for seamless returns and fast refunds, while preventing exploitation of returns policies.
To learn more about stopping returns fraud, click here to download The Returns Fraud Playbook: From detection to prevention in modern retail.
