About 9% of US retail returns are fraudulent, NRF says. See the common types of return fraud, what it costs, and how stores can spot it early.
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7 min read
The short answer
Return fraud is when someone gets money, store credit, or a refund for a return they shouldn't get. It might be a stolen item brought back for cash, a receipt that was changed, an empty box, or a cheap copy swapped in for the real thing. NRF and Happy Returns estimate that about 9% of US returns in 2025 were fraudulent, in a year with nearly $850 billion in total returns. A separate study from Appriss Retail, which also counts return abuse, puts the preventable loss at about $100 billion. Stores can cut it with clear rules, a few good questions at the desk, and regular checks on repeat returners, all without making life hard for honest shoppers.
What is return fraud, and how is it different from return abuse?
Return fraud means lying to get a refund. Think stolen goods, fake receipts, or a box with nothing in it.
Return abuse is sneakier. The person stays inside your policy on paper but uses it like a free rental. Buying an outfit for one event, wearing it, and bringing it back is the classic example. People call it wardrobing.
The line between the two matters because the fixes are different. Fraud calls for checks and evidence. Abuse usually calls for better policy.
How big is the problem?
Two studies give the best picture, and they count different things, so don’t add them together.
Source | Finding |
|---|---|
NRF and Happy Returns, 2025 | Total returns of $849.9 billion, or 15.8% of annual sales |
NRF and Happy Returns, 2025 | About 9% of all returns are fraudulent |
NRF and Happy Returns, 2025 | Online purchases returned at a rate of about 19.3% |
NRF and Happy Returns, 2025 | Retailers expect 17% of holiday sales to be returned |
Appriss Retail, 2026 report | $706 billion in returned merchandise in 2025, plus $90 billion in shrink, for $796 billion in total loss |
Appriss Retail, 2026 report | About $100 billion in preventable return loss from fraud and abuse, or 14.2% of returns |
Appriss Retail, 2026 report | Buy online, return in store made up $208 billion, or 29% of returns, and is the fastest growing source of fraud and abuse |
The exact number matters less than the direction. It’s a lot of money, and the fastest growing piece is buy online, return in store, which ends at the store return desk.
What are the most common types of return fraud?
NRF asked retailers that track fraud what they were seeing more of. 71% said overstated return quantities, 65% said empty box returns, and 64% said decoy returns, such as counterfeit items. Here is the full list in plain terms.
Stolen goods returned for cash or credit. Someone takes an item off the shelf, walks to the desk, and returns it, often with no receipt.
Fake or changed receipts. A copy, a receipt from a different item, or one with the date or price altered.
Empty box returns. The box looks right and may even be sealed, but the product isn’t inside. Some people call it a box of rocks return.
Decoy swaps. A cheaper item or a counterfeit goes back in the real product’s packaging.
Overstated quantity. Someone bought two and claims they’re returning three.
Buy online, return in store. A shopper orders online, then returns a different item at the store, and nobody checks that it matches the order.
Wardrobing. Worn once, then returned. This is abuse more than fraud.
Helped by an employee. A worker approves returns for friends or keeps the refund. This one is internal fraud, and it often hides inside “exceptions.” Our post on employee theft covers the warning signs.
What are the warning signs at the desk?
A high value item with no receipt and a story that keeps changing
A sealed box that feels too light, or packaging that doesn’t match what’s inside
The same person coming back again and again, sometimes at different stores in your chain
Someone in a hurry, or asking for cash instead of a refund to the original payment
A return of an item that was just reported stolen from your shelves
One employee approving far more exceptions than coworkers
A warning sign is a reason to look closer. It isn’t proof. Plenty of honest people return things without receipts.
How can a store cut return fraud without annoying good customers?
NRF found that 71% of shoppers are less likely to shop with a retailer again after a poor returns experience. So add friction only where it’s needed.
Write one policy and use it the same way everywhere. Time limits, receipt rules, and dollar limits should be the same in every store.
Look in the box before you refund. It takes ten seconds.
Refund to the original payment when you can. For returns with no receipt, many stores offer store credit at the lowest recent price.
Set a manager call rule. Any return above a dollar amount you choose gets a second set of eyes.
Match online orders to the item. For buy online, return in store, check that what’s in the bag matches what was ordered.
Review exceptions every week. Who approves overrides? Which stores have odd return rates? Which products come back most?
Keep the desk in view. Put it in front of a camera and in sight of a manager.
Train for a friendly tone. “Let me take a quick look at this for you” works better than an accusation.
Where do AI and video fit?
NRF’s 2025 returns report says 85% of retailers use AI to detect or prevent return fraud. Return software works with transaction data. Cameras show what actually happens at the desk.
Spacture AI watches the camera feeds a store already has and alerts your team to activity that looks like theft or fraud, so a person can take a look. That’s one more set of eyes on the returns desk, the registers, and the doors. Across 500+ US retail locations, Spacture AI delivers 87% alert accuracy and a 43 second response time.
Frequently asked questions
What is return fraud?
It’s when someone deliberately deceives a store to get money, credit, or a refund they aren’t owed, such as returning stolen goods or using a fake receipt.
What’s the difference between return fraud and return abuse?
Fraud involves lying or stealing. Abuse stays inside the policy on paper but pushes it too far, like wearing an item once and returning it.
How much return fraud is there in the US?
NRF and Happy Returns estimate about 9% of returns in 2025 were fraudulent. Appriss Retail counts fraud and abuse together and puts that at about 14.2% of returns, or around $100 billion.
What does buy online, return in store mean?
A shopper buys something online and brings it back to a physical store. Appriss says it made up 29% of returns in 2025 and is the fastest growing source of fraud and abuse.
What should staff do if they think a return is fraud?
Stay calm and polite, follow your policy, and call a manager. Write down what happened. Never accuse the person or try to block them.
Can a store refuse a return?
A store can usually set its own return policy and apply it fairly. Some states have rules about posting the policy, so check with your legal team.
About Spacture AI
Spacture AI is a New York based retail loss prevention platform. It uses AI video intelligence on the cameras retailers already own to detect theft, fraud, and safety incidents in real time. It runs in 500+ US retail locations and is SOC 2 Type II and ISO 27001 certified, and GDPR and CCPA compliant.
Sources
Consumers Expected to Return Nearly $850 Billion in Merchandise in 2025, National Retail Federation and Happy Returns, October 15, 2025
Study: Returns, Shrink Totaled Nearly $800B in 2025, Chain Store Age, February 19, 2026, reporting on the Appriss Retail 2026 Total Retail Loss Benchmark Report
Retailers Face USD 796bn in Losses from Returns and Shrink, eCommerceNews US
Key takeaways
Return fraud is a roughly $100 billion problem when you count abuse. The common tricks are stolen goods, fake receipts, empty boxes, and swaps. Use one policy, look before you refund, match online orders, review exceptions weekly, and keep the desk on camera.
