Everything You Need to Know About E-Commerce Refund and Return Fraud

Good business says companies need to give customers the freedom to change their minds about a purchase. But businesses also need to be aware of common return and refund fraud practices that can cause financial losses.

Refund fraud happens when a customer or bad actor gets a refund for goods they purchased without returning them. This type of fraud often occurs during busy seasons.

One way bad actors commit refund fraud is by falsely claiming that a package did not arrive or was stolen in an attempt to get a full refund. Because there are little to no industry controls on refunds, businesses experience higher losses in refunds than chargebacks. And since there isn’t a traditional dispute with refund fraud, it’s hard to detect and fight.

Return fraud happens when a customer or a bad actor takes advantage of return policies to profit or get goods for free. They may try to manipulate tags and packaging to return an item for more than it’s worth.

Businesses lose billions of dollars each year to return fraud. And many allow customers to abuse promotions. For example, they may allow customers to buy enough merchandise to get free shipping and return items later.

Fortunately, businesses can fight these types of fraud in a number of ways. Click here now to visit Kount's blog to read more about refund and return fraud — and how to prevent these schemes.