Ecommerce fraud spikes in Q4: How to combat bracketing & abuse
Kiran Banwait
·October 31, 2025
Peak Season is almost upon us – and while you may be thrilled to see sales volume increase, you probably can’t say the same for the rise in returns fraud.
That’s right: 75% of retailers say that they expect returns fraud to escalate during the holiday season – on an annual basis, it’s a $101 billion problem, and only growing. In fact, Signifyd found that the rate of abusive returns had grown by 64% between January 2024 and May 2025.
While some forms of returns fraud involve coordinated fraud rings, most often, returns abuse is attributable to customers who are taking advantage of your flexible return policies through wardrobing, bracketing, and returning ineligible items. These customers aren’t hardened criminals; they’re just shoppers who either don’t know that their return practices aren’t allowed, or they don’t care.
The good news is, it’s easy to spot and correct this behavior – helping you recover more revenue from returns and keep your profit margins strong.
In this article, let’s take a deeper look at some common forms of returns abuse, and how to put an end to them with the right processes and technologies.
Common types of returns abuse
Ecommerce retailers are seeing increasing rates of abusive and deceitful practices from customers that cut into their bottom lines. In addition to refund fraud (i.e., pretending an item never arrived to request a refund on it), they’re seeing increased incidence of returns abuse – defined by manipulating a brand’s returns policy in order to take advantage of it.
Some common ways to do that include:
Bracketing
If a shopper has an upcoming beach vacation, they may want to check out multiple swimsuits to see which one suits them best. If they were going to a brick-and-mortar store, they’d just use the dressing room – but, if they’re shopping online, they’re far more likely to participate in bracketing. That means they might purchase five or six items to try on, but only keep one of them. As a result, you’ll end up with a bunch of returned merchandise that you may not be able to resell at full price.
Wardrobing
Wardrobing refers to the practice of purchasing an item, wearing it, and then returning it as new – even when it’s clearly not. In some cases, the wearer may leave the tags on to reduce the risk of their return not getting accepted, but the item will nonetheless show signs of wear and tear. If you accept wardrobed returns without a comprehensive review process, you’re likely to grant refunds on products you won’t be able to restock in inventory, leading to net losses.
Returning ineligible items
While wardrobing is an example of this form of abuse, there are other types of returns that don’t fall into that bucket – such as returning “final sale” items, damaged or altered items, opened products that don’t meet hygiene requirements (i.e. food and beauty products), and items returned outside of the return window. While you may be more likely to catch some of these forms of abuse in time to reject the refund, if you don’t have a solid inspection process in place, they’re more likely to slip by unnoticed.
Chances are, a good chunk of your customers have engaged in one of these practices at some point: Our survey found that 40% of shoppers said they or someone they know had engaged in returns abuse within the past year.
So what can you do to prevent returns abuse from killing your Peak Season profits?
Strategies for curbing returns fraud and abuse
To cut down on customers abusing your returns policies, you’ll need to build an ecommerce fraud prevention strategy that brings together the right processes and technologies to safeguard your returns process. Here’s how to get started.
Automate fraud prevention with Loop’s Fraud Model
Loop has data from millions of return transactions – and we know what to look for when a return is likely to be fraudulent. Our system automatically checks for high-risk signals, such as a flagged IP address, geographical anomalies, or suspicious return attributes, which are likely indicators of fraud and abuse.
Our Fraud Model algorithm parses through all of your return-related transactional data in real-time to spot red flags for potential fraud, putting a halt on refund authorization until your team can review the transaction and determine if it’s legit or not. To date, our model has helped brands successfully detect $0.87 for every $1 of confirmed fraudulent transactions.
Implement strategic fees to combat bracketing and wardrobing
Bracketing and wardrobing are two of the most common forms of returns abuse – and they’re also the easiest to solve for.
If your brand offers a generous free shipping and free returns policy, many of your customers will take advantage of it by purchasing multiple items that they don’t intend to keep. Whether they want to try on a variety of products to see what fits best, or purchase an outfit just to wear it for their social media pictures and then send it back, they’re taking advantage of your generosity since there’s nothing at stake for them.
You can easily change that by introducing return shipping fees. Our research has found that implementing shipping fees doesn’t deter customers from shopping with your brand – but it may make them more likely to think twice about purchasing items they don’t plan to keep. By using Loop’s Checkout+ feature, you can enable customers to offset the cost of a return later with a small upfront fee during the checkout process, which will cover your return shipping and software fees.
Manage less, sell more this BFCM
Boost profits, block fraud, and turn returns into growth with Loop’s quick-start holiday guides.
Win this BFCMSet up customized returns Workflows for high-risk item types or customer segments
You’ve likely discovered that certain product types are more prone to abuse than others – for instance, swimwear that’s sent back with the hygiene strip removed.
By tracking your data, you’ll be able to spotlight product categories that are at high risk for an abusive return, which should be fully inspected before authorizing a refund. You can use Loop’s Workflows tool to customize your returns process, ensuring that these items aren’t eligible for a refund until they’ve been inspected and your warehouse team has ensured that they meet the conditions for a return.
The same goes for customers. Most of them are great, but you probably have a subset of shoppers who send back items frequently – sometimes in worn condition. You can segment out these serial returners, and place restrictions on their accounts so that they will not receive a refund until all of their items have been inspected and approved for return.
Putting guardrails in place around the return process for high-risk products and shoppers helps you protect your profit margins without negatively impacting the customer experience for the majority of your shoppers.
Enhance your returned product inspections with our Two Boxes integration
Even the best returns processes aren’t foolproof if you don’t have visibility around them. With Loop’s enhanced Two Boxes integration, we make it easy for your brand to get transparency around the entire returns process, with real-time access to item grading and disposition data on items returned to your warehouses and 3PLs. That means you’ll be able to get better clarity around which items are refund-eligible, giving you the evidence to reject return requests that don’t meet your criteria. By tapping into enhanced data around your returned inventory, you’ll be able to set up sustainable return policies that protect your revenue.
Retain more revenue this Peak Season
Peak Season brings excitement, sales, and new customers – but it also puts your business at greater risk of returns fraud and abuse. Without the right guardrails, even a small percentage of abusive returns can eat into your profits at the exact moment you should be maximizing them.
By combining preventative strategies with Loop’s built-in fraud detection and integrations, you can stay ahead of abuse without creating friction for your best customers. The result? A returns process that protects your margins, scales with your holiday sales, and keeps shoppers confident in your brand.
Now is the time to prepare. Put these systems in place before the holiday rush so you can enter Peak Season with confidence.
Check out our other Peak Season resources for more tips on optimizing your success this holiday season.
In this article
Stay in the loop
Subscribe for product updates and Loop's biweekly newsletter.
Protect margins and retain revenue with Loop.
Want to boost profits, block fraud, and turn returns into growth?