How economic pressure is driving returns abuse in 2025
Kiran Banwait
·June 18, 2025
In the face of rising economic pressure, customers are cutting corners in many areas of their lives. Three-quarters of Americans said that they’d “traded down” on household purchases in the first quarter of 2025, which encompasses purchasing smaller quantities of goods, switching to lower-priced alternatives, delaying purchases, and using “buy now, pay later” options. (In fact, 25% of BNPL users say they’ve used the service to finance groceries, up from 14% in the previous year.)
And while consumers are thinking more carefully about what to buy, and how to finance their purchases, they’re also more likely to look for ways to recover money they’ve already spent on purchases. As a result, we’re seeing increased incidence of returns abuse.
The rise in returns abuse
In 2024, 76% of shoppers said that they’d embellished return reasons to avoid fees, a 39% increase from the previous year. In a Ravelin study, 51% of shoppers in the UK, France, and Germany who admit to participating in returns fraud or abuse say that “the cost of living crisis” was a trigger.
Those practices can have a devastating impact on retail businesses: Last year, fraudulent returns resulted in $103 billion in losses for U.S.-based retailers, with 15.14% of all returns marked as fraudulent.
We’ve previously covered the types of returns abuse that retailers commonly see. A growing percent of abuse is driven by organized crime rings that exploit vulnerabilities in brands’ returns policies, and you can use returns fraud software to effectively detect and stop this type of abuse.
However, abusive behavior that’s driven by economic pressure is generally tied to bracketing, wardrobing, and policy manipulation, and may be harder to detect or prevent through these measures.
- Bracketing means ordering multiple items to try out, with the intention of returning most of them.
- Wardrobing involves purchasing an item, using or wearing it, and then returning it for a refund.
- Policy manipulation refers to other forms of policy abuse, such as returning items that aren’t eligible for a refund.
Our recent study found that 39% of shoppers have either participated in abusive returns behaviors or knew someone who had. Of those that did, many of them were habitual return abusers: For instance, 30% of those who participate in wardrobing said they did so at least once a week.
How to combat returns policy abuse driven by economic pressure
Returns abuse can be damaging for your brand—but by connecting with these customers in the right way, you can reduce its incidence and keep them as loyal and profitable shoppers.
Here are some strategies for preventing financially-stressed consumers from taking advantage of your brand.
Tighten your returns policies
When building your returns policies, weigh up your customer experience against the risk of abuse to create modern return policies that control against common abusive behaviors. While offering a generous time window for returns (typically 30 days) is a great way to increase your conversion rate, don’t be afraid to set rules around returns eligibility.
For instance, by ensuring that items are in new, unworn condition with the tags still attached to be eligible for a refund, you’ll be able to reduce the incidence of wardrobing. When items that don’t qualify for refunds are returned, you can offer the customer an exchange instead, deduct a fee from the refund, or decline the refund altogether and re-ship the item to the customer.
By using Loop’s Workflows, you can set up customized returns policies for different types of products, ensuring that customers understand the rules and don’t send back items that won’t qualify for a refund.
Curb bracketing behavior
Bracketing behavior is easy to spot: Typically, a shopper will order the same item in multiple colors or sizes, with the intention of sending most or all of them back. By restricting purchases on similar SKUs to no more than two, you’ll be able to block customers from going overboard on bracketing.
Customers will also be less likely to bracket if they feel confident in their choices from the start. Apparel brands can build “real fit” guides, using AI technology to help customers identify the right size for every type of item, with options for AR try-on services so they can get an accurate sense of how the product will look on them.
Implement returns fees
The easiest way to prevent returns abuse? Simple: add a return shipping charge.
In our survey, 37% of shoppers said they’d stop taking advantage of retailers’ generous policies if they had to pay a fee to make the return. Return shipping fees are a powerful disincentive that stop shoppers from buying items they don’t actually plan to keep, and they can help your brand recoup lost margins from rising reverse logistics costs. And they’re more common than you might realize: Driven by rising operational costs, about two-thirds of retailers now charge return fees on at least some forms of returns.
By using Loop Checkout+, you can provide shoppers with a premium and predictable returns experience. Checkout+ presents shoppers with the option to pay a small fee during the checkout in exchange for access to free returns later. Even better, this eliminates your return software and shipping costs while growing top-line revenue on every order.
Setting up thoughtful returns policies and processes will encourage cost-conscious customers to do right by your brand, helping you control costs while keeping customer loyalty rates high.
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