How UK retailers can combat returns fraud in 2025
Is your ecommerce shop struggling with increased returns fraud and abuse this year?
You’re far from alone: In our recent survey, we discovered that 64% of UK-based brands said that rising returns fraud was the trend with the biggest impact on their companies. As the UK has very strong consumer protection laws, some customers are identifying ways to take advantage of those laws to take advantage of brands’ returns policies.
But you can do a lot more than commiserate: By building a proactive strategy to mitigate the impact of returns fraud, you’ll be able to protect your profit margins without negatively impacting the customer experience or running afoul of consumers’ rights.
Here’s what you should know to get started with a UK returns management programme that protects your brand from abuse.
Build a generous refund policy—but don’t let customers take advantage of it.
Under the Consumer Contracts Regulation of 2013, shoppers have 14 days from the day after delivery to cancel an order for any reason, and an additional 14-day window to send the item back.
By law, that means they’re entitled to a minimum 28-day return window, and unfortunately, some shoppers may take advantage of that policy to bracket (buy multiples with the intention of sending most back) or wardrobe (wear items and then send them back) their purchases.
You’re not able to refuse a return, even if you’re confident that customers are abusing your policies—however, you can require inspection of the products prior to issuing a refund. If the items show signs of damage or wear, you can deduct a penalty fee from the refund.
Ensure a clear process for assessing product quality issues.
The Consumer Rights Act of 2015 gives shoppers a 30-day window to assess their purchases for quality issues, and return them for a full refund if they are faulty. After the 30-day window, they have the option to request a repair or replacement of the item within six months. After six months, they must prove that the item was faulty at time of purchase to be entitled to a repair or replacement.
To avoid abuse of these rights, make sure that your brand has a clear-cut process in place for assessing quality issues if a customer is requesting a return outside of your standard refund window. Require customers to demonstrate the item damage in a live video or send the item back to your warehouse for manual inspection, rather than simply sending you a photo of the damage, which could easily be faked.
Use fraud detection AI tools—but make sure you’re compliant with data privacy laws.
The easiest way to fight back against fraud is to make use of machine learning tools, like Loop’s Fraud Model. Loop has analysed millions of return transactions to identify key flags for high-risk returns behaviour. When these flags are spotted, you can set up your system for manual review or automatic denial of the return request.
That said, such systems rely on huge amounts of customer data, and under the 2018 GDPR and Data Protection Act, you’re required to be transparent in your use of customer data. As such, you should have a clear explanation of your data collection and use policies on your website. Customers should be able to request the data you’ve collected from them, and request deletion if they like. If you penalise or block customers for their returns behaviour, they should have the right to understand why and be able to appeal the decision.
GDPR shouldn’t stop you from using fraud detection tools—but the law makes it very important to take precautions with the data you’re collecting, and to put policies in place that give customers control over its use.
Set straightforward policies with controls in place to prevent abuse.
As you build processes for fighting back against returns fraud, it’s important to balance fraud prevention against the importance of delivering a great customer experience.
As a brand, it’s critical to go above and beyond with providing your customers with the rights and benefits that they expect and are entitled to. At the same time, you can set up safeguards and standardised workflows that will help you reduce the risk of returns fraud and abuse, and hold abusive customers accountable for their actions without negatively impacting the experience for the rest of your shoppers.
By implementing returns management technology like Loop, you can strike the right balance with ease. Loop makes it simple to set up customised returns policies based on criteria such as item type or order value, enabling you to set up more stringent review processes for higher-risk transactions. You’ll also be able to streamline your reverse logistics process by automatically routing returned items to the right location based on return reason, such as sending new and unworn items to your warehouse for restocking, while shipping faulty items to a repair centre.
Further, Loop’s data insights help you understand vulnerabilities in your returns process, so that you can strengthen your policies to protect your brand against abuse and fraud—without damaging the experience for trustworthy customers.
Ready to fight back against fraud? Book a demo today.
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