How to Prevent Return Fraud in eCommerce
So you get a notice that a customer wants to return your item.
You wonder if there’s something wrong with your product. Did they not like it? Was there something wrong with the actual product itself?
There are many reasons why a customer would want to return an item.
You can ask about why it’s being returned. When you know the reason, you have an idea of whether you should invest in the product or not or improve any content marketing in your online store.
If the customer bought the wrong item, the item didn’t fit, it was a gift and the giftee didn’t like it, it’s a reasonable return. But what if the customer wants to use the item once and return it for a full refund.
In this case, the customer is engaging in return fraud. And it happens a lot.
Even Amazon is getting rid of customers who are chronic returners.
Over time, eCommerce businesses will become more cognizant of chronic returners who scam businesses out of their money.
And I bet you’re wondering how you can avoid your product from being returned due to a dishonest customer who wants to buy a product without the intention of keeping it.
Let’s say someone has a special occasion, a wedding. Because it’s only one occasion, they won’t wear that piece of clothing again.
So they decide to wear it for one night and return it to your store. This form of wardrobing has its consequences. It’s happened in brick and mortar stores and it’s happening online.
The biggest difference is the cost of shipping the item back to the warehouse. It adds up and can cost millions of dollars.
It happens with big screen TVs, kitchen appliances, and most importantly clothes and shoes.
Having a strict return policy in place can prevent this. Have the expectation and in-policy statement that says if it is the wrong size, the item must remain unopened in its original packaging. If it is not, the customer must keep the item and will not be refunded. Depending on our product and/or industry, using your judgment is best when determining your specific return policy.
Using clear and well-defined policies helps avoid return fraud.
So that you don’t punish those truthful and honest customers who want to return an item, try a policy that says the customer must return within two days of the delivery date. This especially works for clothes as the customer can quickly try the item on and return it. They would not risk the chance of buying something online and having their occasion a day later and then returning.
Keep track of who is returning so repeat offenders don’t manipulate the return policy.
State which products are eligible for returns. Use a detailed return policy that’s easy to understand so the consumer doesn’t get confused.
If the customer can explain why the product didn’t work out, especially expensive items, you can be understanding. However, charging a restocking fee can eliminate some return fraud.
But how can you avoid this while not punishing truthful customers?
Firstly, there’s no way (yet) to accurately detect if someone is telling the truth about the reason for returning a product. But there are ways to avoid and prevent these returns and deter offenders from cheating you.
If the product isn’t right for the customer, they take a risk by returning it for a fraction of the price they paid.
For example, if the customer says they want to return an item of clothing because they bought the wrong size but when they return it, it’s opened and looks stretched and worn, you’ll have to use judgment on this call.
Brick and mortar stores have fitting rooms for customers who want to try it before they buy it. Online, there is no fitting room. How would customers be able to find the right fit when no one person is the same standard size? One size does not fit all after all.
Content marketing is key to describing these measurements.
The use of rich media (videos, audio, interactive digital media, etc.) and specific detailed measurements describing the product, helps the customer determine if the product is the right one for them. This prevents returns overall and decreases your return percentage.
One last tip, don’t forget to use good customer service as this goes in line with smoothing out the return process.
Have you ever experienced return fraud in your eCommerce business? What happened and how did you handle it?