As stricter return policies become more prevalent among retailers, many shoppers are reconsidering where to spend their money, PYMNTS reports.
According to a report by The Wall Street Journal (WSJ), some consumers are conducting more research before purchasing products, while others are avoiding retailers that charge for returns altogether.
Retailers argue that tighter return policies are necessary due to the financial impact of returns and return fraud, which have significantly affected their profits. However, many shoppers point out that inconsistencies in product sizing, especially in online purchases, make it difficult to avoid buying multiple sizes. In addition, brick-and-mortar stores often do not have the desired products in stock.
Priya Rednam-Waldo, a Detroit-based therapist, shared with WSJ that she stopped shopping online at Saks Fifth Avenue and Neiman Marcus after both stores introduced return fees. Saks began charging a $9.95 return fee for mail-in returns in April, while Neiman Marcus imposed a similar charge on clearance items and returns made after 15 days.
“If I can find the time to go to a store, I’ll do that. But I won’t gamble anymore with online purchases because of the fees,” Rednam-Waldo noted.
A survey conducted by Blue Yonder, a supply chain management firm, revealed that over two-thirds of consumers aware of stricter return policies said these changes have discouraged them from making purchases, compared to 59% in 2023.
Retailers counter that many allow free returns for in-store purchases, and many also extend return windows during the holiday season or waive fees for top-tier loyalty program members. Despite these measures, data from Narvar, a company that facilitates returns for retailers, shows a 15% increase in online return rates over the past five years. Additionally, the percentage of retailers on Narvar’s platform charging return shipping fees has risen by 20% compared to last year, according to David Morin, vice president of customer strategy at Narvar.
The rise of return fraud has been a major concern for retailers. According to PYMNTS, return fraud is costing merchants $101 billion annually. This increase in fraudulent returns includes the emergence of “refunds as a service,” where cybercriminals assist individuals in filing fake returns for a fee. Some major British retailers, including River Island and Trainline, are responding to this growing issue.
Grant Shipway, Senior Operational Risk Manager at River Island, spoke about the normalization of refund fraud, noting that criminal enterprises are advertising their services on social media platforms like Telegram, Facebook, and Instagram.
