Shoppers Shun Retailers That Charge for Returns

Stricter return policies reportedly have some shoppers rethinking their choice of retailers.

As The Wall Street Journal (WSJ) reported Sunday (Dec. 1), sometimes that means consumers doing more research into product quality before they buy, while others have stopped patronizing retailers that charge customers for returns.

According to the report, merchants argue their tighter returns policies are needed because returns — and returns fraud — are denting their profits. Consumers argue inconsistency in sizing makes it hard to buy online without selecting multiple sizes, and that brick-and-mortar stores are often out of the products they wish to purchase.

Priya Rednam-Waldo, a Detroit therapist and life coach, told WSJ she stopped shopping online at Saks Fifth Avenue and Neiman Marcus once they added restrictions on returns.

In April, Saks began charging $9.95 for returns by mail, while Neiman charged a similar fee for clearance items and those returned after 15 days.

“If I can find the time to go to a store, I’ll do that,” said Rednam-Waldo. “But I won’t gamble anymore with online purchases because of the fees.”

The report cited a survey by Blue Yonder, a supply chain management company, showing that more than two-thirds of consumers who are aware of stricter return policies say those rules have kept them from making purchases, compared to 59% in 2023.

Retailers argue that customers can often return eCommerce purchases at physical stores for free. And most retailers, WSJ said, extend their return windows during the holidays and exempt top-tier loyalty members from fees.

The WSJ report also includes figures from Narvar, which handles returns for retailers, showing a 15% uptick in online return rates in the past five years. And the number of retailers on Narvar’s platform that charge return shipping fees has climbed 20% compared with the same time last year, said David Morin, Narvar’s vice president of customer strategy.

As PYMNTS has written, returns fraud has jumped in recent years, to the point that it’s now costing merchants $101 billion per year.

Among the trends causing concern is the rise of “refunds as a service,” in which cybercriminals help people claim fraudulent refunds for a fee. Major British retailers, including River Island and Trainline, are responding to this challenge.

Speaking with PYMNTS in October, River Island Senior Operational Risk Manager Grant Shipway noted the alarming normalization of refund fraud in today’s culture.

“Organized refund fraud as a service is becoming more common,” Shipway said. “Criminal enterprises are increasingly advertising and promoting these services on social platforms like Telegram, Discord, Facebook, TikTok and Instagram, tempting more and more consumers to act dishonestly. Cybercriminals are also informing consumers, via social media, about tricks and strategies they can use to become more adept at committing — and getting away with — fraudulent returns.”