Retailers are forking out huge sums of money as refund abuse increases

Online retailers are spending huge amounts of money covering fraudulent or excessive refunds, according to new research from Ravelin.

Refund abuse is the act of claiming a refund for to the point where companies are struggling to turn a profit.

Companies are being targeted by refund abusers to the point of unprofitability, with food delivery firms being the most affected by the trend.

Around 57 per cent of which have reported an uplift in the past 12 months, alongside 48 per cent of ride-hailing companies and 44 per cent of goods and services brands.

The rise in the trend has come at the same time as the pandemic where merchants resorted to softening return policies and contactless deliveries to encourage consumers to keep buying.

READ MORE: Citizens Advice calls for tough regulation for parcel delivery companies

While there has has been an uptick in refund abuse since the start of the pandemic, companies have been battling the issue for a number of years.

Fast-fashion retailer Asos actively seeking to ban serial returners in 2019, who were costing the retail sector £60 billion each year.

“While refund abuse isn’t always fraud as such, it’s something that online marketplaces — and ecommerce in general — should treat just as seriously.” Ravelin chief executive Martin Sweeney.

“As our research has shown, it’s one of the fastest-growing hits to profitability.”

“I sympathise with the challenge facing the online marketplace world.

This is a relatively young industry, where competition is tough and every app has to offer the best deals and the easiest returns policies. So, it’s a fine balance to strike between offering convenience and protecting profitability.”

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