As e-commerce revenue becomes a larger part of retail sales, return abuse presents a growing threat and revenue drain that must be managed intelligently
Signifyd, the market leader in trade protection, announced the launch of its AI return abuse prevention solution, a customizable innovation that tackles a $ 43 billion problem by detecting return abuse and enabling merchants to provide frictionless refunds to valuable customers while frustrating those looking to manipulate the system.
Signifyd’s return abuse prevention solution gives merchants the flexibility to customize their return abuse response to the unique needs of their business. It gives online retailers the flexibility to define automated barriers to alert customer support employees about the degree of risk involved in a return request – identifying them as low risk, moderate risk or high risk – along with recommendations on how to process the return. It allows for personalized policies – for example, a guideline to never refuse to return a loyalty program member.
Return abuse prevention also allows merchants to simulate how their return rules would work in real life before implementing them in the real world. With the solution in place, retailers can apply their proposed return policies to previous purchase data and review the results of what would have happened.
” Unfortunately, fraudsters and a subset of consumers are becoming more aggressive and resourceful when it comes to taking advantage of return policies that make buyers’ lives easier,” said Signifyd’s vice president of product, Gayathri Somanath. “ Return abuse prevention depends on Signifyd’s network data, machine learning models and our new decision center module to give retailers the tools they need to stay ahead of this growing revenue crushing trend” .
The new solution extends Signifyd’s identity-centric business protection to another crucial post-purchase checkpoint – the return and start of refund point. It directly addresses one of the most uncomfortable riddles of the customer experience of the current trade era.
Overcoming the returns challenge is now more important than ever as e-commerce sales continue to quickly become a major part of retail sales . Online purchases are much more likely to be returned, and the percentage of fraudulent returns resulting from online orders is significantly higher than purchases made in a store.
The world’s most successful retailers have largely solved the challenge of providing online shoppers with accurate website research, rich images and product descriptions, fast service and 24/7 customer support. But returns continue to seriously drain revenue and make it harder to build lifetime customer value.
About 18% of online retail sales were returned in 2020 and 7.5% of those returns were fraudulent , according to the National Retail Federation and Appriss Retail. This represents a loss of $ 11.6 billion in the cost of goods alone, according to an analysis by Signifyd. But fraud costs much more than just the cost of stolen goods. A return triggers a chain of shipping costs, inspection costs, restocking costs or settlement costs.
In total, returns cost retailers nearly four times the cost of the goods involved, meaning that returns cost traders $ 584 billion a year, including $ 43 billion due to fraud, Signifyd calculated.
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While it is tempting to simply restrict returns, retailers realize that it would be unwise. In fact, 75% of consumers interviewed by Upwave on behalf of Signifyd said they were likely to stop buying from a brand based on a poor return experience. And about 58% said they always carefully check the retailer’s return policy before making a purchase.
Free and easy returns are almost all mandatory for merchants who want to be competitive. However, the easier it is to return items, the easier it will be for professional fraudsters and dishonest customers to take advantage of return policies.
“ When you have no protection or security check, it is clear to fraudsters and abusers that you are an easy target. It is as if the news has spread and they are telling all their friends and associates to go to Cuts, ”says Steven Borrelli, executive director of the Cuts brand of clothing direct to the consumer and customer Signifyd .
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