Enhancing customer experience while combating refund fraud

Introduction

U.S. retailers lost an estimated $103 billion to return abuse in 2024,¹ and “Where’s my refund?” inquiries rank second as a top driver of inbound customer-support contacts.² This guide reveals how a new approach to refund management can transform your customer experience into a loyalty lever while protecting your profits.

How you handle returns and refunds directly affects customer satisfaction, loyalty and lifetime value, but the explosion of professional fraudsters (and even some typically “good” customers) abusing refund policies is putting merchants in a dilemma. Try to protect margins by tightening policies, and you drive away good customers. Do nothing, and risk abusers causing significant financial losses. 

While 84% of retailers updated their return policies to fight abuse in 2024, more than half of consumers now say they’ll shop elsewhere when faced with restrictive policies. The real challenge: safeguarding customer experience without sacrificing profitability.³

This guide explains why refund fraud is surging and how automation and identity-based analytics can help you deliver faster, more personalized return and refund experiences that build trust while preventing abuse. 

To be successful in this fight, you need to deploy technology tools that are fit for purpose. Rather than relying solely on AI-based bots or overwhelming human teams with manual reviews, merchants need an identity-intelligence layer that can tackle the complexities that savvy abusers or professional fraudsters use to bypass rules while speeding up refunds for good customers. This is especially critical for global retailers managing diverse customer bases and complex return policies across multiple regions.

You’ll discover:

• Why refund abuse is exploding, threatening CX and your bottom line
• How automation and identity-based analytics outperform legacy systems
• How to accelerate legitimate refunds and adopt dynamic policy parameters without opening the door to fraud
• What to look for in technology to ensure scalability, agility and results

As you gear up for peak shopping and return season, this guide will help you strike the right balance between speed, trust and protection in the refund process.

¹ “Retailers lost $103B in fraudulent returns and claims in 2024,” Retail Dive, Jan. 3, 2025. Link.
² Narvar