Return fraud and margin leakage: what finance and fraud teams miss

TL;DR: Return fraud now represents nearly 14% of all U.S. returns and costs retailers roughly $103 billion in 2024, according to SEON, showing that policy abuse is a margin leakage problem that finance teams often fail to model. The control gap is not just detection, but shared ownership across fraud, operations and finance.

Editorial analysis by NHI Mgmt Group, based on content published by SEON: “Return Fraud Is a Margin Problem, Not a Security Problem”.

By the numbers:

• Returns fraud now accounts for nearly 14% of all U.S. returns and costs retailers roughly $103 billion in 2024.
• SEON’s 2026 Fraud & AML Leaders Report surveyed 1,010 fraud, risk and compliance leaders.
• Return fraud and promo or discount abuse each ranked as a top threat for 18% of respondents.

Key questions

Q: How should retailers decide when a return request needs manual review?

A: Retailers should route a return to manual review when identity, device or behavioural signals do not fit the customer’s normal pattern, especially when the value or frequency of returns is unusual.

Q: Why do return policies create margin risk even when customers follow the rules?

A: Because policy-compliant behaviour can still be economically abusive.

Q: What are the signs that return abuse is becoming a measurement problem?

A: The clearest sign is when fraud teams and finance teams report different pictures of the same loss.

Practitioner guidance

• Align finance and fraud on one loss metric Tie return reason, customer risk, shipping cost, restocking cost and margin impact into one reporting view so abuse is not hidden across separate dashboards.
• Apply risk-based review before refund issuance Use device, email, phone, loyalty and order-history signals to decide whether a return should be auto-approved, routed to review or blocked before cash leaves the business.
• Segment return policies by risk profile Reserve stricter rules for serial returners, suspicious marketplaces and repeated high-risk behaviour, rather than applying identical terms to every customer.

Bottom line: Return abuse can be fully policy-compliant and still create substantial margin loss, which is why it often escapes traditional fraud ownership.

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