Reducing returns abuse without sacrificing customer experience

By Aaron Begner, EMEA General Manager, Forter.

For merchants, delivering a great customer experience (CX) has always been high on their list of priorities. It’s essential for fostering customer loyalty, and increasing top-line revenue.

A significant aspect of customer experience is how a merchant handles returns, as this can mean increased flexibility and convenience for consumers. Recent Forter research points to this; 83% of consumers want businesses to provide free shipping for returns, and 80% are deterred when a retailer has inconvenient returns policies.

However, returns present a continuous dilemma for merchants: how can they be managed in a way that mitigates the chance of fraudsters taking advantage of the policies, without impacting CX? Fraudulent returns cost UK retailers over £3.7 billion per year, but only 17% have taken steps to address it.

Therefore, it’s essential that merchants prioritise fraud prevention, especially in combating fraudulent returns, helping them to identify legitimate customers from the fraudsters.

To get this balance right, merchants tend to add limitations to their policies to address the issue of returns abuse. For example, they might:

  • Shorten the window of time customers have to send back items.
  • Implement a stricter process for inspecting returned items.
  • Add restrictions to policies for refunds, reimbursements, and exchanges.
  • Create an evolving store returns “blacklist,” a list of customers who are no longer allowed to return items to the store.

Adding restrictions to policies can help reduce returns abuse, but it is often at the expense of customer experience. Also, brands with returns restrictions are less appealing to potential shoppers. Customers expect merchants to offer flexible and easy returns policies with few restrictions. Merchants shouldn’t limit themselves from offering flexible returns policies for fear of abuse.

Customer Experience Doesn’t Have to Be Sacrificed

Businesses can do many things to prevent customers from abusing returns policies without sacrificing customer experience, such as:

Allow 30 days for returns – 68% of consumers prefer a 30-day returns policy. This window of time helps deter policy abusers while ensuring good CX for most customers.

Look at every touch point – Merchants should look at all of the touch points of the customer’s journey, online and in-store. For example, the touch points for an online customer might include account sign up, user login, chatbot, checkout, and online returns portal. Businesses need to implement tools that analyse customer touch points and identify abuse  by observing the minute differences between the shopping behaviours of legitimate customers and those who commit returns policy abuse.

Detect hidden connections – Bad actors often use multiple email addresses to hide their true identities. They use fake identities to create hundreds, sometimes thousands, of new accounts. Merchants must uncover hidden connections between user accounts and detect when accounts are working together to abuse returns policies.   

Implement real-time decisioning – Real-time decisioning allows businesses to enforce policies at every point of the customer journey – from account creation, to checkout, to initiating returns. It prevents bad actors or legitimate customers from placing orders to initiate excessive returns. And it allows good customers who have legitimate returns to make, to send items back to the merchant without having to jump through too many hoops. 

Tailor the solution – Returns abuse looks different for every company. Some companies may be willing to take on more risk than others, and the level of abuse is not the same for every business. What works for one company may not work for another. Any returns process must be tailored to the needs of each unique business. 

Merchants Must Prepare for a Sharp Increase in Returns

As we all know, we are in the middle of a global pandemic (COVID-19). With many brick and mortar merchants in the UK forced to close on 23rd March, this led to a surge in online shopping. The pandemic has led to a slew of returns policy changes, with some businesses not accepting any returns and others extending their returns period up to 90 days. Merchants should prepare for a rise in returns when stores begin to reopen, and footfall eventually increases, with customers combining online shopping with in-store returns.

As merchants look to streamline their shopping experiences as lockdowns are eased, prioritising customer convenience, they should be on their guard against abusers who will increasingly use multiple accounts to exploit these omnichannel offerings.

For example, the continuing spike in eCommerce activity could see a rise in ‘Item Not Received’ claims, whereby fraudsters file chargebacks with the merchant, claiming the items they have ordered were never received. In fraudulent cases, the item has indeed been shipped and received, but the abuser aims to reap the reward of both having received the item as well as getting reimbursed by the merchant for the ‘lost’ parcel. This abuse can result in sustained losses to the merchant, at a time when top-line revenue has been more important.

When it comes to handling returns during and after the pandemic, the best way forward depends on the type of business and the risk the business is willing to take. However, the path forward should include:

  • A system for evaluating customer behaviour and returns.
  • A variety of tools to identify abusers and to take action without hesitation.
  • Patience, because not everyone is looking to abuse returns policies.

Going forward, customer experience and expectations will remain extremely high. Therefore, merchants must continue to be flexible with customers by extending returns policies, offering targeted coupons/promotions, and being extra accommodating in their service.

However, it’s up to merchants to have the systems and partners in place to understand the impact of policy changes, to quickly adapt and update as necessary, helping them to address customer challenges or potential abuse.

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