Return-related fraud is costing retailers more money as e-commerce continues to grow.

LiquiDonate released its 2026 Returns Fraud Report this week, detailing how fraudulent returns are becoming more common across online retail and adding pressure to already-thin margins. The report outlines how return fraud happens, how much it costs retailers, and what companies can do to reduce the damage.

According to the report, retailers estimate that about 15% of all returns involve some form of fraud. Total retail returns reached $850 billion in 2025, with online purchases showing a return rate of 24.5%, far higher than the 8.9% rate for in-store purchases. Each return costs retailers an average of $25 to $30, once shipping, processing, and handling are factored in.

The report breaks down the most common types of return fraud retailers are dealing with today. These include chargebacks, in which shoppers dispute legitimate purchases and keep the items, and wardrobing, in which customers use items briefly before returning them. Other tactics include sending back counterfeit products, returning empty boxes or incorrect items, abusing “keep-it” refund policies, and bracketing, where shoppers buy multiple versions of the same product and return most of them.

LiquiDonate also points to more organized efforts, including return-as-a-service schemes in which criminal groups exploit return systems at scale.

“This report highlights the rising challenges of returns fraud, but it also underscores the opportunity for retailers to rethink returns not just as a cost, but as a strategic advantage,” said Disney Petit, CEO and founder of LiquiDonate. “By adopting smarter, more sustainable return practices, businesses can protect their bottom line while creating a better experience for customers and a positive impact on the environment.”

Beyond fraud tactics, the report outlines the full cost of returns. That includes shipping and processing expenses, chargeback fees, software and data costs, and downstream problems like distorted inventory levels and forecasting issues.

LiquiDonate says retailers can take steps to reduce fraud by tightening return policies, using pre-return approvals, improving item verification, and routing returned goods more carefully after they come back. The report also encourages retailers to work together by sharing fraud data and best practices.

One option highlighted in the report is donating returned goods to nonprofits, which can reduce handling costs while limiting opportunities for fraud.

“Returns fraud is a significant challenge for retailers, particularly in e-commerce,” Petit said. “Our hope with this report is to help retailers understand that they have options when it comes to return fraud. Technology can help.”