By Christian León, Vice President of Signifyd in Latin America*
Returns have always been part of the trade but with the boom of ecommerce in Latin America and the pressure for offering frictionless purchase experiences, return fraud has grown to alarming levels. What was previously a simple operational cost, today represents multimillionaire losses for retailers.
This type of fraud adopts many forms: from the wardrobing (Use a garment once and return it) until the return of counterfeit products or triangulation fraud, which occurs when purchases with stolen cards are carried out where the scammer manipulates the shipping and return process to obtain products and reimbursements. These blows not only affect the finances of companies, but also deteriorate customer experience by forcing restrictive return policies and generate distrust in electronic commerce.
In Brazil, the largest e -commerce market in Latin America (84 billion dollars according to EMARKETER), returns can represent up to 18% of online purchases in categories such as fashion and about 10% of the total digital transactions, according to statista. This is equivalent to approximately 8.4 billion dollars annually. Since returning fraud can reach up to 15% of this figure, the estimated loss for the market exceeds 1,000 million dollars a year.
On the other hand, it is estimated that in Mexico, 23% of online buyers have returned in the last 12 months (AMVO). With a total ecommerce value in 2024 of approximately 39.18 billion dollars, the amount associated with returns would amount to 8.99 billion, of which 1.35 billion would be lost due to fraud in returns.
Faced with these scenarios, the question is not whether the retailers must address this problem, but how much more they are willing to lose before doing so and where they should begin.
More visibility, less losses
The problem is not only the volume of returns, but the lack of control and strategy. Many returns are avoidable: inaccurate descriptions, errors in sizes, delivery delays, but as they do not have visibility on their causes, companies continue to react instead of preventing.
For example, size errors can be corrected, if products are identified with a high rate of returns for this reason and descriptions or manufacturing are adjusted. Delivery problems, on the other hand, can be solved if areas where delays generate more returns and logistics are optimized.
As for fraud and policy abuse, an important problem that concerns e-commerce, there are tools that allow analyzing buyers in real time and blocking high risk transactions by return before they happen.
Artificial intelligence and machine learning of these solutions analyze return data to identify patterns and segment customers. This facilitates the implementation of personalized return policies, rewarding loyal customers with agile and flexible processes. By prioritizing a positive experience, repurchase is encouraged and a long -term relationship is built, maximizing the customer life value (CLTV).
The cost of doing nothing
Beyond the impact on income, returns also affect customer experience, consumer confidence and operational profitability. How much does each customer service call related to a return? How do repurchases affect repurchases? How many fraudulent clients are taking advantage of flexible policies?
This year, the businesses in the region must answer these questions and take action. The solution is not to hinder returns for legitimate customers to avoid fraud, but in managing intelligence returns. The more visibility, better decisions will be made and there will be much fewer losses.
*The opinions expressed are only the responsibility of their authors and are completely independent of the position and the editorial line of Forbes Mexico.
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