This blog was originally published on October 17, 2024, and has been updated on October 23, 2025.
The holiday season delivers a welcome boost in sales, but it also brings a surge of returns that can quickly turn into a challenge. Post-holiday returns strain staff, reduce margins, and open the door to return fraud and abuse. To protect profits, retailers must find a balance between offering a seamless, customer-friendly returns experience, while putting safeguards in place to stop abuse.
What is return policy abuse?
Return policy abuse occurs when customers intentionally misuse or exploit a company’s return policy for personal gain. While most customers adhere to return policies responsibly, some individuals exploit existing loopholes—an issue that becomes more prevalent during the holiday season.
- The holiday season sees a significant increase in return activity, with $160 billion (nearly 16%) of 2024 holiday sales being returned.
Common holiday returns tactics that undermine retail holiday profits
Return policy abuse can take various forms, such as excessive returns, fraudulent returns, or exploiting policy gaps. Some common holiday return policy abuse tactics include:
- Snap and Send Back: Shoppers may buy festive, high-end clothing, take photos for social media, wear it once or twice, and then repackage and return it. This practice, referred to as wardrobing, is especially common with pricey, trendy outfits worn for events.
- Claims and Appeasements Fraud: During the holiday season, shoppers may falsely claim that gifts didn’t arrive or were damaged, seeking refunds or replacements without returning the item. The high volume of holiday transactions makes it harder for retailers to detect fraud, leading to financial losses and operational strain.
- Employee-Assisted Return Fraud: Seasonal hires, often brought in quickly to meet holiday demand, may take advantage of busy store environments to commit fraud. Some assist in processing fake returns for friends or themselves, using discarded receipts or sweethearting items. Proper coaching and training can help reduce these risks by educating staff on best practices and fraud prevention, specifically during the holiday season.
Organized Retail Crime (ORC) is an additional concern for retailers during the holiday season due to increased store traffic, higher inventory levels, and the allure of high-value items. The bustling shopping environment and seasonal sales create opportunities for criminals to exploit relaxed holiday return policies, prompting retailers to boost loss prevention efforts to combat this heightened risk.
These tactics not only lead to significant financial losses but also disrupt inventory levels and create supply chain inefficiencies.
How holiday returns and post-holiday returns affect your bottom line
Processing returns, repackaging, and addressing fraudulent activity all add to operational costs, straining resources and cutting into margins. Get ahead this holiday season and download The 2025 Holiday Survival Guide for strategies to boost profits and avoid chaos. Inside the guide, you’ll learn:
- Strategies to streamline returns and claims while spotting abuse early
- Ways to deliver frictionless return experiences that boost customer loyalty
- How AI-powered, real-time insights separate loyal shoppers from fraudsters
- Tips for turning post-holiday data into smarter, long-term wins
Effective strategies to manage holiday returns and prevent policy abuse
Return policy abuse is a major concern for retailers, especially during the busy holiday season. Implementing clear and concise return policies is crucial in reducing abuse and ensuring an efficient return process for both customers and retailers
1. Being transparent in holiday return policies to protect retail holiday profits
Transparent holiday return policies are essential. A well-defined return policy not only reduces fraud and operational strain but also shapes the overall return experience—and the impact on shopper behavior is significant:
- 55% of consumers have avoided retailers with restrictive return policies
- 36% have had a negative return experience
- 31% stopped shopping with certain retailers because of a negative return experience
- On average, only 21% of customers make additional purchases following a return
Clearly communicating the rules and conditions for returns, including time limits, acceptable reasons, and required documentation, helps minimize potential abuse and confusion while encouraging customer confidence and satisfaction during the busy shopping season.
2. Using AI to balance holiday returns management and profit protection
Leveraging technology plays a significant role in preventing holiday return policy abuse. AI-based fraud detection solutions can help balance preventing fraud while maintaining a positive experience for legitimate customers. A blanket return policy can alienate loyal customers, so using technology to tailor return policies can minimize fraud without driving away your best shoppers.
- 70% of consumers say a positive returns process is important to their shopping experience, according to the report, “How Important Are Returns to Customers?”
3. Smart limits on holiday returns to preserve seasonal profits
Strict return policies aren’t the answer to preventing holiday fraud. A “smart” returns system powered by AI can spot suspicious behavior while still accommodating good customers. Limits like capping returns per customer further deter abuse, and combining these measures with advanced technology ensures a fair, efficient process that protects profits without alienating shoppers.
Educating shoppers on holiday returns and post-holiday return expectations
Clear communication is key to preventing confusion and abuse. Share your return policies across all channels—website, email, social media, in-store signage, and receipts—using simple, easy-to-understand language. Highlight timeframes, fees, and item conditions to set expectations and ensure a smoother holiday return experience for both your business and customers.
Supporting legitimate holiday returns to foster loyalty
Ensure your staff is trained to handle return requests with professionalism and empathy. Encourage staff to listen carefully to customer concerns and work toward solutions that benefit both parties.
Promptly addressing valid returns helps foster trust and loyalty, preventing the loss of future customers.
Optimizing holiday returns processes to maximize retail holiday profits
Efficiently managing holiday returns is crucial for a smooth customer experience. Retailers should implement best practices, including a clear holiday-specific return policy, effective communication of deadlines, and a streamlined return process with dedicated staff.
Analyzing returned products also helps detect abuse and enhance decision-making. Learn more about how Appriss® Engage uses advanced behavioral data to protect revenue from fraudulent holiday returns, while preserving the customer relationships that matter.
