Refund fraud “could be costing UK retailers £5 billion-plus per annum”

The research report – entitled ‘Return to Sender: Mapping the Online Economy of Refund Fraud’ – features input from colleagues at the University of Bristol, the University of Surrey and Queensland University of Technology and analyses circa 500,000 posts across the cyber crime forums Telegram and Discord.

Fraudsters have been using these channels to openly share techniques, target retailers and sell fraudulent refunds as a paid service. It emerges that some ‘Refund‑as‑a‑Service’ vendors were even taking up to 30% of the refund value for a guaranteed outcome.

Most offenders were younger males aged between 14 and 30, with an average age of 19. Many were students or unemployed with refund fraud frequently linked to other forms of criminal activity including card fraud, identity fraud and money laundering.

Some users also showed risky behaviours while online, duly sharing receipts and personal details about themselves such as their names and where they lived, often underpinned by the belief that they’re ‘untouchable’ and that retailers and law enforcement would never catch them.

Common fraud methods

According to the research, the most common fraud methods include claiming that ordered items didn’t arrive, reporting partial or empty boxes, using fake tracking IDs to simulate returns, returning substitute or counterfeit goods, ‘wardrobing’ (whereby items are worn and then returned) and abusing food delivery refunds.

In the pages of the report, researchers warn that refund fraud will continue to grow without targeted public awareness – young people in particular need to be targeted here – and stronger collaboration between retailers, law enforcement and the fraud prevention community.

There’s also an urgent call for an industry‑wide database, much like Cifas’ National Fraud Database, that would enable retailers to track known offenders and share intelligence more effectively.

Opportunity-rich environment

Professor Mark Button, co-director of the Centre for Cyber Crime and Economic Crime at the University of Portsmouth (and one of the 40-page report’s contributors), explained: “Criminals have professionalised refund fraud and are exploiting the opportunity‑rich environment that online retail presents. Weak systems and a perception that they’re ‘untouchable’ have allowed this issue to scale rapidly.”

Mike Haley, CEO of Cifas, added: “Refund fraud is not harmless. It’s organised, widespread and costing UK retailers billions of pounds. Those losses hit honest customers through higher prices and stricter returns. This research makes clear that we need better data and intelligence‑sharing, stronger deterrence and far greater education to challenge the belief that this behaviour is acceptable.”

*Download copies of the ‘Return to Sender: Mapping the Online Economy of Refund Fraud’ report by visiting the Cifas website