Return to origin fraud

Return Fraud in Ecommerce: AI is the solution


An online business opens thousands of doors for you to reach customers even in the remotest locations in the world! Even as a young startup, you can deliver your product to consumers without incurring overhead expenses. However, with an expanded reach, your business is at risk of breaches of security, increased losses, fake buyers and even return fraud!

What is Return Fraud?

Return Fraud occurs when a product sold by an e-commerce seller is returned by the customer by misusing its return policy. A return is initiated by the consumer, however, the seller receives a used, fake or even no product at all in return! A return fraud may take the following shapes in India:

  1. Wardrobing: When a consumer purchases a product, uses it temporarily and returns it for a full return. E-commerce websites for clothing and apparels are the most affected e-commerce industries by this kind of return fraud.
  2. Swapping of Product: A consumer purchases a product, but returns a faulty, damaged or fake product to the seller. With return policies in place, a consumer is able to get a brand new product and you as a seller have to bear the brunt of lost revenue and reduced inventory.
  3. Friendly Fraud: In a friendly fraud, the consumer claims that he never placed the order, or never received the product. In case of payment made through net banking, debit card or credit card, the consumer asks for a chargeback i.e. a refund for the amount paid for the product.

Is your Business suffering from Return Fraud?

E-commerce businesses in India are constantly subjected to return frauds as online shopping platforms make it extremely easy for the consumer to return the product. E-commerce sellers are often oblivious that they are falling victim to such frauds. However, there are some signs that accentuate that you are a victim of return frauds by your customers:

  1. Increased number of Returns.
  2. Loss of Inventory.
  3. Increase in Logistics expenses and decrease in marginal profit.

If you detect any of these signs, you might have fallen prey to return fraud and the only way to reduce your losses and increase your revenue is to integrate fraud prevention programmes in their business.

How to Prevent E-commerce Return Fraud?

As an e-commerce business, taking necessary precautions is imperative to protect your business from further losses in terms of revenue and inventory. You need to catch even the smallest of fraudulent transactions and protect your business from return frauds.

Technology has opened the doors which were not perceived as possible before! E-commerce fraud prevention has been enabled by Artificial Intelligence (AI)- based tools that integrate machine learning and natural language processing to flag fake or fraudulent transactions in real time. 

AI-driven fraud prevention tools help e-commerce businesses in the following ways: 

  1. Recognising Behaviour Patterns: A well-developed AI tool for e-commerce fraud prevention is able to identify behavior patterns of buyers like the pin code, duration of transaction, interests, IP address, etc. and detects risky transactions quickly.
  2. Customisation: A fraud prevention AI tool can be personalised in accordance with the needs of every kind of business, an e-commerce is indulged in. The parameters on which each transaction is evaluated are constantly updated to keep up with the customer trends and user behavior.

Thirdwatch’s Artificial Intelligence (AI) engine- Mitra is able to detect fraud on e-commerce platforms in real time. It carefully scrutinises every transaction on hundreds of benchmarks and distinguishes between genuine and fraudulent transactions in less than a second. Mitra is making it easier for e-commerce businesses to conduct their business confidently by handling the risk factors and alerting them about risky transactions ceaselessly.



You May Also Like

account fraud Types of Frauds

Account Takeover:...

payment frauds Industry Frauds

Payment Fraud And...

Online Fraud Types of Frauds

Online Fraud: How...

Merchant Fraud Types of Frauds

Merchant Fraud: W...

Promo Code Abuse Types of Frauds

Dealing with Prom...

chargeback frauds Types of Frauds

Chargeback Frauds...