Returns Abuse Costs $100B – and Crackdowns Punish Honest Shoppers

01 /The Concept

The ability to return online purchases is genuinely useful – you can't always predict whether something fits, or how it looks in person. But some shoppers have started to abuse that convenience, ranging from habitual over-ordering to outright fraud.

And there are a lot of these bad actors. According to PinchAI, the total cost of returns abuse runs to $100 billion per year.

Processing a returned item costs an e-commerce retailer an average of 60% of the item's original price – factoring in labor, reverse logistics, and the discount required to resell the returned goods. At current return volumes, this meaningfully compresses average margins.

PinchAI built a platform that helps e-commerce retailers fight returns abuse.

Fitting its product philosophy, the fight starts not with cracking down – but with rewarding good customers.

The platform automatically identifies customers who rarely abuse returns and proactively offers them perks: instant refunds, extended return windows, the option to exchange rather than return. These aren't just goodwill gestures – they drive a 3% increase in revenue from this group alone. That's not trivial.

Simultaneously, the platform flags high-abuse customers and quietly makes returns harder for them: holding refunds until the item is physically inspected, requiring in-store drop-offs, or charging a return shipping fee.

Those friction additions reduce the share of purchases that get returned, saving the retailer approximately 2% of gross merchandise value. Combined with the revenue lift from rewarded good customers, the net benefit is 5% of revenue.

PinchAI integrates with major e-commerce platforms including Shopify, Adobe Commerce, BigCommerce, and Salesforce, and is available via API for custom storefronts.

The company has just closed its first funding round at $5 million.

02 /Why It Matters

The $100 billion figure PinchAI cites for returns abuse sounds inflated at first glance. Startuping ran the numbers.

According to the National Retail Federation, in 2026, US retailers saw 15.8% of all purchases returned – including 19.3% of online purchases. Total returns amounted to roughly $850 billion in merchandise value.

Of that, 9% of returns were associated with some form of abuse.

Abuse runs the full spectrum. On the lighter end: bracket buying (ordering multiple sizes or colors to try at home, returning all but one), bulk buying for a volume discount followed by partial returns, or buying an item to wear once and returning it afterward. On the heavier end: swapping genuine products for cheap counterfeits before returning, fabricating returns of items never actually purchased, and other deliberate fraud.

Applying 9% to $850 billion gives $76.5 billion in abuse-related costs. Factor in that abusive behavior skews heavily toward higher-priced items, and the figure could plausibly reach PinchAI's claimed $100 billion.

At the same time, tightening return policies across the board is not the answer. Shoppers actively choose retailers based on return convenience:

- 81% of online shoppers in 2025 checked return policies before purchasing – up from 77% in 2024.

- 77% considered easy returns an important factor in their buying decision in 2025, up from 70% in 2024.

- 57% said a paid return policy would stop them from buying at a given store in 2025 – up sharply from 40% in 2024.

The solution PinchAI offers – differentiated policies based on individual customer behavior – is the only approach that protects good customers while creating real deterrence for abusers.

For context: the US return rate is roughly middle-of-the-road globally. About 48% of US online shoppers have returned a purchase. In the UK, it's 50%; Germany, 54%; China, 66%; India, 81%.

03 /Opportunities

The macro trend is clear: people will keep buying more online – and returning more as a result.

The direction: build platforms and services that streamline returns for shoppers, reduce processing costs for retailers, and contain abuse – all at once.

The category is already active. Loop Returns ([covered previously](/review/kak-ne-vozvrashhat-poluchennye-dengi)) raised $125.5 million for a returns management platform. Reshop raised $19.6 million. Refundid raised $14.2 million. Even the Chilean startup Reversso raised $1.3 million.

Each has a distinct angle – some compete on comprehensiveness, some on instant refunds before the item ships back, some on nudging customers toward an exchange rather than a return. But all of their feature sets are expanding over time.

This market isn't just large – it's structurally growing, and entry is still very much possible. Especially in regions where e-commerce is growing fastest – Mexico, India, the Philippines, Malaysia, Indonesia.

And there's a broader principle embedded in PinchAI's approach worth applying elsewhere. The fight against abuse starts with rewarding good behavior. And that reward generates more incremental revenue than the abuse prevention saves.

Want better performance from your team? Lead with rewards for high performers, not penalties for underperformers. Building a platform to improve workplace productivity? Start by identifying positive behavioral patterns and creating incentives around them.

The carrot works best when the stick exists – and the stick works best when the carrot is already in place.