The Post-Holiday Returns Tsunami: How Retailers Are Battling a 45% Surge in Returns and Fraud

An e-commerce customer service support company is predicting a 45% increase in customer returns following Christmas, a development that will tax many retailers’ support systems and erode their holiday profits.

“The 45% increase in returns directly causes support teams to slow down, with the time taken to solve an issue climbing by 28%,” Dublin, Ireland-based eDesk said in a statement released Monday. “This drop in service is more than just frustrating; it’s a hidden cost that reduces holiday earnings and risks losing loyal customers.”

“The moment the holiday shopping rush ends, the real pressure starts,” stated eDesk CEO Gareth Cummings. “Our data shows a near fifty percent spike in return requests, which stretches support teams and quietly reduces the profit retailers worked hard to earn.”

Scott Gifis, CEO of NoFraud, a fraud prevention technology company in New York City, agreed that holiday return spikes place intense pressure on customer support teams and back-office operations. “Retailers often see sharp increases in ‘Where is my refund?’ inquiries, disputes, and chargeback claims, which can overwhelm support staff already stretched by holiday order volumes,” he told the E-Commerce Times.

“Delayed refunds and inconsistent communication during peak return periods are a major driver of customer frustration,” he said. “Meanwhile, fraud teams face increased risk as high volumes make it harder to quickly identify abusive return or chargeback behavior.”

Gifis explained that returns are a defining moment in the customer relationship. “If the process is slow, confusing, or inconsistent, good/legitimate customers may not return — even if the original purchase experience was positive,” he noted.

“We see firsthand that friction during returns can undo months of brand trust,” he continued. “While strict return policies can alienate legitimate customers, they are designed to reduce losses and add friction for bad actors.”

He recommended that retailers understand customer intent so they can customize the return experience, protect against abuse, and maintain a fair, transparent experience for honest shoppers. “Loyalty is often won — or lost — during the return,” he added.

Beyond operational and fraud pressures, shifts in consumer behavior are also reshaping return patterns.

The Ozempic Effect

High return rates could also affect Black Friday sales, according to global product experience and information company Akeneo. Its consumer surveys have found that 69% of shoppers have returned a deal-day purchase. “If this trend continues, a potential $8 billion in Black Friday losses could be on the line for retailers — and ‘Returnuary’ hasn’t even begun,” it noted in a statement.

The reasons for the high return rate include poor product quality (30%), items not matching the product description or photos (17%), and finding a lower price later (14%), it added.

Smart retailers aren’t reacting to the prospect of higher return rates, eDesk’s Cummings observed, but are preparing for it. “Using returns data to predict demand, strengthen operations, and set clear customer expectations is how retailers protect margin and hold on to their customers,” he said.

However, that may be easier said than done. “This year is expected to be pretty bad,” noted Amrita Bhasin, co-founder and CEO of Sotira, a reverse logistics company in San Francisco.

One reason for that, she asserted, is tariffs. “They’ve really messed up forecasting,” she told the E-Commerce Times. “Forecasting has been really difficult since Covid, but with the tariffs, it’s been worse.”

One of the biggest problem areas for returns is clothing, according to eDesk. A contributing factor to that problem is the weight-loss drug Ozempic, Bhasin maintained. “The obesity rate has changed in a pretty short period of time, and as a result, there’s an increase in apparel returns, although returns are increasing across every category from what we’re seeing,” she said.

Refund Hacks

Bhasin added that fraud is also contributing to rising return rates. “A lot of the companies that we serve are trying to crack down on return fraud,” she said. “It’s a huge issue. It is almost a trillion-dollar issue at this point.”

Part of that fraud is being fueled by social media. According to fraud-prevention company Sift, in San Francisco, social media “refund hacks” are driving a surge in e-commerce chargebacks, which have increased by 233% since January.

Retail e-commerce leads all industries in chargeback rate growth in 2025, highlighting rising post-purchase fraud risks. (Chart Credit: Sift)

The company noted that 22% of consumers have seen tutorials on obtaining fraudulent returns, mostly on TikTok (34%) and Facebook (29%). It added that 10% of consumers have tried the hacks to file for false chargebacks or return worn items for refunds.

NoFraud’s Gifis noted that behavior is already influencing holiday return trends. “NoFraud has observed that refund abuse and ‘friendly fraud’ spike during and after the holidays, when order volumes are high, and retailers are more lenient,” he said.

“Social media tutorials normalize tactics like filing chargebacks on legitimate purchases or returning worn items, which increases both return rates and fraud-related losses,” he added. “This activity not only inflates return volumes but also drives higher operational costs and payment disputes long after the holiday season ends.”

Shelly Hunter, a consumer gift card expert at eGifter, a gift card technology company in Huntington, N.Y., agreed that retailers are right to be concerned about the rise of refund hacks and social media-driven chargeback abuse. “Once a fraudulent return is processed — especially for cash — the revenue is gone,” she told the E-Commerce Times.

“Anecdotally, I don’t think consumers know what actually happens to a product once it’s returned,” she said. “In many cases, that merchandise can’t be resold, so the retailer loses both the revenue and the inventory.”

Selective Returns

Hunter suggested that merchants offer gift cards in place of refunds. “When retailers offer store credit via gift cards, they keep the value circulating inside their ecosystem,” she explained. “This can reduce the fraud since scammers can’t monetize the store credit the same way they do a chargeback or cash back.”

Sucharita Kodali, an analyst with Forrester Research, a national market research company, headquartered in Cambridge, Mass., advised retailers to invest in returns management.

“U.S. online adults say returns are a significant factor as they choose which retailer they buy from,” she wrote in her 2025 Retailer’s Guide to the 2025 Holiday Season. Forty-six percent say that free, no-hassle returns are influential (second only to free outbound shipping), as are convenient store locations to return the product to a store if needed (18%).

“Plus,” she added, “65% of U.S. online adults say they buy more frequently from companies that have an easy return process, and 55% want companies to provide sustainable return options.”

In the coming year, she predicts that rising return-processing costs, combined with supply chain pressures and margin erosion, will force retailers to implement stricter policies as generous return windows become financially unsustainable.

“While Amazon and Walmart are currently known for breaking traditional return models with ‘keep the item’ returns in the case of low-margin items, that approach is ripe for exploitation by savvy shoppers,” she wrote in her Predictions 2026: Retail’s Flight to Profitability.

“In 2026, we expect merchants to be stricter, not more generous, with returns to offset costs,” she noted. “These same retailers will lean into machine learning algorithms to understand the behavior of their best and highest-margin shoppers to selectively offer more generous returns policies to just them.”

“That selective largesse will help retailers keep the profitable customers, many of whom convert online due to generous return policies, while ditching unprofitable shoppers,” she added.