Return fraud is rising. E-commerce platforms are done playing nice

These aren’t isolated incidents. E-commerce platforms say they’re part of a fast-growing pattern of return fraud that’s costing the industry thousands of crores.

As fraudulent claims surge, platforms are rethinking their once-liberal return policies—an issue that’s quietly eating into margins and prompting course corrections across the industry. While genuine returns remain a core part of the online shopping experience, platforms say deliberate misuse—through false delivery claims or product swaps—is rising fast.

According to Vanita Pandey, chief marketing officer at global compliance and fraud prevention firm Bureau, Indian e-retailers lost as much as ₹15,000 crore ($1.8 billion) to e-commerce fraud in FY24, a category that includes return-related abuse among other forms of digital fraud. More recent data was not available.

Mint asked several leading e-commerce platforms for data on return rates and return fraud. Most did not respond. Myntra and Zepto were the only companies that shared comments, though neither disclosed figures. Flipkart, Amazon, Meesho, Purplle, and Nykaa did not respond to emailed queries. Quick-commerce players Swiggy and Blinkit also declined to comment.

While platforms don’t publicly disclose return volumes, industry estimates suggest return fraud may account for around 10% of all returns in Indian e-commerce. Overall, about 15–16% of all e-commerce orders are either partially or fully returned, according to research firm Forrester.

Globally, e-commerce firms lost an estimated $103 billion to return fraud in 2024.

Platforms have long relied on easy returns to attract and retain customers. But reverse logistics—often costlier than forward shipping—has made the model increasingly unsustainable. The shift comes at a pivotal moment: even as online shopping expands into newer geographies, companies are still posting significant losses. Flipkart’s marketplace business reported a loss of ₹2,358 crore in FY24, while Amazon’s touched ₹3,469 crore.

“While some part of the fraud is being done by bots, consumers too are increasingly exploiting policies,” said Pandey. “Instances of fraud in India are significant simply by virtue of the size of the country. And it’s getting more sophisticated.”

To counter this, e-commerce platforms are rolling out tighter rules.

Customer experience vs fraud control

Flipkart-backed Myntra, for instance, unilaterally suspends accounts with high return rates and disables cash-on-delivery for users who frequently cancel or reject orders. The platform also collects a fee on low-value orders and now permits exchanges for different products—not just size or colour—as a way to reduce return volumes. It has also introduced features such as detailed product information and virtual try-ons to help customers make better purchase decisions.

“In recent months, we have improved the return rates while enhancing the shopping journey of our customers,” a Myntra spokesperson said.

Amazon has shortened the return window for categories like fashion, home décor, and accessories to 7 days from 30, and reserves the right to warn or suspend users for excessive returns or cancellations.

Marketplaces have been tightening return policies gradually over the past few years. In 2023, Myntra began charging ₹199– ₹299 for customers with a high return rate. But as return fraud continues to rise, platforms are now scrutinising customer behaviour more closely.

Quick commerce companies like Blinkit, Swiggy Instamart, and Zepto—while newer to the space—are also adapting. These platforms had introduced easy return options last year, but their smaller product ranges have limited exposure to the kind of refund fraud plaguing broader e-commerce.

“We verify every return request, and if it’s genuine, we go ahead and process it,” said a Zepto spokesperson. “Returns are also easier to manage on our platform since our delivery partners operate within a defined, local radius.”

D2C brands feel the heat

Direct-to-consumer (D2C) brands are facing the impact as well.

Chirag Taneja, co-founder and CEO of enablement platform GoKwik, said about 12% of customers return at least half of six orders, raising concerns for companies selling through their own websites. GoKwik works with over 4,000 brands including Lenskart, Shoppers Stop, and Purplle.

“Some categories are easier to exploit than others,” Taneja said. “Fashion and general merchandise see higher return rates than beauty and consumer electronics, where policies are generally stricter.”

According to a 2024 report by GoKwik’s Return Prime, frequent returns could cost Indian e-commerce companies $20-30 billion in lost revenue by 2025. This compares to an industry expected to touch $188 billion in size by then, according to the Brand Equity India Foundation citing Grant Thornton estimates.

India’s online shopping gross merchandise value (GMV) stood at around $60 billion in 2024 and is projected to grow to $170-190 billion by 2030, according to a report by Flipkart and Bain & Co.

Independent experts say the rise in returns—and the resulting policy pushback—could reshape customer experience. Ashutosh Sharma, vice president and research director at Forrester, said this significantly impacts margins and can be especially challenging for newer players. “The abuse by a few makes it difficult for providers to continue with customer-friendly features such as shorter return windows or no-cost returns, which leads to an overall impairment in the experience,” Sharma said.

Sharma also flagged problems on the seller side. “Platforms prone to returns like apparel and fashion have introduced some checks, but they still need to tidy the ship on their side,” he said. “We still have issues such as incorrect or incomplete descriptions, delivery of wrong or defective products, or in some cases, outright fraud—all of which contribute to returns.”

The challenge for platforms is to strike a balance. Taneja said brands that remove easy-return policies risk losing up to 50% of their GMV, especially as most online shoppers prefer brands that offer hassle-free returns. A poor return experience can also cost brands 8% in potential repeat revenue annually, according to GoKwik data.

“The no-questions-asked policy is being closely scrutinized because of growing cases of misuse. But returns continue to be an integral part of the customer experience, so no brand will completely stop returns,” Taneja added.