Amazon’s return problem: how fraud is cracking the door open for rivals

That weapon is now turning in Amazon’s hand. A wave of return fraud has grown large enough to force the company to defend itself, and every defensive move it makes chips away at the very thing that made shoppers loyal. Meanwhile, sellers squeezed between generous refunds and rising fees are quietly building their businesses elsewhere. The result is a slow structural opening for competitors that Amazon spent two decades keeping shut.

Just how big the problem got

The numbers are no longer a rounding error on anyone’s balance sheet.

American shoppers were projected to send back roughly $849.9 billion in merchandise during 2025, according to the National Retail Federation’s returns research with Happy Returns. That represents about 15.8% of annual retail sales — and online is materially worse, at an estimated 19.3% return rate for e-commerce purchases. Of that total, the NRF found roughly 9% of all returns were fraudulent. Run the arithmetic and you land somewhere near $76 billion in deliberately dishonest returns in a single year. To see the trajectory, compare it to 2020: return volume was $428 billion and fraud was estimated at around 6% of returns. In five years the fraudulent slice roughly tripled in value.

Appriss Retail and Deloitte, using a different methodology, put 2024 return-and-claims fraud even higher — around $103 billion, or about 15% of all returns that year. The estimates disagree, which is itself telling: nobody has a precise number, because the whole point of fraud is not being counted.