Stop refund fraud from hurting your bottom line

Return and refund scams are commonplace in the retail industry. But that doesn’t mean you can’t protect your business. With Kount, you can save your merchandise and your revenue from these harmful schemes.

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Refund Fraud


How Kount mitigates refund and return fraud

Shoppers buy items and return them all the time. But how can you tell when they’re taking advantage of you? With data and technology. You can use Kount in one or all of the following ways. 

Refund fraud detection and prevention -- how it works

Before a transaction

Machine learning analyzes our database to see if the customer has committed refund fraud in the past — with you or another business in our network. Based on the analysis, a safety score is issued. Insights about perceived risk can help you approve, review, or decline the order.


Before a refund

When a refund request is made, you can look up the customer in our database. We’ll provide insights on fraudulent behavior with your own business and others in our network. Data can help make an informed decision to honor or deny the refund request.



Engage in ongoing data analysis so past refund fraud can help prevent future threats. Detect patterns — such as certain countries or merchandise that has a high risk for refund fraud. Then set controls around those items or simply remove them from inventory.


Benefits you can’t afford to miss

Refund fraud is challenging to solve on your own. That’s where technology has an advantage. See what you miss and what you gain from fraud prevention software.

WITHOUT prevention

  • Lose revenue to scams.
  • Allow customers to take advantage of you.
  • Sell used or damaged items unknowingly.
  • Review suspicious transactions manually.
  • Fight an endless battle.
  • Block legitimate customers.

WITH prevention

  • Save merchandise and profits.
  • Promote good relationships with customers.
  • Sell high-quality merchandise.
  • Receive risk evaluations automatically.
  • Stop repeat offenders.
  • Accept more orders from good customers.


Digital fraud prevention that goes beyond typical capabilities

What does Kount offer that other providers can’t? We’re glad you asked! Take a look at what sets us apart.

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Industry-leading technology

We have decades of experience in the world of fraud, so we’ve seen trends come and go. We know that a successful strategy has to constantly evolve. And our technology is up to the challenge. We are always innovating — ensuring our solutions stay one step ahead of fraudsters. 


Guidance from fraud experts

No matter what issues your business is facing, Kount will be there every step of the way. Want to change up your growth strategy but worried about opening the door to more risk? Kount’s fraud experts will guide you through the process — offering recommendations that will maximize your revenue potential.

Prevent chargebacks with prevention alerts, Ethoca and Verifi

In-depth data analysis

Some merchandise may attract fraudsters more than others. But how do you know which items are prone to fraud? Data analysis. And with Kount, you can dive deep into your site data to find patterns and problem items. Then, you can remove those items from your inventory or change the way customers can purchase them.

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Complete chargeback protection

Not all return requests are valid, and you have the right to deny the ones that violate your policies. But that might mean you risk a chargeback. Fortunately, Kount offers a complete chargeback management strategy. So if you do receive an illegitimate chargeback, you can fight back and recover the unfairly sacrificed revenue.


Hear what our clients have to say

"With Kount’s technology and expertise on our side, we feel we can confidently move into new and exciting markets."


Michael McClane


“Kount's support team has been great — as have anyone I've spoken to there. Very professional."


Zach S.

Senior Software Engineer

“I'm really proud to say that we feel very supported. When we have questions or want to dive into things that we don't know, we get solutions, answers, and action.”


Norma Flores

Sr. Customer Care Manager


Frequently asked questions about refund and return fraud

While return and refund fraud are closely related, they differ in goals. 

With return fraud, customers typically abuse return policies. The goal is to return an item that has been used or manipulated. 

On the other hand, refund fraud is about getting goods for free. The goal is to keep the merchandise and get a refund. 

Click here to learn more. 

Yes — return fraud, refund fraud, or return theft are all illegal. It is stealing from a business. However, it can be difficult to prosecute a perpetrator unless the crimes are committed at scale. Essentially, it’s your responsibility as a merchant to find a way to stop the issue and recover losses.

Yes. If you don’t have the right internal systems, it can be difficult to identify return and refund abuse. 

You need data, and you need to be able to pick out patterns of behavior that are indicative of fraud. You can do it yourself, but it will take more time and resources than you likely have. Plus, the margin of error is significant. You don’t want to turn away good customers.

Machine learning-based fraud detection software is the most effective approach.

Learn more about Kount’s machine learning.

There are several things that make Kount special, but our complete strategy is usually the most appealing quality for merchants. 

While we can tailor each solution to your specific needs, our technology is flexible and robust enough to protect against various fraud threats simultaneously. We have prevention strategies for card testing, friendly fraud, gift card fraud, new account opening fraud, account takeover fraud, chargeback fraud, and more. 

Get in touch with us to find out how we can address your business’ specific needs.

Learn more about our ecommerce fraud prevention.


Prevent refund fraud in real time

Thousands of companies from all over the world use Kount for refund fraud and prevention. Will you be next? Sign up for a demo today, and see what it’s like to have confidence in every interaction. 

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Types of return fraud and refund abuse

Complete fraud prevention automation

Shipping scams

Shipping scams typically happen during the return process. Customers will falsely claim the merchandise did not arrive, items arrived damaged, or a small item packaged with other items was not included in the box they received.


Policy abuse

A customer may try to return an item after the deadline has passed or requests a refund that does not comply with your policies. The customer may resort to manipulation tactics, such as threatening to leave a bad review on social media, to get the refund.

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Tampered merchandise

Returning merchandise that has been used or tampered with is a common return scheme. For example, customers may return an electronic item after dismantling it and removing parts that can be resold online. Sometimes, fraudsters attempt to return stolen merchandise (goods purchased with a stolen debit or credit card) to a store for a refund.

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Refund scamming

Refund scams happen when customers purchase items with the intent to get them for free. They may falsely claim the merchandise is damaged so they don’t have to return it. Or they might attempt receipt fraud or price switching (buying an item at one price then switching the price tag with a higher priced item and returning it). 


Unexpected ways to incentivize less returns and attract new customers

According to the National Retail Federation (NRF), in 2022 online purchase returns accounted for $212 billion in lost sales for U.S. retailers. And of those returns, approximately 10.7% were deemed fraudulent.

It begs the question — is there a better way to handle returns? The NRF says there is. And we think their approach is worth considering.

An effective strategy starts with analyzing your data. 

Find out why customers return items in the first place, and work with manufacturers to resolve those issues. As a result, you may be able to reduce future returns and prevent return fraud. 

Next, incentivize customers to make smarter buying decisions. 

Consumers are increasingly becoming more aware of sustainability issues. They care about their impact on the environment and recognize that their buying habits can be a major factor. Remind customers that their choices — such as unnecessary returns — have an impact on the environment. Customers might be more selective about their purchases and be less likely to return the merchandise.

Lastly, consider a new way to recoup losses on returned products. Offer used products on your site at a discounted price. You may attract a new customer base that otherwise might not shop with you. 


Are your refund and return policies clear to the consumer?

If you haven’t reviewed your return and refund policies in a while, it might be a good time to do that — especially if you’re experiencing an unexpected uptick in returns or returnless refunds.

If your policies are straightforward and easy to find, it’s difficult for customers to fight back. 

When evaluating your current policies, consider the following things:

Are policies written clearly?

Speak to your customers in simple, plain language. Think about what you would say to the customer in person. The goal is not to sound formal or intimidating so as to dissuade customers from taking advantage of the policy. Rather, you want to establish trust with your customer so that you can maintain a relationship of respect.

Are expectations easy to follow?

Give step-by-step instructions of the return and refund processes. Customers should know what is expected of them and how you respond to requests. If you only offer store credit instead of cash refunds, let customers know. If there is a time limit on certain items, make sure customers are aware of that when making the purchase. 

Are policies easy to find?

Write a designated policy page and link to it from main pages on your site — including the homepage. Make sure customers can navigate to those policies in 1-2 clicks. You don’t want customers to think you’re trying to hide anything. You can also consider including links to your policies on product description pages, checkout pages, and in order confirmation emails. 

Do you allow order cancellations?

Sometimes a customer purchases an item online by mistake or orders the wrong size and doesn’t realize it until they get an order confirmation email. Make sure your policies include instructions for what to do when an order is incorrect or made mistakenly — as in cases of friendly fraud or purchases made unknowingly by a member of the cardholder’s household.

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Kount offers solutions to protect every aspect of your business

Account Takeover Dectection

Identity verification software

From the moment a user enters your site, Kount is there to help you get to know the person behind the screen. We want to make sure you’re doing business with the right customers — not bots or fraudsters. We offer tools to address all aspects of digital identity verification — like new account fraud prevention and account takeover prevention.

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Payment fraud prevention software

Accepting payments is crucial to the success of your business. That’s why protection matters. We offer layers of payment fraud detection. That includes everything from stopping fraud threats, preventing chargebacks, recovering lost revenue, and improving payment processes to increase order approval rates.

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Regulatory compliance software

Part of running a business includes maintaining compliance with regulatory laws — which can be a challenge and a hassle to keep up with. We want to make that simple for you. That’s why we built-in tools such as global watchlist search, regulatory reporting, and customer due diligence.

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Stop refund fraud today

Tired of losing revenue to refund and return fraud? Let Kount help. Our team of experts can help you design a complete fraud management strategy that addresses any threat your business faces — including refund fraud. Sign up for a demo today to learn more.