Refund fraud could be costing UK retailers over £5 billion a year, new research finds

• Online returns abuse driven by young offenders and organised ‘refund‑as‑a‑service’ economy
• Criminals see themselves as “untouchable” online
• Urgent call for industry‑wide data and intelligence‑sharing retail database

Refund fraud could be costing UK online retailers up to £5.76 billion a year, according to new research from the University of Portsmouth, funded by the UK’s leading fraud prevention service, Cifas.

The Mapping the Online Economy of Refund Fraud report – conducted with colleagues from the University of Bristol, University of Surrey and Queensland University of Technology – launches today (21 May) and analyses nearly 500,000 posts across cybercrime forums, Telegram and Discord. The research found fraudsters have been using these channels to openly share techniques, target retailers and sell fraudulent refunds as a paid service. Some ‘refund‑as‑a‑service’ vendors were even taking up to 30% of the refund value for a guaranteed outcome.

Most offenders were young males between 14-30-years-old, with an average age of 19. Many were students or unemployed with refund fraud frequently linked to other criminal activity including card fraud, identity fraud, and money laundering.

Some users also showed risky behaviours while online – sharing receipts and personal details about themselves such as their names and where they lived, often with the belief they were “untouchable” and that retailers and law enforcement would not catch them.

The most common refund fraud methods, according to the research, include:

• Claiming items did not arrive
• Reporting partial or empty boxes
• Using fake tracking IDs to simulate returns
• Returning substitute or counterfeit goods
• Wardrobing – where items are worn and returned
• Abusing food delivery refunds

Researchers warn in the report that refund fraud will continue to grow without targeted public awareness – particularly aimed at young people – and stronger collaboration between retailers, law enforcement and the fraud prevention community. There is also an urgent call for an industry‑wide database, like Cifas’ National Fraud Database, that enables retailers to track known offenders and share intelligence more effectively.

Professor Mark Button, Co-Director of the Centre for Cybercrime and Economic Crime at the University of Portsmouth and one of the report’s contributors, said: “Criminals have professionalised refund fraud and are exploiting the opportunity‑rich environment that online retail presents. Weak systems and a perception they are ‘untouchable’ have allowed this issue to scale rapidly.”

Mike Haley, CEO of Cifas, added: “Refund fraud is not harmless – it is organised, widespread and costing UK retailers billions. Those losses hit honest customers through higher prices and stricter returns. This research makes clear that we need better data and intelligence‑sharing, stronger deterrence, and far greater education to challenge the belief that this behaviour is acceptable.”

Download the Mapping the Online Economy of Refund Fraud report today.

ENDS

Notes to Editors

For more information, please contact Hayley Paterson, Cifas Press and PR Manager, by emailing: press@cifas.org.uk

About Cifas

Cifas is the UK’s leading not-for-profit fraud prevention service with nearly 800 members from across key economic sectors including banking, retail, insurance, and telecoms. Cifas protects businesses and individuals from fraud through the sharing of data and intelligence sharing between the private, public and third sectors. Website | LinkedIn | X

In addition to providing products and services which help businesses prevent more than £2.1bn in fraud losses each year, Cifas delivers specialist training through its Cifas Fraud and Cyber Academy and Digital Learning programme.

About University of Portsmouth

The University of Portsmouth is a modern, research-active institution based on the south coast of England, known for its strengths in applied research and professional education. It has established a strong international reputation across a range of disciplines, including criminology, law, and business. The Centre for Cybercrime and Economic Crime is one of the specialist research centres it runs and is a global leader in conducting research and the provision of education related to economic crime and cybercrime.

Contact us at press@cifas.org.uk