AI-Powered Solution to Combat Retail Return Fraud

UPS-owned Happy Returns is piloting an AI tool called Return Vision to combat retail return fraud in the U.S., a $76.5 billion issue. This technology flags suspicious packages for human review, aiming to save costs for retailers like Everlane and improve the efficiency of returns processing.

Retail return fraud has become a significant challenge for U.S. retailers, costing the industry a staggering $76.5 billion. In response, Happy Returns, a reverse logistics company owned by UPS, is testing an innovative AI tool to tackle this problem during the holiday season.

The AI tool, named Return Vision, is being piloted with major apparel retailers like Everlane, Revolve, and Under Armour. It detects fraudulent returns by flagging suspicious packages and analyzing their contents, with human auditors making the final judgment. This initiative aims to curb return fraud, where customers ship back items of lesser value to receive a refund.

Retailers, burdened by the costs of shipping and processing returns, welcome the AI solution. Everlane reports that nearly 85% of its U.S. online returns are processed through Happy Returns. As fraudsters become more sophisticated, the tool's importance grows, with Happy Returns adapting to combat evolving tactics in retail fraud.