Retailers Face Surge in AI-Generated Return Fraud
Retailers are seeing a rapid rise in return fraud that uses generative AI to produce fake damage photos and doctored receipts. Retail Gazette reports data from digital trust platform Forter showing AI-generated damage claims are the fastest-growing form of return abuse, with 53% of merchants reporting "wardrobing" and 44% of UK businesses saying returns abuse affects them. Retail Gazette also reports some fraud rings offer "returns-as-a-service." PYMNTS documents merchant cases where images contained AI watermarks and cites industry data that U.S. consumers returned nearly $1 trillion in merchandise in 2024, with retailers incurring an estimated $200 billion annually to recover returned goods, per PYMNTS reporting and Riskified analysis. Editorial analysis: this trend raises detection and operational trade-offs for fraud teams and retail operations.
