Retailers across the United States have been receiving post-holiday lumps of coal — finding counterfeits, fake receipts, or badly damaged goods sent back by customers expecting full refunds on top-of-the-line merchandise. 

In some cases, returns on televisions revealed boxes filled with bricks or stolen merchandise inside. 

The National Retail Federation estimated more than $101 billion in merchandise was returned fraudulently in the U.S. in 2023. That’s about 14% of the overall returned goods retailers received last year and more than twice the level in 2020, the NRF said in a recent report. For every $100 in returned merchandise, retailers will lose $13.70 in return fraud. 

“Retailers continue to test and implement new ways to minimize losses from returns, particularly those that are fraudulent, while at the same time optimizing the shopping experience for their customers,” NRF Executive Director of Research Mark Mathews said. “Retailers’ efforts include providing greater detailed descriptions on sizing and fit of products for online purchases and requiring a receipt with returned items. As a whole, the industry is prioritizing efforts to reduce the amount of merchandise returned in stores and online.”

The volume of returns has been eating into profit margins and could put some businesses in the red. 

“We’re headed for a trillion-dollar problem here,” industry expert Tom Enright said. 

Enright told the Wall Street Journal that more and more people have been trying to game the system, hoping a returned shipping label scanned by a postal carrier secures a refund before the retailer can confirm the correct item has been returned. 

The most common type of return fraud is “wardrobing,” which takes place when a customer returns clothing that has been worn, torn, or has stains on it that weren’t there when it was sold, the NRF said. 

More than one-third of shoppers admitted to embellishing or exaggerating the reason for a return to avoid fees or receive a refund, returns technology firm Optoro found in a November survey of more than 1,000 adult consumers. Of those polled, 30% admitted to wardrobing, 43% said they engage in wardrobing a few times a year, and 23% admitted to doing it at least once a month. Forty percent of shoppers aged 18-29 were most likely to “wardrobe” items, the survey found. 

Another common fraud is transferring higher price tags to lower-cost items. 

Amena Ali, chief executive of Optoro, said fraud is “definitely becoming more and more of a concern to retailers,” adding that people are shipping back obvious counterfeits to luxury retailers looking to make a quick buck.

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Retailers have been trying to fight back, requesting shoppers to bring returns to stores where they can be checked out on the spot. The in-store return also allows retailers to track people who may be abusing return policies.

Retailers are also implementing shorter return windows and employee education on how to spot fraudulent returns.