A processing company for boxless returns, Happy Returns, has rolled out a new artificial intelligence tool that helps detect return fraud.
According to Reuters, UPS-owned Happy Returns' new AI tool, Return Vision, works by scanning photos of returned items. It operates in tandem with human auditors to analyze return contents and flag suspicious packages.
The tool aims to catch fraudulent returns, such as when someone sends back a knockoff item or a different product. It's being tested with brands such as Everlane, Revolve, and Under Armour.
One study by Happy Returns and the National Retail Federation found that roughly 9% of returns this year were fraudulent, totaling approximately $76 billion in lost sales.
Jim Green, the director of logistics and fulfillment at Everlane, told Reuters: "Not getting back the real items is a double whammy. It's hundreds of thousands of dollars for us alone per year."
Fraudulent returns have a dangerous impact on the economy and the planet. They hurt company profits, causing brands to raise prices to offset this shrinkage.
Additionally, the returns increase landfill waste because they can't be resold and are simply thrown away. Repackaging and shipment costs also create waste and air pollution.
While the economic and environmental impacts of fraudulent returns are concerning, AI tools like Return Vision have their own problems. AI data centers require vast amounts of water and energy to operate, depleting resources and increasing pollution.
Reuters reported that about 0.1% of all returns processed through the tool are confirmed as fraudulent, averaging about $261 per return. This may not be enough to offset the impact of the AI operations. As fraudsters become more savvy and sneaky, tools like this may help reduce waste, pollution, and lost revenue.
Happy Returns Chief Operating Officer Juan Hernandez-Campos told Reuters: "Bad actors adapt. We need to adapt, too."
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Return fraud is a problem. However, the return culture itself is draining resources and revenue. According to a Narvar report via Earth911, the average return costs a business $25-$35 because of shipping, handling, restocking, and reselling. Forbes reported that 2.6 million tons of online returns wind up in landfills because discarding them is cheaper than reselling.
It's important to shop thoughtfully. Shopping in person, carefully selecting items, and avoiding overconsumption reduce waste from returns, creating a cleaner commerce world.
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