Return fraud is eating into ecommerce margins in 2025. From wardrobing and fake returns to serial refund abuse, merchants are losing money, time, and customer trust. Stopping return fraud requires a two-part strategy:

• Reduce fraud within the return process
• Prevent fraud before a return is even initiated

In this guide, we’ll break down how platforms like Frate and Yofi help ecommerce brands address both.

Why Return Fraud Is a Growing Problem in 2025

Return abuse isn’t rare anymore, it’s widespread. According to recent estimates:

• Return fraud costs ecommerce brands over $25 billion annually
• 8–10% of returns are flagged as high-risk or abusive
• Common tactics include:
  • Wardrobing (using items and returning them)
  • Bricking (damaging or disabling items before return)
  • Cross-retailer return fraud
  • Fake receipt uploads
  • Multi-account return abuse

To fight back, brands need automation, not just policy.

Two Ways to Stop Return Fraud

Return fraud can be addressed at two levels:

1. Returns Portal Fraud Reduction (Frate)

Frate prevents fraud from within the return flow by verifying item legitimacy and enforcing smart policies.

Frate’s Fraud Prevention Features:

• AI-Powered Image Verification: Automatically checks customer-uploaded return images to detect swapped or damaged items.
• Smart Risk Scoring: Monitors return frequency, product value, and customer behavior to identify suspicious activity.
• Tiered Return Policies: Customize refund rules by SKU, return reason, customer segment, or fraud score.
• Automated Return Rules: Block high-risk requests, require photo proof, or trigger manual review without human oversight.
• Fraud Analytics Dashboard: Track fraud trends across products, geographies, and return types in real time.

Frate protects margins without adding friction for trusted shoppers.

2. Identity-Level Fraud Mitigation (Yofi)

Yofi prevents fraud before it hits your returns portal by analyzing identity and trust signals.

Yofi Detects:

• Multi-account abuse: Flags when a single user is operating under multiple emails, devices, or addresses.
• Synthetic and risky identities: Uses behavioral, network, and device data to score customer trustworthiness.
• High-risk behaviors: Detects users using VPNs, anonymizers, or abnormal browsing patterns.
• Trust signals for real-time decisions: Assigns each shopper a trust score used to adjust policies dynamically.

With Yofi, you stop return fraud at the source, before a return is even initiated.

Frate + Yofi: End-to-End Return Fraud Protection

Frate and Yofi integrate seamlessly to protect your business across the entire post-purchase journey.

How It Works:

1. Yofi assesses shopper trust: High-risk customers are flagged before they access your returns flow.
2. Frate adjusts rules in real time: Based on Yofi’s trust signals, Frate enforces stricter policies, like requiring photo evidence or blocking a refund.
3. Trusted customers get a smooth experience: Honest shoppers enjoy frictionless returns and instant exchanges.

Combined Benefits:

• Prevent refund fraud and abuse before it starts
• Reduce manual return review and operations overhead
• Protect margin without hurting the customer experience
• Create a dynamic return policy that adapts in real time

The Bottom Line

Return fraud is no longer a minor issue—it’s a strategic threat. In 2025, ecommerce brands need a layered solution:

• Use Frate to stop fraud within the return portal
• Use Yofi to prevent abuse at the identity level

Together, they give you full-stack protection, from who’s returning to what’s being returned.