5 types of refund abuser you’ll meet after the peak period sales boom – and how to deal with them

It’s no secret that ecommerce enjoys the busiest period of the year during Q4, with Black Friday, Cyber Weekend, and the holidays coming up. Transaction volumes have been observed to increase by up to 25% at around this time.

When shopping online, consumers find convenient returns and refunds important. And customer loyalty has been shown to be affected by refund policies. According to research, 53% of bad experiences with a merchant result in customers cutting their spend and taking their custom elsewhere. In fact, Qualtrics XM identified this as the number one consumer trend for 2025.

Merchants that sell online are advised to prepare for an onslaught of refund and returns requests during and after the peak period.

But not all refunders have the same motivations, and not all refund requests are legitimate. Which types of refunders are you likely to be approached by following this peak period, and how should you respond to each?

Peak period refund trends – sales, Black Friday, Cyber Monday, and the holidays

Data from our refund abuse product demonstrates that peak period orders have lower returns and exchange rates compared to the rest of the year.

Anecdotally, this could be due to gift shopping, with consumers who receive gifts they don’t like generally being more hesitant to return them than items they have bought for themselves.

However, the rate of merchandise write-offs increases. Over peak periods, including Q4 shopping and sales, orders that have a refund request attached to them are more likely to see items written off.

In this context, write-offs are items that are missing inventory – no longer with the merchant but not received by the customer, or not (able to be) returned by the customer. Depending on the merchant’s internal processes, write-offs can happen for various reasons, including item-not-received, item missing upon arrival, item damaged, item lost on return journey, etc. In other words, items that are missing or lost, and subsequently written off by the merchant.

A rise in write-off rates for orders during the peak period is associated with customer-reported delivery issues, which merchants don't have as much visibility into. Whether those issues are accurately and truthfully reported largely depends on the customer themselves – which means that opportunists and abusers among a merchant’s customer base could attempt to misrepresent the truth.

With higher sales volumes, more write-offs of lost merchandise make some sense, yet it is important to keep on top of these rates and assess whether there are remedial actions to take, such as changing delivery providers, or increasing your use of signed for/recorded delivery.

Focal archetypes: 5+1 types of refunders

To deal with refund abuse post-peak season and post-sales periods, you will want to understand the types of refund requests you might receive. It’s not just a matter of flagging suspicious activity. Signals of trust and legitimate requests are equally valuable in separating the wheat from the chaff.

Although this is not an exhaustive list, and each company’s fraud/abuse is different, we hope the below will help you better understand the different motivators behind shoppers’ actions, as well as the interventions that could help address these cases.

1. Professional fraudsters / cybercriminals

This is the most obvious category of refund fraudster you will come across. A professional fraudster involved in refund abuse will take deliberate action to exploit policies and processes to obtain a refund that is not due – whether that involves a return or not.

For example, they might use a stolen credit card to make a purchase, and then request a refund to a different payment method – such as a gift card, which is not as easy to track or block for merchants.

A professional fraudster’s motivations are obvious enough: profit. Note also that sometimes professional fraudsters will team up with first parties (legitimate card holders) to conduct fraudulent refund schemes. The professional in this case will earn a portion of the refund as payment.

Signals to watch out for

• Acquires products unethically – for example with stolen cards

• Returns without proof of purchase

• Substitutes returned items with lookalikes, items of same weight, or low-value knockoffs

• Might be acting on behalf of a first-party customer as part of a FaaS refunds-as-a-service scheme

• Often is part of a fraud ring and/or multi-accounts once they have found a good target

• Typically makes purchases using a fake name or synthetic persona

How to deal with a professional fraudster filing for a refund

Block them. This could be either at the point of refund, if you have strong evidence that this could only have been them (rather than someone who took over their account). If you have the right refund abuse product in your fraud stack, you can block the customer at the point of ordering. Don't forget to conduct graph network analysis to spot any related, duplicate or linked accounts. Consider blocking those too.

2. System players / policy manipulators

Less straightforward is the case of system manipulators, who take advantage of processes and policies to repeatedly and frequently make claims of issues with their purchase and returns journey.

Their motivators include gaining items, services and funds for free, as well as, possibly, a satisfaction linked to having defrauded a large organization. It’s interesting to note that in our Consumer Fraud Report, Ravelin identified that the majority of consumers are more likely to attempt abuse and fraud against larger companies, as well as “those who can afford the losses” – so take heed, large merchants.

Signals to watch out for

• Opportunist who bends T&Cs and returns policies

• Can frequently claim parcels went missing

• Frequently requests compensation for low quality, bad service, etc.

• Claims no-return refunds – trying to avoid returning refunded items

• High return rates and high write-off rates

• May engage in multi-accounting

• Take advantage of errors and mistakes such as delayed delivery, additional items sent, higher value items received

• Normally buys using their real name

How to deal with a policy manipulator

Gather intelligence on their behavior and consider nudging rather than banning them. Use a refund abuse tool that provides a real-time, clear view of how trustworthy a first-party is – including their purchase history, write-offs and goodwill claims.

Determine at what point they become suspicious and when they can be classed as potentially fraudulent. Consider no longer offering goodwill to those customers whose history is suspicious.

3. Serial returners / net loss customers

A serial returner is not necessarily a fraudster or abuser. However, serial returners are important to detect because retailers would prefer to discourage such repetitive behavior as it can be expensive. Plus, some of them might actually be breaking Terms and Conditions or be outright fraudulent.

We define “net loss customers” as customers with a kept value that is less than the total written off revenue. Kept value here means the difference between the ordered and refunded amounts. Depending on a merchant's margins, a customer can become part of this category even if there are no write-offs – because of the high costs associated with reocurring return fees, shipping fees, warehouse processing, and so on.

Their motivations include the excitement of shopping, including unboxing, testing and trying on items. Sometimes, serial returners are social media creators looking to feature a product in their content before returning it.

Signals to watch out for

• Has high purchase rates and high return rates

• Is likely to purchase multiple items and sizes per order

• Places large orders frequently

• Purchases the same item in a short period repeatedly

• Orders items they intend to return just to take advantage of volume discounts, free shipping and offers

• Normally buys using their real name

How to stop a serial returner

Remedial measures can vary and often require coordination across several different teams. On your end, ensure your warehouse team inspects returned items sufficiently. You might want to nudge the customer using what they care about – for example, by pointing out returns’ impact on the environment.

Consider adapting how you market to these customers, including excluding them from certain promotions. Might you want to stop offering free returns, or limiting them?

Finally, think about delaying refunds in accordance with T&Cs and remind them that you reserve the right to revisit and investigate their past behavior.

4. Wardrobers

The wardrober buys items with the express purpose to wear or use them briefly and then return them, claiming they were unused.

This behavior is different to those consumers who might buy the same item in more than one size in order to keep the one that fits best, or someone who genuinely is unsure about whether an item would suit them.

Although wardrobers can be considered part of the wider “serial returner” phenomenon we’ve outlined above, they are specific to fashion and are understood to have different motivations. Many wardrobers normalize their behavior and don’t see anything wrong with it, even believing it to be in line with the terms of their purchase. On the other hand, serial returners tend to be aware they are violating T&Cs.

Wardrobers’ motivations include appearing to be fashionable, looking successful, having brand new items to use for personal or work events, and showing off on social media.

Signals to watch out for

• Expensive branded clothing and accessories are favored over cheaper options

• Returned clothing looks worn and shows signs of use

• Might repeatedly order and return the same product in the same size

• Mainly focused on clothes but can also be after accessories, electronics

• Strong social media presence

• Normally buys using their real name

How to stop a wardrober

In addition to using robust fraud protection to find them, your main line of defense against wardrobers is delayed refunds. You reserve the right to delay refunds, and this should be consistent in your messaging across your shopping channels. Remind potential wardrobers situations when delays or even rejections of a refund request may occur, as a deterrent.

Another approach to consider is to subtly let them know you’re on to them: Making them aware you have spotted their high refund rate can be a deterrent in itself, and this can be as simple as a carefully-worded email.

5. Resellers

A reseller is, as it says on the tin, someone looking to buy merchandise in bulk in the hopes of reselling it for a profit. They’re often after limited edition items, such as shoes and sneakers, as well as electronics, though they might also buy other items when they are available at a significantly lower price.

Why would a reseller file a refund claim? When they fail to resell their item, they are likely to attempt a return of these items, often in bulk.

A reseller could be reselling legitimately or illegitimately. As one would expect, their motivation is profit – often this is a secondary income for them. However, in most cases you will want to flag who your reseller refunders are, even if you decide not to take firm action against them.

Signals to watch out for

• Returns unsold bulk items from small orders

• Sometimes fails to collect orders, resulting in stockpile returns

• Often returns multiples of the same type of item, but not all of their order of the same item

• Often a net loss customer when it comes to lifetime value

• Can be buying using their real identity or not

How to stop a reseller requesting refunds

Once they have been identified by your fraud detection model as a business rather than a retail consumer, it is time to ask them to refer to your business-to-business sales department, if you have one.

Consider updating your T&Cs, as well, to clearly delineate what constitutes a legitimate consumer purchase and how you define purchases for business use. This way, you will be able to reject any refunds you choose to without problems.

6. Genuine returners / good customers

Despite the rise in refund abuse as well as chargebacks, let’s not forget that genuine customers also return items for a refund.

As a way to know the difference between regular shoppers and refund abusers, it is a good idea to have a clear understanding of the legitimate reasons why your customers might request a refund. Depending on your niche, these can include faulty items, issues with delivery, unsatisfactory quality, simply changing their minds, items not fit for purpose, and so on.

However, there are certain characteristics that genuine returners are likely to share.

Signals to watch out for

• Order pattern varies but refunds are not frequently requested (though this fluctuates according to product category)

• Overall lifetime value skews positive

• Buys using their real name

• This category includes one-time shoppers lured to shop due to promos and peak period marketing for whom refund request decisions have to be made without any customer history

How to stop a genuine returner

You do not want to stop genuine first-party cardholders from filing returns claims. This is by no means refund abuse. The key is to employ tech that can identify both good refunders and bad refunders.

However, if you come to realize that your company receives a significant volume of genuine, factual refund requests, it’s still worth questioning why.

Perhaps your product information pages are inaccurate or incomplete? Could one of your suppliers be providing sub-par products? Refunds cost companies a lot – even when legitimate – so explore different avenues to reduce them overall, rather than only focusing on fraudulent refunds.

How to stop refund abusers without alienating good customers

Not all refund abusers are the same, as we saw above. And depending on which category they fall into, the ways to deal with them vary.

Identifying the true motivation behind a refund request can seem impossible without access to the right data. It helps to see the bigger picture.

At Ravelin, we build sophisticated technology that helps companies not just identify fraud and abuse but also confidently know which customers are genuine, so they can deliver a smooth, frictionless shopping and refunds experience – boosting brand reputation and earning more loyal customers.

In more general terms, here are some steps you can take to reduce fraudulent refunds:

• Review returns from new customers, particularly those with low order volumes and recently created accounts shopping for high-value items.

• Identify customer traits by analyzing your historical patterns and better understand how your normal, legitimate customers behave – not just fraudsters.

• Consider delaying refunds Evaluate the possibility of delaying or denying refunds for high-value items from customers with limited purchase history during peak periods (from November to end of January), also giving your teams ample time to inspect the returned items before awarding the funds.

• Look at the customer’s LTV: Even when they are not fraudsters, net loss customers are best identified so your customer support team can take this into account when making decisions.

• Use machine learning: Use granular ML insights to detect patterns in high-risk behavior and better understand whether a request is legitimate or not

Are seasonal fraud rules worth considering?

Any existing rules you’ve set up to address your policies are likely set up for BAU – business as usual. But what about Black Friday? Or Cyber Monday? Last minute Christmas shopping? Or any planned promotion or any other festive season?

Your rules are more likely to get triggered at these times due to the sheer increase in the number of transactions. So, rule performance will be affected. You are thus more likely to accidentally block good customers – in other words, to experience false declines.

If you leave the block rules as they are, you’re risking a spike in prevented transactions. More customers will be blocked from shopping and you might lose out on revenue.

To avoid this scenario, identify rules that should be temporarily paused or relaxed during the sales period – or introduce new fraud rules that take into consideration these seasonal shifts in how the average consumer shops.

Start with the changes in customer behavior that you have observed. For example,

• Order value might increase, so we want rules around that

• Order velocity might increase, so let’s have rules around that

From there, use your fraud prevention platform’s built-in tools to estimate what impact the new rule would have on historic orders – ideally, from a similar period or promotion in previous years. Don’t forget to also fine-tune and adapt as you go.

Bringing it all together

Depending on a merchant's KPIs for a given peak period or sales season, policies might be loosened or tightened around that time. There is no blanket one-size-fits-all-merchants answer to what to do.

However, we can confidently say this:

• Using automation, including AI, for fraud detection, puts you in the position to better handle larger volumes of payments, as well as identify trends in refund requests.

• Taking the time to better understand the types of refund requests you receive, complete with customers’ motivation, can make or break your refunds policy.

• Rules have their place in fraud prevention too – being especially useful for quick interventions and seasonal adjustments to your refunds policy or fraud strategy.

• By thinking outside the box and making reducing refund abuse a cross-team battle, your company can introduce refund abuse deterrents at different touchpoints – from marketing communications to your online shop and to customer service.

Ravelin can help curb your refund abuse problem and deliver a stellar experience to your genuine customers.
Book a call to find out how.

Further reading

• Ravelin solution overview: Refund Abuse

• Ravelin for developers: Refund abuse

• Are merchants facing a criminal customer crisis?

• Refund abuse: Why is it on the rise and how do we stop it?

• How much are serial returners costing your electronics business?

• New Ravelin survey: Tracking the rise of friendly fraud – the dark side of online shopping

• RavCon merchant panel: Out of control? Refund abuse trends & solutions