‘Returnless Refunds’ Help Retailers Keep Prices Low and Customers Happy

A “returnless refund” strategy is being used by some retailers to cut shipping costs and processing fees as well as keep customers happy. When a customer wants a refund for an unwanted item, many large retailers have found it makes sense economically to just give the money back and let the customer keep the product.

A returnless refund is usually an unadvertised policy used by large retailers like Amazon and Walmart to simplify the process for both the consumer and customer service agents. Retailers often deem that low-cost products or large items with expensive shipping fees are just not worth the trouble of getting back.

Reportedly, Amazon has had the strategy in place for years. Earlier this year, some Amazon third-party sellers were given the option to offer returnless refunds for items less than $75.

“We offer this on a small number of returns as a convenience and to help keep prices low for customers,” Amazon Spokesperson Maria Boschetti told CBS last December.

Walmart has a similar program for merchants on its platform. Sellers can decide if they want to participate and determine the price limits.

Discount online retailers SHEIN and Temu purportedly offer returnless refunds on occasion. Other retailers such as Chewy, Target, and Wayfair also seemingly have such a policy.

Who Is Eligible for Returnless Refunds?

In the retail industry, it’s not exactly a secret that returnless refunds happen. Yet, to protect against return fraud, companies usually don’t disclose the exact conditions when a returnless refund is issued.

To determine eligibility for a returnless refund, it’s likely retailers use a proprietary algorithm that evaluates multiple factors. The system takes a mathematical guess as to whether a customer will request a refund based on previous purchase habits as well as return history. It also looks at the potential processing and shipping costs of getting an item back.

According to industry experts, many retailers also analyze a customer’s lifetime value. Long-term, profitable customers may get a random returnless refund as an unexpected benefit or unofficial loyalty perk.

However, fraud remains a looming issue. In 2023, retailers lost over $100 billion due to dishonest customers returning items, per the National Retail Federation.

Customers returned an estimated $743 billion in goods last year. When compared to the total sales, that figure represents a 14.5% return rate, up from 10.6% in 2020.