What is Wardrobing? Concerning Fraud Trends

For online businesses, wardrobing has become a serious threat. For any online business ranging from e-commerce giants to small Shopify stores and home-based sellers on platforms like Amazon, the objective is to facilitate profitable growth while minimizing service costs. The global market access provided by online sales, combined with the lower overheads compared to physical stores, forms a solid business foundation.

However, the rapid growth of e-commerce, especially after the pandemic, has led to an increased risk of returns fraud. While returns fraud also happens in physical stores, the anonymity of online returns often makes consumers feel more justified in their wrong actions, absolving themselves of any guilt. Online customers buy a product, use it once or twice, and then return it, claiming a refund. This practice of wardrobing has seen a substantial increase in recent years.

This article will discuss the complexities of wardrobing and its impact on online retailers. Continue reading to discover various strategies for shielding your business from its repercussions.

What is Wardrobing?

Wardrobing, also known as “wear and return,” refers to a deceptive practice where consumers buy products, use them briefly, and then return them for a full refund. This practice is akin to online shoplifting, enabling customers to enjoy products temporarily without any cost, facilitated by policies offering free shipping and returns. Approximately 13% of consumers admit to engaging in this prevalent type of return fraud. And it’s estimated that out of the roughly $212 billion in returned online purchases, approximately $22.8 billion, or 10.7%, are likely fraudulent.

Source: NRF

Wardrobeing is a form of return fraud in which customers temporarily use an item without cost by exploiting return policies. For instance, a customer might purchase an outfit for a special occasion, wear it with the tags concealed, and then return it soon after for a full refund.

Although wardrobing may appear harmless, it is technically illegal as it constitutes return fraud. However, the challenge lies in enforcing this, as there are minimal legal repercussions, and it is often hard to prove that an item was worn just once.

 

Who Participates in Wardrobing and What Motivates Them?

Customers might resort to wardrobing for several reasons:

• Economic Challenges

In times of financial hardship, the desire to keep a fresh and ever-changing wardrobe can be financially impractical for many. The economic pressures, coupled with the high costs of constantly updating one’s closet, often lead to increased incidents of wardrobing. People might wear items once for an occasion and return them because they simply cannot afford to keep them.

• Social Media Influences

The pressure to post unique and fashionable outfits daily, known as #OOTD (outfit of the day), significantly influences the wardrobing trend. Influencers often wear clothes to photograph them for their social media accounts and then return these items. This “snap-and-send-back” behavior is driven by the need to appear continually trendy and avoid outfit repetition.

• Special Occasions

Events such as weddings, proms, and interviews often lead individuals to engage in wardrobing. The societal expectation to wear something new or unique for one-off events drives many to return items after a single use. This behavior is partly due to the social stigma against outfit repetition at significant events, where appearing fashionable is highly valued.

• The Illusion of Harmless Fraud

Some consumers view wardrobing as a ‘friendly’ fraud—a victimless crime where the only action is returning the item for a refund, believing that businesses can easily absorb the cost. This perception can encourage the thrill of committing what they see as a harmless act, reinforcing the behavior as acceptable.

• Buyer’s Remorse Exacerbated by Social Media

When purchases don’t meet expectations, particularly after being showcased on social media, the disappointment can lead to buyer’s remorse. If the social feedback isn’t as positive as anticipated, consumers may feel justified in returning the item. By carefully reattaching tags and hiding signs of wear, they engage in wardrobing fraud, often rationalizing it due to their dissatisfaction.

• Perceived Social Pressures

The portrayal of an ideal lifestyle on social media, along with the culture of never wearing the same outfit twice, pushes many towards wardrobing. Individuals who can’t afford an unlimited wardrobe but want to keep up with fashion bloggers find themselves ‘borrowing’ items from stores. This pressure is part of a broader societal push towards maintaining a certain image, regardless of one’s financial reality.

• Thrill of the Act

Some people find the idea of wardrobing appealing because it gives them the chance to deceive others. They enjoy the excitement of returning used items without being detected, which they see as a minor and clever offense. This behavior is driven by the challenge of circumventing the system and the satisfaction that comes from doing so without any immediate consequences.

This practice is facilitated when tags are attached to the item with easily removable methods like safety pins or knotted ribbons. This allows the customers to reattach the tags without any signs of tampering, making it difficult for the retailer to detect any misuse.

Despite the many reasons behind it, wardrobing is illegal, and retailers can take various measures to prevent eCommerce wardrobing return fraud.

The Impact of Wardrobing on Business

Wardrobing might seem like a victimless crime to some shoppers, allowing them to recoup their cash while the seller gets the merchandise back. However, this view underestimates the significant negative effects it has on online retailers, including the costs incurred from return fraud.

• Loss of Customer Trust

Consider an honest customer who expects a brand-new item but receives something previously worn. Naturally, they’ll be disappointed and might lose trust in the retailer, potentially leading to negative reviews and a loss of loyalty. Dissatisfied customers are often vocal, sharing their poor experiences widely, which could damage the retailer’s reputation and erode its customer base.

• Higher Operational Costs

Online retailers may have to employ more staff or spend more time on training for rigorous inspections to determine if returned items have been worn. This process increases labor costs significantly. Additionally, resources must be allocated to inspect returned items to decide if they can be resold at full price or if they need to be discounted, discarded, or liquidated.

• Financial Losses

The financial repercussions for e-commerce businesses facing return fraud are considerable. These include lost revenue from returns, used inventory, higher costs due to processing fees and increased labor, reduced profits from necessary markdowns, and the need for extra capital to replace goods and add more resources. For example, returning a $50 sweater costs approximately $33, which is 66% of its price, underscoring the severity of fraudulent returns, especially for small and startup e-commerce businesses.

• Challenges in Reverse Logistics

Managing returns and restocking poses significant logistical challenges. Identifying a used item is just the start; it cannot be resold as new and must be handled differently, often leading to stock shortages for genuine customers.

• Environmental Impact

Wardrobing also contradicts the growing consumer demand for sustainability. In the US, it is estimated that about 9.6 billion pounds of returned merchandise end up in landfills each year. While customers increasingly seek sustainable options, wardrobing’s environmental toll starkly contrasts with these values, complicating efforts to maintain eco-friendly practices.

Spotting Wardrobing Red Flags

To effectively tackle wardrobing, retailers need to spot its signs proactively. Key indicators include damaged or missing tags and visible signs of wear, which signal potential wardrobing. Recognizing these red flags allows retailers to take steps to mitigate the negative impacts on their business.

Although policies are in place, the retailer and their staff are responsible for identifying and addressing wardrobing. Some key indicators of wardrobing to look out for include frequent or consecutive returns by the same customer, items that show signs of wear, such as noticeable odors or changes in texture and appearance, and items with missing tags or tags that do not match the original in type or color.

Trusting your instincts is important: if a return seems suspicious, there’s likely a valid reason. Clear communication of return policies and consistently applying them is crucial in preventing abuse, regardless of customer objections. Here are some things to remember:

1. Thorough Inspection of Returns:

A detailed inspection of returned merchandise is critical for identifying potential wardrobing. Retailers should rigorously adhere to their return policies and meticulously check each returned item to assess if it has been worn or used. This diligence helps reduce wardrobing incidents and ensures a reliable customer relationship.

2. Damaged or Missing Tags

Damaged or missing tags are strong indicators of wardrobing. Retailers should carefully inspect returned items for any tampering signs, such as damaged tags or tags that have been removed and reattached. It’s crucial that all tags are intact and in their original condition to prevent wardrobing.

3. Signs of Wear

Retailers must also look for subtle signs of use, which could indicate wardrobing. These signs include:

• Wrinkling
• Spotting
• Staining
• Soiling

Spotting these subtle signs is vital for retailers to identify wardrobing attempts and to take necessary actions to combat this fraudulent practice, thereby protecting their business from financial and reputational harm.

Strategies to Prevent Wardrobing in Your Business

There are several effective measures you can implement to minimize the incidence of wardrobing in your business.

1. Establish a Robust Return Policy

Creating a clear return policy is essential, as it allows you to set specific terms that help mitigate the risks of wardrobing. For instance, you might shorten the return window to 30 days, which is standard among e-commerce retailers. This reduces the likelihood of out-of-season returns. Additionally, stipulating that items must be returned in unworn condition can provide grounds to deny returns showing clear signs of wear despite potential attempts by customers to hide tags. Here are some things to remember:

• Maintain a straightforward and easily understandable policy by using plain language.
• Designate personalized products as non-returnable, except when they are defective, to minimize returns and enhance customer satisfaction.
• For online sales, provide a prepaid return label and explicit instructions for returning products.
• Offer store credit as a more flexible option for accepting returns of opened items, which typically would not be eligible for a full refund.
• Provide detailed guidance on return processes, including packaging requirements, shipping details, and necessary documentation.
• Establish a clear return period, which could vary from one week to a year or more.

2. Adapt Your Approach Based on Business Impact

Your strategy should be proportionate to the impact wardrobing has on your business. If wardrobing is not a significant issue, investing heavily in preventative measures may not be cost-effective. However, be prepared to adjust your tactics as your business scales or as you notice an increase in wardrobing activities.

3. Utilize Anti-Wardrobing Tags

Consider using anti-wardrobing tags, which are designed to be difficult to disguise or replace. Options like large tags, security ribbons, and Shark Tags, which are visible and irreplaceable once removed, can deter wardrobing by making it harder to wear items without detection.

4. Blacklist Repeat Offenders

To further reduce wardrobing, consider blocking the accounts of customers who frequently engage in this type of return fraud. You can manually review customer records for unusual return patterns or use AI-driven tools to automatically flag potential wardrobes. Be aware that determined customers might circumvent this measure by creating new accounts from different IP addresses.

5. Incorporate Thorough Inspection Processes

Efficiency is vital in processing returns, but it’s important not to compromise the thoroughness of inspections for speed. Ensure your reverse logistics workflow includes detailed checks for signs of wardrobing, such as:

• Damaged or reattached tags
• Stains from deodorant, perfume, or makeup inside garments
• Small debris in shoe treads

Conclusion

Wardrobing poses significant challenges for online retailers, fueled by factors ranging from economic constraints to societal pressures and the allure of perceived victimless fraud. As businesses strive to navigate these complexities, it’s crucial to recognize the profound impact of wardrobing, not just on financial losses but also on customer trust and environmental sustainability.

By implementing proactive measures such as robust return policies, anti-wardrobing tags, and thorough inspection processes, retailers can safeguard their operations against the detrimental effects of this deceptive practice. Plus, by understanding the motivations behind wardrobing and addressing them with tailored strategies, businesses can cultivate a culture of transparency and accountability, reinforcing integrity in online transactions. Ultimately, combating wardrobing requires a multifaceted approach that balances customer satisfaction with prudent risk management, ensuring sustainable growth in the dynamic landscape of e-commerce.

Frequently Asked Questions