Refund fraud could be costing retailers over £5bn

Refund fraud could be costing UK online retailers up to £5.76 billion a year, according to new research from the University of Portsmouth, funded by fraud prevention service, Cifas.

The research found fraudsters have been using these channels to openly share techniques, target retailers, and sell fraudulent refunds as a paid service. Some ‘refund‑as‑a‑service’ vendors were even taking up to 30% of the refund value for a guaranteed outcome.

Most offenders were young males between 14 and 30 years old, with an average age of 19. Many were students or unemployed, with refund fraud frequently linked to other criminal activity, including card fraud, identity fraud, and money laundering.

Some users also showed risky behaviours while online – sharing receipts and personal details about themselves, such as their names and where they lived, often with the belief they were “untouchable” and that retailers and law enforcement would not catch them.

Researchers warn in the report that refund fraud will continue to grow without targeted public awareness – particularly aimed at young people – and stronger collaboration between retailers, law enforcement and the fraud prevention community. There is also an urgent call for an industry‑wide database, like Cifas’ National Fraud Database, that enables retailers to track known offenders and share intelligence more effectively.

Professor Mark Button, Co-Director of the Centre for Cybercrime and Economic Crime at the University of Portsmouth and one of the report’s contributors, said:“Criminals have professionalised refund fraud and are exploiting the opportunity‑rich environment that online retail presents. Weak systems and a perception they are ‘untouchable’ have allowed this issue to scale rapidly.”

Mike Haley, CEO of Cifas, said “Refund fraud is not harmless – it is organised, widespread and costing UK retailers billions. Those losses hit honest customers through higher prices and stricter returns. This research makes clear that we need better data and intelligence‑sharing, stronger deterrence, and far greater education to challenge the belief that this behaviour is acceptable.”