The Most Common Reasons for Returns

Most merchants would rather avoid returns altogether if possible, especially in an era where lenient return policies have become the norm. Most customers now expect businesses to absorb any return shipping or restocking costs, meaning excessive returns can quickly erode margins.

Still, returns have one big upside for merchants: they're not chargebacks. Compared to refunds, chargebacks bring significantly higher costs, operational strain, and long-term risk. Many of the refunds a merchant issues serve to avoid potential chargebacks. That means generous return policies often lead to better finances in addition to better customer service.

Returns don’t happen in a vacuum. They’re typically the result of identifiable breakdowns in the customer experience—issues that, if left unaddressed, can escalate into disputes. In many cases, the root causes behind returns and chargebacks overlap, meaning efforts to reduce one will often mitigate the other. Understanding these common triggers is the first step toward improving satisfaction, reducing friction, and ultimately minimizing both returns and disputes.

1. Why Do Customers Return Their Purchases?
2. Returns and Chargebacks
3. Proactive Strategies to Minimize Returns and Chargebacks

It’s generally smart for merchants to have a generous return and refund policy. When customers know they can come to a business with their problems, return an unwanted purchase, and get their money back, they have little reason to dispute the transaction with their bank instead.

With a return and refund, the merchant only loses out on the cost of the transaction, and may even be able to resell the returned product.

A chargeback, on the other hand, costs the purchase price, the product, the costs of selling it, and the associated fees. The average chargeback actually costs more than double the amount of the original purchase when various fees and hidden costs are taken into account. There's also the ever-present risk that an excessive chargeback ratio will lead to additional fees and penalties from card networks and acquirers.

Another silver lining to returns and refunds is that they have the potential to make the customer feel positively inclined toward the merchant and more likely to shop with them again. Chargebacks, on the other hand, are likely to leave a customer with negative feelings about the merchant, and can lead to bad reviews, negative word of mouth, and the end of the customer relationship.

It’s important to understand why customers make returns, because the same reasons often lead to far more damaging chargebacks. “Friendly fraud” refers to chargebacks that are based on falsified claims, and these often occur because a customer is dissatisfied with their purchase and frustrated with the merchant’s return policy. Preventing that dissatisfaction prevents returns and chargebacks alike.

Analyzing the reasons why customers might be unhappy can shed light on any chargeback problems a business might be having and locate potential areas of improvement for customer service and other business operations.

While it's impossible to get inside the mind of every customer, here are twelve of the most common reasons why customers return their purchases:

The Customer Ordered the Wrong Product or Size

Customers often order the wrong thing. It could be clothes that don’t fit, an accessory that turns out to be incompatible with their device, or a replacement part for the wrong equipment model. While they surely would have benefited from considering their purchase more carefully, it’s understandable that they wouldn’t want to be stuck with a product they can’t use.

When merchants sell products with compatibility concerns, they should make every effort to avoid misunderstandings. Having a complete list of compatible products is one basic step that can be a big help. Many merchants will also look for common misunderstandings in customer service interactions and add a line to the product description explicitly clarifying that the item is incompatible.

For products that come in different sizes, many e-commerce merchants ask customers about the item's size when they leave a review or contact customer service. A chart next to the available sizes then indicates the percentage of customers that said the item ran small, ran large, or was true to the listed size. This can help customers make an informed decision about what size to select before they check out.

The Merchant Shipped the Wrong Product or Size

Sometimes the customer places their order correctly, but the merchant ships the wrong item. In these instances, the merchant has a clear obligation to accept the return and ship the correct item.

The only way to prevent this is to improve employee training and internal procedures to ensure accuracy. Clear labels and color-coded packaging can make it easier for warehouse staff to know what they're sending out.

The Product Was Damaged or Defective

Items sometimes get damaged during shipping, or they leave the warehouse in damaged or defective condition. Once again, the merchant is obligated to issue a refund. The customer clearly has the right to receive an undamaged and functional product or get their money back. To avoid this, inspect items and pack them carefully before shipping.

Frequent reports of products being damaged during shipping may indicate that some items aren't being protected sufficiently. Securely packaging purchases (especially those with multiple items of irregular size or those containing fragile products) can be tricky, so it's important to keep an eye out for signs of recurring issues.

In some cases, frequently damaged products may instead indicate that the shipping service the merchant has partnered with isn't doing a very good job and may need to be replaced.

The Product Arrived Too Late

Some purchases are time sensitive, and if the merchant takes too long to fulfill the order, or if delivery is delayed for some reason, the customer will no longer need it. While some delays are unavoidable, it’s always best to ship orders promptly and use fast, reliable carriers. 

When delays are unavoidable, merchants should always let the customer know immediately and provide them with the ability to track the shipment. Transparency and clear communication provide the best chance of working out amicable solutions and avoiding contentious disputes.

The Customer Experienced Buyer’s Remorse

Sometimes a customer buys something impulsively and sends it back without good reason. This can result from overspending, impulse buys, or second thoughts about the purchase. Tempting as it may be for merchants to protect revenue by insisting on a legitimate justification for returns, such policies often don't serve merchants well.

At the bare minimum, policies like these will lead to customers being dishonest about the reason for the return, skewing valuable customer service data and potentially causing the merchant to dispose of products that could have been resold.

In addition, many customers who find themselves unable to return an item will file a chargeback instead, even if they don't have a legitimate reason for doing so.

The Product Did Not Match the Description

When there is a significant divergence between the way a product is depicted by the merchant and the actual appearance or functionality of the product, customers often feel ripped off, and who can blame them? Issuing banks will often judge this to be a valid reason for a chargeback if the difference is large enough, which means merchants won't always be able to fight such chargebacks and win.

Merchants can avoid this problem by providing accurate and detailed product descriptions and photos on their website and in other marketing materials.

Merchants should be wary of relying on product images provided by the manufacturer, and should verify that these match the actual item. With the rise of AI image generation, it has become increasingly common for product images to be entirely fabricated.

To avoid the costs of staging and photographing a product, some manufacturers will instead rely on generative AI, describing the product and asking for representative images. Some manufacturers even create new products based on AI-generated images, in which case practical considerations can lead to significant differences between the final product and the image that inspired it.

The Product Did Not Meet the Customer’s Expectations

At times, the gulf between expectations and reality is not the merchant’s fault. Sometimes customers bring their own assumptions to the table and anticipate the product doing things that the merchant never promised. Fashion items are also frequently subject to these returns, since a product image can't tell a customer how the item will look on them. Offering a refund in these cases can avoid chargebacks and preserve customer loyalty.

In other instances, the issue arises from how the customer intends to use the product. A tool or device may perform exactly as designed, but fail to deliver the outcome the customer had in mind. For example, a buyer might expect a product to solve a different problem than it was built for, leading to dissatisfaction despite proper functionality. These returns are less about product quality and more about a disconnect between intended and actual use.

Some returns are driven by subjective preferences that simply can’t be standardized across a customer base. A mattress that feels supportive to one customer may feel too firm to another; a fragrance that seems subtle to some may be overpowering to others. These highly individual reactions make returns inevitable in certain categories, regardless of how well the product performs objectively.

The Product Was a Gift

Buying gifts for others can be challenging, and gifts are often given with the disclaimer, “You can return it if you don’t like it!” In many cases, that's exactly what happens. There's no easy way to avoid these returns, since the person returning the item is not the same person who purchased it, and may not even have a preexisting customer relationship with the merchant.

The Customer Found a Better Price Somewhere Else

There’s no better trigger for buyer’s remorse than to see the item you just purchased offered for sale at a much lower price elsewhere. If a customer in this predicament doesn't have the option to return the product, they may be tempted to try asking their bank for a chargeback instead.

One way to avoid losses from being undercut by your competitors is to offer price-matching guarantees. If this isn't feasible, customer service representatives can be instructed to offer partial refunds for the difference in price if a customer wants to return an item for this reason.

The Customer Was Wardrobing

“Wardrobing” is the practice of purchasing an item of clothing with the intention of returning it once it has been used for a specific occasion or event.

Customers who engage in wardrobing are clearly abusing merchants’ return policies, but refusing them may leave you stuck dealing with a friendly fraud chargeback, since a customer who's willing to purchase and return an item with ill intent is probably willing to make false dispute claims as well.

If you suspect a customer of wardrobing, the smartest move may be to accept the return, but block them from making future purchases.

The Return Is Part of a Fraud Scheme

Returns may also be used to launder money from stolen credit cards. The fraudster pays for an item with a stolen card, then returns it for cash. Standard practice for avoiding this is to offer refunds only to the original card or in-store credit for card purchases. Merchants should also use fraud prevention tools to help avoid such purchases from being made in the first place.

Returns and Chargebacks

Returns and chargebacks often happen for the same reasons. The difference is the path the customer chose to take to get their money back.

When merchants are accessible, easy to deal with, and quick to offer refunds when a customer is unhappy, they have a better chance of preventing disputes and avoiding friendly fraud.

No merchant enjoys having to give up revenue, but refunds are always a better alternative to chargebacks. A return and refund policy that puts the customer first can be an important part of any chargeback prevention strategy.

Strategies to Minimize Returns and Chargebacks

Enhance Product Descriptions and Imagery

Utilize Interactive Size Guides

Improve Quality Control and Packaging

Optimize Order Fulfillment and Shipping

Educate Customers on Product Use

Detect and Block Bad Actors

Utilize Fraud Prevention Measures