Retailers are ramping up artificial-intelligence tools to curb a spike in fraudulent returns as post-holiday volumes climb. UPS-owned Happy Returns is piloting an AI system, Return Vision, that flags suspicious patterns before refunds are issued and routes questionable items for human review. The move targets a costly problem: U.S. retailers will process roughly $850 billion in returns this year, with an estimated 9% deemed fraudulent, according to industry data; losses are pegged at $76.5 billion. Happy Returns, which operates about 8,000 box-free drop-off locations, says fewer than 1% of returns are flagged as high risk and about 10% of those prove fraudulent, averting just over $200 per confirmed case. The approach pairs behavioral signals with physical inspections—an answer to lookalike goods and tampered packages—while leaving most customers’ refunds unaffected. Amazon, FedEx and the U.S. Postal Service are pursuing similar tactics as merchants balance convenience with tighter controls.
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