Major retailers tighten return policies ahead of holiday season

With holiday shopping ramping up, major retailers like REI, Target and Amazon are revising return policies to combat fraud.

REI confirmed to ABC News on Wednesday that a small fraction of frequent returners will be banned from any exchanges or returns.

"We pride ourselves on having a generous returns policy," a statement from the outdoor retailer read. "In the interest of preserving this benefit for as many of our members as possible, we recently updated our policy to provide an exception for members that have abused it in the past."

The statement continued, "We've tried to curb this behavior by some members over the past several years with targeted warnings and probationary periods. Unfortunately, these tactics have not proven effective."

The new return policy exception affects less than 0.02% of members who show a pattern of policy abuse, with an average 79% return rate and $1400, in used returns annually, the statement added.

The update from REI comes on the heels of Target reserving the right to refuse refunds suspected of fraud recently, and Amazon adding processing fees for high-return items in June.

Speaking to "Good Morning America" in an interview that aired on Thursday, retail analyst and financial expert Hitha Herzog said return fraud has cost retailers billions of dollars, prompting them to take the action.

"When customers buy a product and return it, this tacks on more money to the product and it actually ends up costing the retailer more money per product sold," she explained. "Retailers want to mitigate that cost. Therefore, they are now turning to the customer to cover that cost."

The National Retail Federation estimates over $100 billion lost to return scams in 2023 alone. Common tactics include "wardrobing" (returning used items), fake receipts for stolen goods and switching high-value items with knockoffs.

With holiday shopping underway, consumers depend on flexible return policies to purchase gifts with confidence.

However, as return fraud increases, retailers are setting stricter rules, giving them the option to reject suspicious returns. This makes it more important than ever for shoppers to understand each store's return policy to avoid surprises.

"Retailers don't want to lose any more revenue than they have to, especially going into the holiday season," Herzog added. "Customers shouldn't be concerned, but they should be diligent about what they are buying and what the return policy is."

ABC News' Becky Worley notes that while these policy changes may seem targeted at big corporations, the impact of return fraud affects all consumers.

"The billions and dollars of loss they're experiencing because of this fraud is ultimately passed down to you and me, the consumers, so maybe this helps keep our costs a little lower," she said.

As Veteran's Day approaches, retailers like Bed Bath & Beyond, Dell and Target are offering discounts, especially for active and retired military personnel, Worley said, adding that sales are also starting for the general public, though they may not be as big as Black Friday discounts.

"But if you're trying to spread your purchases across multiple paychecks or you need something right now it's worth looking at stores that are pushing these holiday sales earlier and earlier and they're all blending together," Worley said.