The UK’s 2021 Serial Refunder Report

Our last Serial Refunder Report for 2020 illustrated the shift in consumer behaviour as a result of the coronavirus pandemic, which undoubtedly changed consumer buying habits. One of the most prominent changes last year was the shift from cash to contactless payments, as more customers were reluctant to handle cash when they could pay using a card machine with just a tap. 

To understand whether consumer behaviour has evolved further since the pandemic, and altered the UKs refunding habits, we have updated the study for 2021. In order to investigate consumer behavioural shifts, we analysed anonymised transactions on over 54,000 Paymentsense card machines across 118 locations. The results have discovered the areas and industries with the highest value of returned items from October 2020 to September 2021. 

So in 2021, are UK customers shying away from serial refunding or, has the increase in online shopping increased the number of returns being made? This is what we found…

 

Online returns alone cost UK retailers an estimated £5.2 billion a year on average

 

A ‘serial refunder’ describes a customer that returns purchases at an excessive volume. Reasons can range from: 

• Returning items due to unnecessarily ordering the same item multiple times
• Having issues with the item's arrival or condition
• Or, using purchases and then returning them for a full refund (known as ‘wardrobing’ when done with clothing items)

The consumer behaviour of serial refunders can have a profound effect on the bottom line of SMEs, as high volumes of returns leads to an increased loss of money for the business having to refund customers. According to a report by Clear Returns[1], returns cost UK retailers an estimated £60 billion a year on average, £20 billion of this total being from online shopping.

Online sales in the UK also increased by over 46% in 2020 according to the ONS[2]. The shift in purchasing online was predicted to be driven by convenience and easier price comparison, however, this transition was sped up massively during the pandemic. This was mainly due to lockdown restrictions causing more people to stay at home, as opposed to heading out physically to the shops.

Consumer online purchasing decisions are also being increasingly impacted by companies’ payment, delivery and returns options online. In particular, ‘Buy Now Pay Later’ and ‘Free Returns’ are a significant determining factor in a consumer's purchase decision, which also impacts the ease of returning items. Research by Mintel[3] found that due to the Covid-19 pandemic, 38% of UK online shoppers felt more confident returning online purchases.

 

Bolton is the UK’s serial refunder capital for the second year running - each small business refunds an average of £675 per month 

With serial refunding on the rise we looked at our unique data to discover how much, on average, each small business across the UK’s towns and cities is having to return in refunds per month.

Bolton takes the top spot for the second year in a row as the city in the UK with the highest amount refunded per business per month (£675). In Bolton, home and office furnishing was the most refunded product category. An average £10,240 worth of furnishing goods is reported to have been returned per month between October 2020 to September 2021, by customers. 

This could be due to the increased number of people decorating and refurbishing their homes during the pandemic, leading to increased sales of home and office supplies which were then returned with the easing of lockdown.  

At the other end of the table is Sunderland, where on average £35 per business per month is refunded to consumers. Dumfries isn’t far behind with £41, and Aberdeen at £45. 

Across the 118 UK locations analysed, on average £15,600 a month is returned from small businesses to consumers.

 

The UK’s serial refunding hotspots in 2021

Rank	City	Amount refunded per business per month (£)
1	Bolton	£675
2	Southall	£524
3	Reading	£307
4	Bromley	£286
5	Wolverhampton	£278
6	Perth	£246
7	Norwich	£245
8	Preston	£242
9	Oxford	£238
10	Redhill	£233
11	Milton Keynes	£233
12	Llandudno	£222
13	Walsall	£221
14	Truro	£207
15	Oldham	£188
16	Carlisle	£186
17	Stevenage	£184
18	Salisbury	£181
19	Derby	£181
20	Kingston	£177

Southall residents received the highest value of refunds in 2021 at £234 per person

Our research also revealed which residents were receiving the highest value of refunds per person on average from small businesses in UK towns and cities.

 

 

The suburban district of Southall, located in West London paid out on average £234 per person in returned goods between the months of October 2020 and September 2021. Bolton follows in second place which saw on average £209 refunded per person. 

Reading concludes the top three with £307 refunded per person each month. Reading saw the highest amount of returns per person from the apparel and clothing industry, which could be due to a rise in ‘wardrobing’. This is a form of return exploitation, where an individual will wear a purchased item of clothing out, and then return it to the store for a refund after doing so. This type of return abuse costs the UK clothing and apparel economy over £1 billion a year. 

At the other end of the scale, Dorchester residents received the smallest value of refunds per person at £40. Followed closely by Bath at £44 per person and Crewe at £45 per person.

The UK’s serial refunding hotspots per capita in 2021

Lockdown home renovation projects cause ‘Trade and Trade Supplies’ to be the industry most impacted by serial refunders in 2021

As the pandemic confined people to their homes for 18 months, there has been an increase in home renovations. Brits spent 30% more on their homes during the pandemic than ever before. Unsurprising then, that ‘Trade & Trade Supplies' ranks as the industry with the highest amount of refunds per location per month. 

Redhill, a town in the borough of Reigate and Banstead, saw the highest number of returns in the Trade & Trade Supplies sector. The town’s trade suppliers saw an average 19 returns a month, totaling an estimated £1,755 in product refunds for small businesses in the area. A similar trend can be witnessed for ‘Garden & DIY’ stores as many Brits tackled home improvements during lockdown. Although this industry ranked sixth in terms of value refunded, these types of stores saw the highest volume of returns. 

The industry in second place is ‘Home & Office Furnishing’, which last year topped the leaderboard due to working from home becoming the new way of working for many people. Items such as desks and chairs were bought for many to set up their at home office, but our data shows these were again one of the most commonly returned, causing the industry to rank in second place this year. 

The average refund amount of the Automotive and Home & Office Furnishing industries tends to be higher, due to the higher cost of the products in comparison to industries such as clothing and Garden & DIY.

 

The UK industries impacted the most by serial refunding in 2021

Rank	Industry	Amount refunded on avg per month per industry (£)
1	Trade & Trade Supplies	£514
2	Home & Office Furnishing	£485
3	Accommodation & Travel	£465
4	Recreational goods & services	£394
5	Retail	£332
6	Garden & DIY	£285
7	Automotive	£205
8	Clothing	£190
9	Health Care	£153
10	Food & beverage hospitality	£39

 

How do 2021 serial refunders compare to 2020? 

Comparing this year's results to the same time frame of October 2019 to September 2020, we can see Bolton continues to be the number one city in the UK for the highest amount refunded in each small business per month. Similarly, Southall stays in second position, with an increase of £212 refunded per month between October 2020 and September 2021.

One city that ranked in the top 10 for the highest amount refunded per small business each month in 2020 was Bournemouth. The seaside city landed in ninth place. However, new data for 2021 shows that it now ranks in 55nd place, dropping a huge 46 places. 

Another city that has seen small businesses decrease the average refund amount per person is Oxford. In 2020 the city ranked in third place, shelling out an estimated £299 per person. In 2021, Oxford fell to 14th position with a total decrease of almost £100 per customer. 

The top three industries in which small businesses are paying out the most in refunds are still the same in 2021 as they were in 2020.  Home/Office furnishing moved down to second place, and Trade & Trade supplies moved to first place. One key difference is the amount refunded per industry per month, as it has decreased across all of the top three industries. However, one sector that did see an increase in the average refund per person is Automotive. 

The worst months for recurring refunds - January refunds have grown 39% year-on-year in the UK

Analysing the data, we can see that lockdown impacted the normal trends in monthly returns due to the restrictions in place. So far, August has seen the highest number of refunds from small businesses in 2021. This contradicts typical statistics which often present January as the business month for returns, but with restrictions still in place at the beginning of this year this was not the case. 

However, with January around the corner and restrictions eased it is predicted to return to being the busiest month for returns. Royal mail even coined the first Monday of January ‘Takeback Monday’[4] as many Brits will return their unwanted Christmas presents.  

From our data we can see that year-on-year there was a 39% increase in returns from January 2020, and January 2021. So, if predictions are true this figure is expected to be much greater in 2022. 

The impact of free returns on purchase intent - 78% of customers more likely to purchase from a business online if they offer free returns 

Free returns have become an increasingly popular offer by brands, to entice customers into purchasing from them, by making them feel more at ease when buying products online. An easy returns process can be paramount for the success of a business. 78% of customers said they are more likely to purchase from a brand if they offer free returns, as it makes the process easier. 

However, high levels of returns can cause strain to a businesses supply chain due to higher package volumes. 52% of shoppers are unlikely to use an online retailer again if they’re charged for returns, but by offering free returns, brands open themselves up to serial refunders who are likely to take advantage of the offering and order more products than they need. In the UK, one in three customers return a product once a month. 

We looked at the top 500 retailers in the UK to see which customers were searching the most for free returns. Amazon came out on top, with on average 4,400 searches per month. Following Amazon is ASOS, and at the bottom of the top 20 is Urban Outfitters with 170 searches per month. 

 

Free returns can improve the customer experience by satisfying customer needs. By offering free returns and exchanges, businesses can minimise customer frustrations and increase customer satisfaction and retention. Customers are likely to check a business's return policy before making a purchase. Therefore, by offering free returns/exchanges, businesses are likely to see a boost in sales. 

However, returns do have a negative impact on businesses. By offering free returns, businesses take the hit by paying for the shipping costs. Also, customers are highly likely to take advantage of the free returns offering and make businesses victims of ‘wardrobing’. 

Rank	Retailer	"Free Returns" UK Avg. Monthly Search Volume	Do they offer free returns in the UK?
1	Amazon	4,400	Yes. Most items from Amazon can be returned for free within 30 days.
2	Asos	1,600	Yes. ASOS offers free 28 day returns.
3	Shein	880	Yes. Shein offers free returns within 60 days.
4	Zara	880	Yes. Zara offers free returns within 30 days.
5	Boohoo	590	Yes. Boohoo offers free returns in 28 days.
6	Missguided	590	Yes. Missguided offers free returns within 28 days.
7	Aliexpress	480	Yes. Aliexpress offers free returns within 15 days.
8	Nike	480	Yes. Nike offers free returns within 60 days.
9	Ebay	390	Varies depending on the seller's return policy.
10	Overstock	320	No, Overstock does not offer free returns, shipping costs are the customers responsibility.
11	Adidas	320	Yes. Adidas offers free returns within 60 days.
12	Sports Direct	320	No free returns, shipping costs are the customers responsibility. Sports Direct will only refund the cost of the initial delivery.
13	Uniqlo	320	Yes. Uniqlo offers free returns within 28 days.
14	House Of Fraser	260	No free returns, shipping costs are the customers responsibility. House of Fraser will only refund the cost of the initial delivery.
15	Nasty Gal	260	Yes. Nasty Gal offers free returns within 28 days.
16	Jd Sports	210	JD Sports offers free returns to their store within 28 days.
17	Next	210	Yes. Next offers free returns within 14 days.
18	H&M	210	Yes. H&M offers free returns within 28 days.
19	Apple	170	Yes. Apple offers free returns within 28 days.
20	Urban Outfitters	170	Yes. Urban Outfitters offers free returns within 30 days.

“I unashamedly wanted it for the photos, but not to keep” - Confessions of a serial refunder 

We spoke to a self-confessed serial refunder who commented on their experience of wardrobing:

“University is obviously really expensive and you have to live within your means from week to week - which definitely means no unnecessary shopping. But I had an end of the year ball coming up for my final year of uni and although I’d never normally risk wearing something with the intention of returning it the next day… I unashamedly wanted a great outfit for the photos (and the memories!).

 

I ended up picking a light pink Ted Baker dress costing just shy of £200, solemnly promising myself I wouldn’t spill anything on it and would leave the labels in so I could return the week after. The whole experience was slightly stressful but despite a close encounter with red wine, I managed. I aired the dress, gave it a wipe down and returned it, no harm done and no-one the wiser.

 

I don’t think I’d risk it now, it’s not worth the stress. Especially as loads of stores like Selfridges offer you the choice to rent one-time wear dresses. But it was worth it for that event, especially when I was on a shoestring budget!”

“I’ve had a man throw a box of shoes at my head” - Employee shares their refund horror story 

An ex till manager shared their personal experience of dealing with serial refunders in store. 

“In my two years managing the till department for a busy sportswear store, I encountered many refund horror stories. What many don’t realise is how aggressive people can be when you refuse to return goods for valid reasons (soiled items, no receipt, expired refund period etc). I’ve had a man throw a box of shoes at my head after refusing to give a refund, and been sworn at more times than I can count. 

Serial refunders capitalise on this, knowing that many retail workers just want an easy life so often succumb to customer intimidation. Many exploit lesser-known loopholes too. We had a family visit our store every couple of weeks for months, each time returning the same type of product. They discovered that certain item “faults”, (in this case AirMax bubbles bursting) entitled them to a refund up to a year after purchasing (and even longer in some cases). You think after the 4th pair of “faulty” AirMax in as many weeks, the customer would buy something else. 

Turns out, they were intentionally damaging the product to get cashback, collecting old pairs of shoes from family members in order to repeat the trick. In total, they gained upwards of £2,000 before we banned them from the store, and sent CCTV images of them to every brand in the region.“

 

“False chargeback requests nearly ruined my business” - Small business owner shares their experience with serial refunders 

Rob Williams, Director of Hawthorn International, a clothing manufacturer based in the UK shared his negative experience with a serial refunder.

 

“Some years ago, we produced some custom clothing items for a client who specified at the time that they wanted to pay by credit card, and that they also didn't want to pay for the shipping of the items at that time. We're a bulk clothing manufacturer so we have lead times for everything we make and in this case, the lead time was around 3 months. Essentially, the customer wanted to wait 3 months to pay for the international shipping to spread the cost, which we allowed to help them out.

Once the items were completed in full, the client said that they couldn't afford to pay for the bulk shipping, which was valued at over £600, so asked we send them for free. We declined, as this would have represented a significant loss for us. This then turned into a back and forth exchange where the customer ultimately refused to pay. The customer eventually requested a chargeback of the original amount for the goods from their credit card company, citing that we hadn't delivered them, which the credit card company honoured. We pointed out that this charge back meant we'd made the items and received no payment for them, when in fact the agreement said that shipping would be paid at the end of the process. After pointing this out to the client, they made a new offer of payment via credit card, for the full amount including the shipping fees.

Frustratingly, once in transit, the customer then made another chargeback request, citing that we didn't make them aware there could be import fees, which we did in fact do; this information is included on all of our invoices. The client's credit card company didn't give us a chance to discuss the request and honoured it. It was at this point a case of realising that the client was looking to receive the goods without paying for them, so our next port of call was to threaten court action to reclaim funds and saying that we would only allow bank transfer as a payment method in the future.

Following an exchange with the customer, they mentioned that they would not be able to afford a bank transfer payment under any circumstances, although they would pay via PayPal and use a credit card again. We accepted this, believing that the PayPal dispute system would protect us if there were any further issues. Sadly however, it did not. The customer raised a dispute with PayPal citing that they had been delivered to an incorrect address. The correct situation however was that the customer requested to change address due to moving home, but we believe saw this as an opportunity to raise a dispute on the payment. The PayPal dispute system honoured this, and we ended up having to threaten legal action again.

Following all of this, the customer eventually agreed to pay in instalments for the items, on a month by month basis. When the instalment plan was paid in full (using bank transfer, rather than credit cards), we released the goods.”

 

What can small businesses do to help prevent the number of returns?

We have put together three top tips to help small business owners deal with recurring refunds online and how to handle difficult returns. 

1. Make sure your product information on site is correct and in depth

By ensuring the product information on your website is correct and in depth, customers can make better informed purchasing decisions, meaning when they receive the product, it will be what they were looking for and expecting! 

1. Clarify your returns policy 

It is important that your returns policy is clear and easily accessible, so when you do get a difficult return you can refer back to the policy and clearly explain it to the customer. 

1. Provide a great personal experience 

When shopping in a store, it is important to provide customers with a seamless experience. For example, by allowing customers to try items on and feel the quality of products and allowing them to ask questions about items before they purchase. By ensuring the customer is satisfied when leaving the store, businesses can minimise refunds. 

Methodology

Unique data was collated by analysing anonymised transactions from Paymentsense card machines across the UK to find:

• Regional refund figures using the number of refunds per business and total refunded per business
• Regional refund figures by industry – cross-referenced above data with industry categories from Paymentsense merchants

The time frame for data is a specific 12-month period – October 2020 to September 2021. This was then compared with the year before October 2019 to September 2020. 

References 

[1] clearreturns.com/portfolio-item/black-friday-costs-uk-retailers-180m-in-returned-goods/

[2] ons.gov.uk/businessindustryandtrade/retailindustry/bulletins/retailsales/december2020

[3] internetretailing.net/industry/industry/british-shoppers-return-52bn-worth-of-goods-each-year-bought-online--and-its-going-to-go-higher-post-covid-21417

[4] royalmail.com/business/guides-and-insights/delivery-matters-for-online-shoppers