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Approximately 10% of claims and appeasements are fraudulent, resulting in retailers losing $2.1 to $4.2 billion annually in revenue due to order adjustments. As ecommerce becomes the primary purchasing channel, these losses are expected to rise. Retailers must prioritize strategies to combat fraud and protect their bottom line. 

To protect profits and avoid falling victim to fraudulent claims and appeasements, there are three things retailers need to know. 

1. Claims and appeasements vs. chargebacks  

Historically, chargeback-related fraud was the main focus for retailers, but today the types of fraud that threaten the bottom line have evolved and diversified. In fact, claims now have a larger negative impact on a retailer’s business than chargebacks.  

While claims and appeasements are similar to chargebacks, the distinctions between the two types of fraud are significant:  

  • Chargeback fraud occurs when a consumer falsely claims to their credit card company or payment provider that a charge for a purchase, they made is inaccurate and should be reversed. 

  • Claims and appeasement fraud occurs when a customer incorrectly claims an item they ordered was not received (known as “INR fraud”), was damaged, was incomplete, or not what was expected.  

When a chargeback is reported to a payment provider, it must decide whether or not to reverse the charge. If a credit card was legitimately stolen and used to make illegal purchases, the payment provider will conduct the chargeback to rectify the situation for the customer.   

Similarly, when a customer makes a claim, the customer service representative (CSR) will review the claim and determine if the shopper should receive an appeasement. Common customer appeasements include a refund or a reshipment. When the claim is legitimate, the appeasement is critical in fostering strong customer relationships. On the other hand, when the claim is fraudulent, the appeasement can cost retailers tremendously.  

In both scenarios, it can be challenging for retailers and payment providers to know whether fraud is at play. 

2. The bottom-line impact of claims and appeasements

Industrywide, claims and appeasements cost retailers around $35 billion per year according to Appriss Retail’s work with leading retailers. To estimate the value of claims fraud within the business, retailers can use this formula: 

($ ecommerce sales x 2% claims) x 10% fraud = Estimated loss to claims fraud 

Fortunately, with AI, retailers can significantly decrease losses due to claims fraud.

3. Leveraging advanced analytics and AI to identify scams and fake IDs

Retailers often struggle with identifying fraudulent claims because if they are wrong and refuse an appeasement for a true claim, they will upset a loyal customer. This concern stems from the fact that most claims are legitimate and fraudulent claims are typically made by a small percentage of shoppers. What’s more, this small group is difficult to identify because they often hide behind fake identities to make fraudulent claims.  

That’s why the Appriss Linking System within the Engage platform analyzes tokenized payment information, IP addresses, email addresses, and more across disparate transactions to catch bad actors. The system uses AI to review risk factors like frequency of returns from one address and the use of multiple email addresses in real time across channels. If a shopper that’s deemed “high risk” for fraud makes a claim, they are likely to be denied, whereas a shopper with good behavior’s claim will be recognized.  

Case study: A retailer’s fight against ecommerce claims and appeasements fraud 

A leading omnichannel sporting goods retailer recently analyzed its ecommerce order claims and appeasements with Appriss Retail. The retailer learned that 1.58% of its online sales resulted in a customer claim, meaning it was losing $50 million of its online sales to post-order adjustments (POAs) every year.   

In response to these shocking results, the retailer implemented Appriss Retail’s Engage Claims and Appeasements Authorization module. The goal of the partnership was to mitigate fraudulent claims without making sweeping changes to its appeasement policies that would negatively impact top customers.  

With Engage in place, the retailer’s CSRs were equipped with up-to-date access to a shopper’s historical behavior, empowering them to make informed decisions regarding eligibility for POAs. 

The global retailer saved $12.3 million in POAs while increasing year-over-year ecommerce sales by 8% and freeing up CSR time for more customer-centric tasks. 

Defending Margins: A Retailer’s Fight Against Ecommerce Claims and Appeasements Fraud 



Pete Barker, Director of Product, Appriss Retail

Pete Barker has a long history in Retail Loss Prevention, most notably as the Sr. Manager of Digital Loss Prevention at Dick's Sporting Goods where he built the Digital Loss Prevention department/team from scratch. He was the Director of Fraud and Identity for technology provider SpyCloud before joining Appriss Retail in 2023. Pete is also very active with the Merchant Risk Council (MRC), holding the position of Fraud Community Committee Member since 2019, as well as a mentor for the MRC since 2019. He was also an MRC Regional Advisory Board Member from 2/20-2/21. 

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