In a previous edition of the Retail law roundup, we explored the growing use of AI-altered images by customers seeking refunds on food deliveries.  

Fashion retailers, however, are contending with a more prosaic, but equally damaging, form of fraud: 'wardrobing'. This is the practice where customers purchase an item online, wear it to an event or on holiday, and then return it within the 28-day distance sale return period. The statistics make clear that this is a serious and growing problem for apparel retailers:

• According to Harris, one in three UK shoppers admits to wardrobing. 
• This figure rises to 43% among those aged under 34, with 21% admitting to doing so frequently. 
• According to Retail Economics, UK retailers are now losing £1.3bn annually to returns fraud, with wardrobing accounting for a significant proportion of that figure. 

In addressing this challenge, retailers must balance the trust of their law-abiding customers against the need to enforce returns policies for those who abuse them - and this is not straightforward. UK consumer law is one of the most consumer-friendly regimes in the world, leaving retailers with limited room for manoeuvre.

Yet the more fundamental issue, in our view, is one of consumer attitude. Many consumers do not appreciate that wardrobing constitutes fraud; and even those who do tend to regard it as a 'victimless crime' that larger retailers can simply absorb. In reality, serial wardrobing inflates the cost of fashion items for everyone.  Also, having done it once, consumers are likely to make it a habit. How many of us have purchased an item on a resale platform described as 'new' - and priced accordingly - only to suspect it has already been worn?

Set out below are some practical steps retailers can take to protect their bottom line, alongside possible technology-based solutions and a broader call to action. 

1. Review your returns policy

A blanket refusal of returns is not permissible for distance sales, nor where an item is faulty, not of satisfactory quality, not fit for purpose, or not as described. However, retailers can apply return conditions to make it more difficult for serial returners. To do so effectively, those conditions must be clear, transparent, and communicated to the customer before the point of sale. 

2. Consider deterrent statements

Build trust with honest customers by explaining, openly and plainly, why stricter returns rules are necessary. Transparency about your enforcement approach can itself act as a deterrent.

3. Enforce reduced refunds

Consumers are entitled to 'reasonable handling' of items - intended to allow them to try goods on in a manner that replicates the in-store experience. Your returns policy should define what constitutes reasonable handling, and also identify the point at which a return will be inspected against that standard. 

Many online retailers effectively 'accept' a return at the point of issuing a returns code, but the process should be viewed as a journey with distinct stages. Acceptance of a return should occur only once the goods have been physically received and inspected. Where handling falls outside the agreed definition, retailers have the right to reduce the refund accordingly - and where the item is unsaleable as a result of the damage, to refuse a refund altogether. Almost all retailers include this in their returns policies, yet very few enforce it. While inspection is time-consuming, without enforcement, the problem will only continue to grow. 

4. Use data analytics to monitor accounts

Retailers should make use of existing technology to monitor return volumes and rates by individual customer and address, and to identify patterns in the categories of items being returned, such as occasion wear, holiday clothing, and footwear. Provided your data policy sets out clearly how such information will be used, this data can be used to inform policy decisions and to consider measures such as tiered returns, return fees, or account restrictions. Any such measures must, of course, be incorporated into your policy and communicated to customers before the point of sale. 

5. Deploy technology to assess condition

Fraunhofer IPS has developed smartphone-based applications capable of detecting early-stage fabric degradation, including pilling, micro-tears, loss of elasticity, and UV-induced fading. These apps analyse pixel-level texture, colour uniformity, edge continuity, and geometric distortion to produce a 'wear score' based on statistical deviation from a pristine reference for the relevant garment category. Fraunhofer cautions, however, that the technology is most effective at detecting macro-level, high-contrast degradation, and less reliable when it comes to subtle structural wear. Nonetheless, informing customers that AI tools will be used to assess returned items may in itself deter a proportion of wardrobers.

6. Engage with your supply chain

Retailers should explore with their suppliers what can be achieved through smarter garment tagging, both in terms of where tags are placed and how they are affixed. Options worth considering include tags sewn into unexpected locations within a garment, or tags that respond to perspiration or other indicators of wear. Equally important is avoiding tags that can easily be removed and reattached - an obvious point, but one that a surprising number of retailers have yet to act on. 

7. Champion a new narrative

The majority of consumers are frustrated by the hidden costs of retail fraud. What is needed is a concerted campaign to shift the narrative - one that highlights the dishonesty inherent in wardrobing and, crucially, makes clear the cost it imposes on all of us. Retailers, trade bodies, and consumer groups should consider working together to reframe wardrobing not as a harmless shortcut, but for what it truly is: fraud.