The season of gift-giving is also the season of returns, one in 10 of which in the US are fraudulent — often cheaper knockoffs, while the buyer keeps the refund and original product, according to the National Retail Federation. Software company Happy Returns, a subsidiary of UPS that handles its boxless returns, is testing an AI-powered fraud detection tool this holiday season on products from companies including Under Armour and Revolve, Reuters reported. It analyzes photos of returned items against a company’s catalog images, flagging minute details that could indicate a fake, like incorrect seams and a misplaced logo.
The technology itself isn’t new — we wrote about luxury clothing brand Lacoste using AI to address return fraud last year — but UPS’ adoption of it brings new scale to the billion-dollar problem. It could help retailers protect their bottom lines and ensure fraudulent returns aren’t then resold to customers who pay full price.