Total Retail Loss Cost $796B in 2025, Appriss Retail Report Uncovers

Retailers lost an estimated $796 billion to returns and shrink in 2025, according to Appriss Retail’s 2026 Total Retail Loss Benchmark Report—the first study to aggregate returns, fraud, shrinkage and operational leakage into a single enterprise-wide tally.

The Irvine, Calif.-based company, which was acquired by Gemspring Capital last March, emphasized that a “Total Retail Loss” (TRL) strategy—one unifying data across all channels—is essential to identifying preventable losses and maintaining customer confidence.

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“Returns overwhelmingly power the majority of financial loss that retailers endure,” Appriss Retail CEO Michael Osborne said in a statement. “Every dollar lost to returns is a dollar straight off the bottom line.”

And that bottom line is short some $100 billion, the report suggests.

Of the $706 billion in merchandise returned last year, 14.2 percent—roughly $100 billion — was classified as preventable loss tied to fraud and abuse. Returns abuse accounted for 12 percent of returns-related losses, or about $86 billion, while fraud represented just 2 percent.

Shrink added another $90 billion in losses. Appriss Retail estimated 73 percent of that total was preventable, driven by employee theft ($26 billion), inventory errors ($19 billion), operational mistakes ($12 billion) and organized retail crime ($9 billion).

The report draws on surveys of more than 1,000 consumers and analysis of in-store and online returns across 250 million unique customer identifiers. Its central argument? Returns now represent the single largest driver of retail loss—demanding coordination across loss prevention, finance, operations and customer experience rather than siloed oversight.

“To stop the bleeding, leaders must look at returns, fraud, and shrink through the lens of Total Retail Loss, build a system of collaboration, and implement cross-functional muscle,” Osborne said. “Retailers that continue to work in silos will continue to erode profits.”

Returns data sits at the center of the report’s findings, underscoring how fragmented systems are costing retailers billions.

Retailers lost $4 billion to cross-channel fraud tied to BORIS—buy online, return in-store—as bad actors exploit gaps between digital and brick-and-mortar systems.

Of the $706 billion in total returns, $367 billion (aka 52 percent) came from buy-in-store and return-in-store (aka BISRIS) transactions. Another $208 billion (29 percent) stemmed from BORIS—now identified as the fastest-growing fraud and abuse vector. The remaining $131 billion (19 percent) came from buy online, return online (BORO) transactions.

Appriss uses artificial intelligence and a variety of other technologies to help retailers prevent return fraud, track in-store crime, and implement other risk-management features.

Its “warn and approve” system reduces abusive returns by implementing a graduated, three-tier approach to return decisions that focuses on educating and retraining customers rather than simply punishing them.

“The associate no longer has to be ‘the face’ of return decisions. They can direct customers to a phone number or website for appeals, helping them avoid in-person friction when disputes arise,” the report reads. “Clear explanations and escalation paths let retailers capture AI efficiency without eroding trust.”

The 2026 Total Retail Loss Benchmark Report finds that AI-powered return controls don’t necessarily drive customers away—if retailers use them carefully. Which means that if TRL is a company-wide problem, it requires better interdepartmental cooperation and unified data to “reduce loss and protect profit margins.”

According to the survey data, 90 percent of consumers said they would shop again after receiving a warning about problematic return behavior. That translates to an estimated $75 billion in retained revenue.

In other words, flagging abuse doesn’t automatically torch loyalty.

Appriss surveyed more than 1,000 consumers and found that 90 percent would still shop again after receiving a warning about abusive returns—indicating an opportunity to recapture revenue.

“High-return customers are more likely to push policy boundaries,” the report reads. “The majority (62 percent) won’t commit outright fraud, but in the meantime, your generous return policy becomes a subsidy for serial abusers.”

That’s because transparency matters, according to Appriss. Eighty percent of respondents want clarity on how AI is making return decisions. At the same time, trust in automation remains limited: 71 percent of consumers trust human associates more than AI for approvals, while only 10 percent say they trust AI outright.

“While fraud and abuse might be hammering away at your bottom line, reducing them actually increases net profits,” per the report. “Retail leaders taking advantage of this profit boost have embraced a new way of thinking about Total Retail Loss—one that goes far beyond shrink.”