AI Refund Fraud Adds Risk to FBA Fee Calculations
Returns Already Carry High Costs
U.S. retailers processed approximately $849.9 billion in merchandise returns in 2025, and about 9% were fraudulent, Practical Ecommerce reported July 16, citing the National Retail Federation and Happy Returns.
E-commerce recorded a 19.3% overall return rate, substantially higher than physical retail.
AI Expands Synthetic Evidence
Generative AI can create convincing photographs of cracked, stained or incomplete products. It can also fabricate damaged packaging, customer-service messages, carrier records and delivery screenshots used to support false refund claims.
The risk is higher when merchants approve low-value refunds remotely because return shipping and inspection would cost more than the product.
AI-Specific Losses Remain Unclear
The 9% fraud figure covers return fraud overall. Practical Ecommerce said there is no credible U.S. estimate for the share specifically assisted by AI, so sellers should not treat all fraudulent returns as AI-generated.
Manual review, extra photo angles and mandatory returns can reduce risk, but each control also adds support, shipping and inspection expense.
Add Expected Return Loss
FBA profitability models should include expected return cost per sale: return probability multiplied by the average net loss per return. The net loss can include non-resellable inventory, applicable Amazon return charges, removal or disposal costs and unrecovered shipping.
China-based sellers should calculate this by SKU and category. A low-margin product with a high return rate can become unprofitable even when its standard FBA fulfillment fee remains unchanged.
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