U.S. retailers expect $849.9 billion in merchandise to be returned this year, about 15.8% of total annual sales, according to the 2025 Retail Returns Landscape report released by the National Retail Federation (NRF) and Happy Returns, a UPS company. The rate is similar to last year’s 16.9%, when returns totaled $890 billion.

“Returns are no longer the end point of a transaction,” says Katherine Cullen, NRF’s vice president of industry and consumer insights. “They provide an opportunity for retailers to create a positive experience for customers and can translate to brand loyalty.”

The report noted that online purchases continue to drive higher return volumes, with an estimated 19.3% of e-commerce sales expected to be returned in 2025. Younger shoppers, particularly those aged 18-30, are the most frequent returners, averaging 7.7 online returns in the past year—more than any other generation.

Consumer expectations around returns remain high. Eighty-two percent of shoppers cited free returns as a key factor in purchase decisions, up from 76% last year, while 76% said they prefer return options offering instant refunds or exchanges. Negative experiences, however, carry lasting consequences: 71% of consumers said they are less likely to shop again with a retailer after a poor returns experience, and 80% said they would share that experience with others.

Retailers continue to weigh customer satisfaction against rising operational costs, including shipping expenses, tariffs, and return logistics. Nearly two-thirds (64%) of surveyed merchants said improving their returns process within the next six months is a priority, while their top goals for 2026 include growing online sales and reducing return rates.

Return fraud remains a persistent challenge, accounting for 9% of all returns. Retailers reported increases in fraudulent practices such as overstating return quantities (71%), empty-box or “box of rocks” returns (65%), and counterfeit or decoy items (64%). To counter these trends, 85% of retailers said they are using artificial intelligence to detect or prevent return fraud.

The report also found that many consumers engage in behaviors that add to return costs, such as wardrobing or “bracketing” (buying multiple versions of an item to return most). Nearly two-thirds admitted to at least one such behavior, and 45% said they believe “bending the truth” on returns is acceptable in some situations.

“To stay competitive amid rising return rates and behaviors like bracketing, retailers must modernize their reverse logistics to enhance customer satisfaction, reduce fraud, and safeguard their operations in today’s high-pressure retail landscape,” says David Sobie, cofounder and CEO of Happy Returns.

With the holiday season approaching, retailers anticipate 17% of holiday sales will be returned, consistent with previous years. To manage post-holiday returns, many plan to increase reliance on third-party logistics partners (49%), hire seasonal staff (43%), and extend return windows (37%).