CHARLOTTE — With the rise of online shopping, fraudulent returns have become a growing problem. Unfortunately, the cost of that fraud is often passed on to customers, but one warehouse in Valencia, California, is working to sniff out return fraud and refund your money faster.
Consumer advisor Clark Howard took a tour of Happy Returns warehouse to see how it all works.
Juan Hernandez Campos, the company’s chief operating officer, says when products arrive at Happy Returns warehouse they are unloaded and sent to sorting stations. Then, robots quickly find the right box that will be sent back to the retailer.
Campos says they’re focused on what they call “decoy returns.” That’s when someone sends back a less expensive product similar to the one they bought.
“So what AI is really good at doing is picking up on details that somebody at the drop-off location might not have caught,” said Kayla Hunter, Happy Returns’ senior product manager. “It’s saying this is a suspected mismatch, so AI thinks this is fraud. And now me as a human, it’s my job to go in and say, is that correct? ”
Campos says fraud is a bigger problem than you might think, affecting about 1 in 10 returns, and it’s not just large corporations dealing with these issues.
Juli and Scott Chapin own CakeSafe, a small business that makes reusable cake delivery boxes.
“People will use our disks and then send them back and there’s buttercream on them, there’s hair on them,” Juli said. “It’s disappointing in humanity when that happens.”
They say they’ve had to change their return policies and charge restocking fees because of return abuse.
“There may very well be a cost that somebody is picking up because you are being dishonest about something,” she told Howard.
Howard says you can often get a cheaper price upfront when you buy just to give up your right to return. Amazon is currently experimenting with this on its Woot site. If you know you are buying something you are going to keep, get the cheaper deal up front.
©2026 Cox Media Group
/cloudfront-us-east-1.images.arcpublishing.com/cmg/LH3JSJEF3VBLRJLJQESEAG34AM.png)
