Consumer electronics brands have spent the last decade perfecting the purchase experience. Seamless checkout. Next-day delivery. Unboxing moments engineered to delight.
And then the device gets returned.
Most conversations about CE returns focus on one problem: fraud. Empty-box swaps, counterfeit items, serial number abuse. That problem is real and growing. But in my experience working with CE brands, from global peripheral manufacturers to smart home platforms, fraud is only half of what is driving up return rates.
The other half is something more uncomfortable to name, because it is not a customer problem. It is an operational one.
Most CE returns are either fraudulent or avoidable. Almost none are inevitable.
The return that should never have happened
In working with CE brands across multiple geographies and product lines, I have seen a pattern that rarely gets discussed openly: a significant proportion of products returned as defective — in some programs, as many as 8 in 10 — are found to be fully functional when they arrive at the fulfillment center.
The device worked, but the customer could not make it work.
They tried. They followed the setup guide. They restarted it. They called support. And somewhere in that chain — often because the associate on the other end did not have the specific knowledge needed to resolve a firmware conflict, a connectivity issue, or a configuration error — the customer concluded that the product was broken. It wasn’t, but that conclusion cost the brand anywhere from $40 to $120 in reverse logistics, a replacement unit, and a customer whose confidence in the brand did not survive the experience.
This is the category of return that gets the least attention and causes the most systemic damage. Fraud is a known adversary; you can build defenses against it. But a support operation that consistently fails to resolve fixable device issues is a silent returns engine running in the background of every product launch, every peak season, and every firmware update.
The fix is not more returns capacity. It is smarter associate knowledge. When support teams understand which setup steps fail most often, which firmware versions generate the highest contact volumes, and which product features confuse first-time users, they can resolve the interaction before the customer concludes the device is broken. A customer who understands why their device is not connecting is not the same customer as one who gives up and ships it back.
The fraud problem is real — and growing
The avoidable return problem does not diminish the fraud problem. They coexist, and together they represent the full scope of what CE brands are up against.
According to the NRF's 2025 Retail Returns Landscape, 9% of all returns are fraudulent — and retailers tracking those incidents reported sharp increases in empty-box returns (65%), overstated return quantities (71%), and decoy returns using counterfeit items (64%).
For consumer electronics specifically, the fraud rate runs even higher: in some CE categories it reaches 13% of returned products, according to ReturnPro's 2026 Consumer Trust Gap report.
The financial exposure is not abstract. Across all retail, that 9% fraud rate translated to roughly $76 billion in lost merchandise in 2025. That is not a rounding error. It is a structural cost embedded in almost every CE brand's profit and loss, and it compounds with every peak season, every new product launch, and every promotional event that drives volume.
Most brands find out about it too late. A cluster of empty-box returns in a specific region goes unnoticed for weeks. A pattern of serial number reuse across multiple accounts is flagged after the loss is already on the books. The data to catch it earlier exists; it lives in the conversation data, in the claim language, in the timing patterns of how contacts arrive. It just is not being analyzed.
One intelligence layer; two problems solved
What I find most compelling about where this is heading is that the solution to both problems — the avoidable return and the fraudulent return — runs through the same mechanism: the ability to learn from every customer interaction, not just a sample of them.
Traditional quality assurance tools review less than 3% of customer interactions. That means 97% of the signals your operation is generating — the patterns in how customers describe setup failures, the language clusters that precede return requests, the subtle shifts in contact reasons that signal a product quality issue is emerging — never get analyzed. They are handled, closed, and filed.
An Everest Group's enterprise surge on AI adoption in CX, conducted across 107 enterprises in 2026, found that more than 70% have not successfully scaled AI — not because of technology limitations, but because of fragmented data, disconnected systems, and governance gaps. The brands that are genuinely ahead are not just deploying AI. They are using conversation intelligence to analyze 100% of customer interactions across every support channel and using that analysis to do two things simultaneously.
- First: detect fraud patterns before they scale. The language a customer uses when initiating a fraudulent return follows patterns. The timing, the frequency, and the account history all leave a signature in the conversation data long before it shows up on a loss report. When that data is being analyzed in real time, the intervention happens before the replacement ships, not after.
- Second: identify and close the associate knowledge gaps that drive avoidable returns. As contact patterns emerge (customers describing the same connectivity failure in different ways, or associates failing to resolve the same firmware issue at Tier 1) that intelligence feeds back into training, into knowledge bases, and into the briefings associates receive before the next call arrives. The next wave of customers gets better support. And fewer of them return a product that was working all along.
This is what I mean when I say the returns problem is an intelligence problem. It’s not an AI problem, a technology problem, or a headcount problem. The brands that are closing the gap between what returns cost them and what they should cost are the ones that have closed the gap between what their support operation knows and what it needs to know.
The window is open right now
CE brands face a recurring pattern: post-peak shopping periods convert into return waves three to four weeks later. These happen after product launches, seasonal promotions, and major retail events. The timing is predictable. The preparation is usually not.
Most consumers (71%) say they are less likely to shop with a retailer again after a poor returns experience, and four out of five say they will share that negative experience with friends and family, according to NRF. For CE brands, where the product purchase is the beginning of a multi-year ecosystem relationship — accessories, software, subscriptions, trade-ins — a returns experience that goes wrong isn’t a transaction problem. It’s a lifetime-value problem.
The brands that understand this are not waiting for the return to arrive. They are intercepting it. Before a customer decides the device is broken, they are getting a support interaction that resolves the issue. Before a fraudulent claim processes, it’s getting flagged. Before the return wave hits the warehouse, the intelligence layer has already identified what is driving it and adjusted the operation accordingly.
Don't let the return be where trust ends
The brands getting it right are combining two things: specialist operations (people who understand device-level complexity, warranty entitlements, and reverse logistics workflows) and an intelligence layer that turns every customer interaction into a signal that makes the next one better.
Neither alone is sufficient. Specialist knowledge without intelligence scales slowly and reacts late. Intelligence without specialist knowledge generates insights that no one can act on.
Together, they create something genuinely different: a returns and warranty operation that learns. One where the first peak season teaches the operation what to do better at the second, where the first wave of contacts after a firmware update equips associates for the second wave before it arrives, where fraud patterns detected in one geography close the door before they open in another.
The return and warranty operation is where CE brand trust is either reinforced or quietly destroyed. It is the moment after the unboxing that most brands have underinvested in — and increasingly, it is the moment that determines whether a customer buys the next device from you or from the brand next to you on the shelf.
The next wave is coming. The question is whether your operation has learned from the last one.
If you lack the expertise needed to master the returns process in-house, working with an expert partner is the fastest way to access the people, technologies, and accumulated knowledge you need.
