Returns by mail may soon come with additional fees

Sending back a disappointing gift this holiday season may cost you.

About 40% of retailers are charging return fees this year, according to retail technology company Narvar, including fast-fashion brands Zara and H&M. That’s up from 31% in 2022 as companies work to improve profitability amid dwindling consumer demand and rising costs.

“I think the age of free returns is over, in a universal sense,” said Neil Saunders, managing director of analytics company GlobalData. “It used to be the case that almost all returns were free. Now, what we’re seeing is a much more patchwork approach.”

He added, “It isn’t as simple for the consumer as it once was.”

Experts say even more retailers are expected to experiment with paid returns, especially as broader economic challenges continue.

Saunders noted that retailers are finding “a lot of pressure” on their profitability.

“They’re trying to find ways to prune their expenses,” Saunders said. “And one of the big expenses, especially for those that operate online, is returns.”

Processing a return can cost retailers as much as 66% of a $50 item, according to one estimate from logistics technology company Optoro. It’s costly enough that retailers like Amazon and Walmart occasionally let a customer keep their refunded item instead of making them ship it back.

The shift makes returns more challenging for consumers, but there are positives. Most notably, dropping free returns can help companies meet their environmental goals, Jane Hali and Associates retail research analyst Jessica Ramírez said.

Tacking on a return fee is “making the consumer a bit more conscious of what they’re purchasing,” Ramírez said.

The additional fees could turn away some customers, according to Saunders,

Abercrombie & Fitch: A $7 fee is deducted from mail-in refunds.

Amazon: The company charges a $1 fee for some returns made at UPS stores. Customers can still make free returns at Whole Foods, Amazon Fresh and Kohl’s locations.

American Eagle Outfitters: A $5 fee is deducted from mail-in returns that do not qualify for free returns.

Dillard’s: Mail-in returns cost $9.95.

DSW: Gold or Elite members can mail in returns for free. Other customers need to pay $8.50.

H&M: A $5.99 return shipping fee is automatically deducted from refunds. Loyalty members will have the fee waived.

JCPenney: An $8 fee applies to mail-in returns.

J.Crew: A $7.50 fee is deducted from mail-in returns.

Kohl’s: The company’s website says it does not pay for return shipping costs. Returning larger items delivered by freight comes with a 15% restocking fee.

REI Co-op: A $5.99 fee is deducted from refunds.

T.J. Maxx: An $11.99 return shipping and handling fee is deducted from mail-in refunds.

Urban Outfitters: A $5 restocking fee is deducted from most mailed returns.

Zara: A $3.95 fee is subtracted from refunds on mail-in returns.

but it’s not yet clear to what extent.

“The question is whether retailers save more than they lose” through these fees, he said. “I think we’re still in the experimental phase. I think retailers looking at this and assessing it.”