Why wealthy shoppers generate more retail refunds

Shoppers with higher incomes are more likely to return retail purchases they make, a new report finds. 

Higher-income households had the highest percentage of retail refunds, at 5.3% of their purchases in 2025, according to a recent report by the Bank of America Institute that compared higher-, middle- and lower-income shopper return behavior. The analysis is based on aggregated, anonymous transaction data from bank debit and credit card holders who made at least five transactions per month.

Lower-income households had the smallest percentage of retail refunds at around 3.7% of their purchases.

Higher-income shoppers are less cash-strapped than lower earners, the report notes, so they are more likely to “buy items speculatively,” especially if they know they can “return it later if they decide it’s not right for them.” 

This behavior is similar to what shopping experts call “bracketing,” or the act of ordering multiple products in different sizes, colors or variations, with the intention of keeping a few and returning the rest.

“That’s likely to be somewhat easier for someone who has a higher income to do,” said David Tinsley, lead author of the report and senior economist at the Bank of America Institute.

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To be sure, bracketing is not really new, said Edgar Dworsky, a consumer advocate and founder of ConsumerWorld.org.

“It’s really been around as long as the internet has been around,” Dworsky said. “Unlike walking into a department store — going into Macy’s and trying on something there, or seeing things in person — you’re buying much more blindly online.”

More shoppers are making more frequent returns. Nearly half, or 46%, of consumers return purchased items multiple times a month, according to a separate 2024 report by Optoro, a returns solutions company. That’s a jump from 29% in 2023.

While consumers value the ability to return products, retailers have been tightening their return policies in recent years to mitigate the high costs, experts say. 

Broadly, the ability to return unwanted purchases is important for consumers.

About 76% of surveyed respondents consider free returns important when deciding where to shop, per a 2024 report by the National Retail Federation and Happy Returns, a returns shipping company.

Nearly as many, 67%, of respondents stated that a negative return experience would deter them from shopping with a retailer again. 

The survey polled more than 2,000 consumers who had returned at least one online purchase in 2024, and 249 e-commerce and finance professionals from retailers with at least $500 million in revenue.

Despite those desires, returns can be costly for retailers. In 2024, retailers expected that about 16.9% of their annual sales would be returned, reaching an average cost of $890 billion, according to the report.

“Retailers themselves say it’s a very expensive business,” said Tinsley.

To offset the costs, companies have been tightening their return policies in recent years. NRF and Happy Returns found that about 66% of retailers began charging for one or more return methods.

Another way to cut back on costs is by shortening the window consumers have to make returns, said Dworsky: “We’ve generally seen this over the years.”

“I think back to the old days when you bought something … and you had maybe 180 days or maybe no return limit,” he said.

As tariffs, or taxes on imported goods, increase the cost of products, companies may look for ways to tighten return policies even further to cut down on expenses, said Dworsky.

“One of the ways of cutting expenses is to cut back on the length of return periods,” he said.

To avoid going through the hassle of returning a product, Dworksy said it’s important to understand what you’re buying ahead of time.

One way to do so is by checking online reviews from customers who recently purchased the item. Some retailers, like Amazon, will flag whether shoppers tend to keep or return certain products, which can help you gauge the quality of the piece.

Check a retailer’s return policies before you buy, especially if you think there’s a chance you won’t keep the item. Look for businesses that offer more flexible terms, he said.

A 2024 report by GoDaddy found that 77% of shoppers check the return policy before making a purchase. The site polled 1,500 consumers in September.

For additional protections, it can be helpful to use a credit card for the transaction, said Dworsky.

Credit cards can offer several kinds of return protections that help cardholders in different ways, such as extending the time a consumer has to return an item or the ability to dispute charges and get a refund, per Bankrate.

However, make sure to review the fine print in your card and what terms may apply.

“Credit card return protection is a notoriously fickle credit card perk that’s increasingly rare,” notes the Bankrate report.