Return fraud is costing retailers billions. A new AI program can spot when scammers send back counterfeits.

• Lacoste is using AI tech Vrai to detect counterfeit returns.
• Return fraud costs retailers billions, with billions lost globally.
• Amazon and other retailers face scams exploiting return policies for financial gain.

Spotting designer knockoffs is now easier than ever.

French luxury brand Lacoste is using Vrai, an AI technology developed by Cypheme, a leader in anti-counterfeit artificial intelligence, to catch scammers returning counterfeit items.

Trained on thousands of images of genuine merchandise, Vrai aims to distinguish real products from fakes with 99.7% accuracy, according to Semafor.

At its warehouses, Lacoste employees can snap a picture of a returned item with Vrai and verify its authenticity. The AI model can detect subtle discrepancies, from a slight variation in color to an extra tooth in the brand's signature crocodile logo.

Represenatives for Lacoste and Cypheme did not respond to Business Insider's request for comment,

The technology combats return fraud — a growing practice of exploiting return and refund processes for financial gain. Often, it involves returning different items for a refund. Some companies have even received boxes full of bricks after customers banked refunds for items like televisions.

Total returns for the retail industry came to $743 billion in merchandise in 2023, according to a report released by the National Retail Federation and Appriss Retail. US retailers lost a little over $100 billion in return fraud, or around $13.70 for every $100 returned, up from $10.40 per $100 in 2022.

Major retailers are frequent targets of such scams. In July, Amazon filed a federal lawsuit accusing a Telegram group of stealing more than 10,000 items through fraudulent returns. Members of the group fabricated stories to convince Amazon customer service to refund their accounts, sometimes even using falsified police reports.

Amazon, along with other online giants like Walmart, Target, and Wayfair, were also targeted by a crime ring that recruited legitimate shoppers to purchase items, have them refunded, and then keep or resell the goods. According to a federal indictment, the group exploited a "no-return refunds" policy that allows customers to get refunds without physically returning items—an option many retailers have implemented to reduce return costs for both themselves and consumers.