Tool SOPs/Loop Returns/Fraud Rules

Loop Returns Fraud Rules SOP

AY
Anand Yadav · Founder, ReccordSOP
·Last reviewed June 1, 2026

Return fraud costs DTC brands 1 to 3 percent of revenue. Loop's fraud tools can catch most of it without false-positive friction for real customers, if you configure them deliberately. This SOP defines the rules that catch fraud while preserving the experience for legit returns.

Why this SOP matters

Heavy-handed fraud rules block real customers and CSAT tanks. Loose fraud rules invite professional return-abusers who cost you margin every month. The right configuration sits in between, biased slightly toward catching repeat patterns rather than first-time customers.

Step-by-step SOP

  1. 1

    Set return velocity limit per customer per 90 days

    Max 3 returns in 90 days. Above 3 flags for manual review. Adjust threshold based on your return rate category.

  2. 2

    Configure return-to-purchase ratio threshold

    Customer with 80%+ returns over $200+ orders triggers review. Some categories run high (apparel) so calibrate.

  3. 3

    Maintain manual blocklist for known abusers

    Once flagged and verified as fraud, add to blocklist by email + shipping address + phone. Loop catches future returns from same identity.

  4. 4

    Flag returns from high-risk fulfillment patterns

    Same shipping address with multiple customer profiles. Repeated return-shipping address mismatches. Tag for human review.

  5. 5

    Set photo verification for high-value returns

    Returns over $200 require photo of unworn/unused product before refund. Filters most claim fraud.

  6. 6

    Configure exchange-only mode for high-risk customers

    Customers flagged 2x in 6 months get exchange-only access. Can still return but only for store credit. Most fraudsters move on.

  7. 7

    Document the rules in a customer-facing policy

    Transparency reduces complaints. 'We may require photos for returns over $200' set in advance avoids the angry email.

  8. 8

    Review fraud-rule decisions monthly

    Pull all flagged returns, audit false-positive rate. Target under 5 percent. Higher and you're alienating legit customers.

Common mistakes to avoid

  • ×Setting velocity limit too low (3 returns in 90 days is reasonable, 1 is hostile)
  • ×No false-positive auditing, you can't tell if rules are hostile to real customers
  • ×Maintaining blocklist only by email (fraudsters use multiple emails, block address + phone too)
  • ×Forcing photo verification on every return (kills CSAT)
  • ×Hiding the fraud policy from customers (creates surprise and complaints)

Stop rewriting this SOP every quarter

Record your screen while performing the loop returns fraud rules. ReccordSOP turns the recording into a SOP with timestamped screenshots. When your live setup changes, drift detection flags it.

Generate this SOP free

FAQ

What return rate signals fraud vs normal high-return shopper?

Above 50 percent return rate over $200+ orders is fraud territory. Above 80 percent is near-certain. Adjust for apparel which runs higher.

Should I be transparent about my fraud rules?

Yes. Tell customers you may require photos for high-value returns. Surprise enforcement creates complaints. Documented policy reduces them.

What's the false-positive rate I should aim for?

Under 5 percent of flagged returns. Higher and you're punishing real customers. Audit monthly and tune.

AY
Anand YadavFounder, ReccordSOP

I built ReccordSOP after watching too many DTC ops teams lose months to undocumented workflows. These SOPs are battle-tested with Shopify operators running $1M to $50M brands.

Last reviewed June 1, 2026

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