When a return costs more to ship back than the product is worth, some platforms issue instant refunds to high-trust customers without requiring the item. Low-trust customers still have to return it, partly so the platform can gather data on whether to remove them. Fraud detection is crucial to stop people gaming the system.
Someone is asking, how do you handle returns when the reverse logistics cost is higher than the product value?
So basically what we do is we've set up a threshold. So we've got a trust score developed for customer level and seller level as well. So we use that metric. And when it's— the value is higher and the value of the product is lower than the cost of the return logistics, we give an instant refund where we do not ask for the product back. And we give the customer an instant refund. But you also have to keep in mind that the customer has to have a certain threshold. Because if it's a new customer or a bad customer, you do not give this refund because you need that package to come back to give us that dataset to eventually move this customer out of the platform if they're already trajectory— if the trajectory is always towards a bad customer. So that's how you have to keep that balance.
The only thing is when abuse happens, as he rightly said, right, there is a fraud management algorithms you can build, there are logics you can build and you can keep track of it. And then, you know, you can act on those customers who are misusing it. But I think that is the right answer to this question.
