IoT-based Smart Return Tag for Reducing E-Commerce Return Fraud

E-commerce has taken off rapidly, but with that growth comes a significant spike in product returns and considerably more money lost to return fraud. Conventional tools— barcode scans, RFID tags, and manual inspection—fail to detect whether an item has been used or a package tampered with after delivery. This paper presents a review and prototype implementation of an IoT-powered smart return tag system designed to reduce e-commerce return fraud. The system integrates smart packaging principles, tamper-detection sensors, Bluetooth Low Energy (BLE)-based communication, and modern embedded IoT technology. A budget-friendly smart return tag combining multiple sensors detects opening, handling, and usage events, logging all occurrences with timestamps for enhanced security. Experimental results confirm that sensor-based return monitoring significantly improves fraud detection accuracy, achieving above 95%. The proposed system demonstrates that IoT smart return tags are practically viable for making reverse logistics more efficient and enabling online retailers to substantially reduce fraudulent returns.