The audit isn’t about your return rate. A low rate can mean a great product, or a policy so hostile that unhappy customers keep the item and never come back. It asks what each return costs, what it does to the next order, and whether the trip is one a customer would take twice.

Open your returns app, twelve months of orders and refunds, and your policy page. Score each check 0 to 2: 0 if it failed or nobody can answer it, 1 if partly true, 2 if clean. “Our vendor handles that” isn’t an answer.

A return rate on its own tells you almost nothing. What happened to the customer afterward tells you almost everything.

The twelve checks

1. You know your return rate by product and by customer · 5 minLook at: Twelve months of returns, by product and by customer.
   Good: Someone can name the ten products with the highest return rate and the share of customers who returned anything.
   Cost if wrong: One bad product hides inside a healthy average.
   Read next: Reasons Are a Defect Log
2. Repeat rate is split by how the return ended · 5 minLook at: Twelve-month repeat rate for customers whose first return ended in a refund, an exchange, store credit, or no return at all.
   Good: The four numbers exist and someone reviews them each quarter.
   Cost if wrong: Every policy is set on cost alone.
   Read next: Repeat Rate by How the Return Ended
3. You know what one return costs · 4 minLook at: Label, handling, inspection, repackaging and write-off, per returned order.
   Good: One number per return, from finance, with the share of returned items that go back on sale at full price.
   Cost if wrong: You can’t price a bonus credit, a returnless refund or a fee.
   Read next: The Economics of One Return
4. The terms match everywhere · 3 minLook at: The return terms on your product page, checkout, policy page, order confirmation and portal.
   Good: Same window, same fees, same exclusions, stated plainly before the customer pays.
   Cost if wrong: Surprise fees, angry tickets and legal exposure.
   Read next: The Legal Floor
5. A return starts in under a minute · 4 minLook at: Start a return on your phone as a customer who has only an email address.
   Good: No account, no order number hunt, no call to support; done in under a minute.
   Cost if wrong: Customers email support instead, or give up and dispute the charge with their bank.
   Read next: The Portal Is a Flow
6. Exchange first, refund one tap away · 3 minLook at: The outcome screen in your portal.
   Good: Exchange for another size or item appears first, store credit second, refund plainly visible.
   Cost if wrong: Customers who would have taken the right size take their money instead.
   Read next: Exchange First
7. Refunds move at the first carrier scan · 3 minLook at: Median days from first carrier scan to refund, last 90 days.
   Good: Same day for most customers; only flagged returns wait for inspection.
   Cost if wrong: The customer waits a week for money they consider theirs, and remembers it.
   Read next: Refund at the First Scan
8. Reasons are specific and read weekly · 4 minLook at: Your reason list and last month’s reasons.
   Good: Reasons are specific (runs small, color differs from photo), “other” is under 10%, and someone reviews the top reasons by product every week.
   Cost if wrong: The same fixable problem ships thousands of times.
   Read next: Reasons Are a Defect Log
9. Low-value returns have a keep-it rule · 3 minLook at: Whether any return is refunded without the item coming back.
   Good: A written rule: below a value you set, for customers in good standing, the refund is issued and the item stays.
   Cost if wrong: You pay $15 to bring back a $12 item you’ll throw away.
   Read next: Keep It, Resell It, Trade It In
10. Serial returners are found by rule · 4 minLook at: How you decide a customer returns too much.
    Good: A written threshold based on your own margin, applied automatically, with a warning before any penalty and a route back.
    Cost if wrong: You subsidize the few, or punish everyone for them.
    Read next: Serial Returners Without Punishing Everyone
11. Any fee was tested against a holdout · 3 minLook at: Your return fees and how they were decided.
    Good: No fee, or a fee that was tested on a random share of customers and read on repeat purchase, not only on return cost.
    Cost if wrong: The fee saves a visible dollar and loses an invisible five.
    Read next: The Fee Wave, and How to Test a Fee
12. The legal floor was checked this year · 3 minLook at: Whether counsel has reviewed your policy for each country you sell to.
    Good: Yes, within twelve months, including the EU withdrawal button if you sell into the EU.
    Cost if wrong: A policy that promises less than the law gives, or a “money back guarantee” you don’t honor in full.
    Read next: The Legal Floor

Score as you go; your band appears when all twelve are in.

Read your score

If you sell consumables that rarely come back, score checks 6 and 9 on how you handle damaged or wrong deliveries instead.