It’s the topic that often dominates the Nextdoor app for neighborhood conversations. Open it on any given day, and you’re likely to see a raft of complaints about packages being stolen by porch pirates.

Images caught on doorbell cameras suggest that the problem is one of random thieves roaming the streets in search of easy opportunities. In reality, porch piracy is just one aspect of a much larger problem of retail fraud.

An estimated 250,000 packages, valued at around $15 billion, are stolen nationwide each day. And porch pirates are becoming increasingly sophisticated in their methods, according to Yael Hemo, a researcher with Riskified, creator of a fraud-prevention platform driven by artificial intelligence.

Thieves today are often part of extensive fraud rings that employ such tactics are Wi-Fi jammers to knock out cameras and bypass home-security systems, Hemo says. They actively trade techniques and obtain inside information on potential victims over the dark web.

Those victims aren’t just individual consumers. The big money comes from duping merchants through the widescale abuse of refund policies, Hemo says.

Exploiting the high public profile of porch piracy, the scam often takes the form of a shopper falsely claiming that a package was either stolen or never arrived, and demanding a full refund. Research by Riskified reveals that refund abuse in 2024 amounted to between 1% and 2% of total order value. As many as one in four return claims is fraudulent, Hemo says.

Total losses from all forms of retail return fraud are in excess of $100 billion a year, Hemo notes. Other techniques include wardrobing (purchasing and wearing an outfit once, then returning it for a refund), returning stolen merchandise, submitting fake or altered receipts, and using fraudulently obtained gift cards to receive cash or store credit on returned items.

Porch piracy in particular “is always looking to imitate legitimate phenomena,” says Hemo. That saddles merchants with the burden of distinguishing between scammers and honest customers. Failing to stop the former can lead to huge losses and higher prices, but erroneously charging the latter with fraud can seriously undermine brand loyalty.

Fraudsters have become so sophisticated that they’re now offering their services to others on the dark web — even on legitimate platforms such as Telegram. “You can reach out to a professional, and in return for a fee, they can do it for you,” Hemo says.

AI serves as the basis of Riskified’s platform, helping to detect patterns of abuse across networks to suss out suspicious behavior. Retailers are turning to the technology to help differentiate between fraudsters and customers, at point of purchase and during claim processing.

At the same time, AI has become an equally valuable tool for fraudsters, who are using it to create fake photos and videos to document supposed package damage and theft. They’re employing ChatGPT to run query scripts for scanning multiple customer accounts, including logins, passwords and credit card information. And they’re creating bots that communicate with customer reps about phony return requests. “Fraudsters are really proud about how they can manipulate another person,” Hemo says.

The growing volume of fraudulent behavior, especially during peak buying periods, is making it increasingly tough for retailers to address returns abuse with manual preventive methods and teams of humans, however keen their detection abilities might be. Automation of the process has become essential to identifying bad actors while ensuring fair treatment of legitimate requests, says Hemo. The alternative is to tighten up on return policies to such an extent that retailers alienate their best customers.

Porch piracy is the most visible form of retail theft, but the ultimate solution to the larger question of return fraud has to reach well beyond the customer’s doorstep. Retailers must deploy modern technology and exercise constant vigilance against the most sophisticated techniques of scammers. Says Hemo: “It’s really important for merchants to stay ahead.”