Raphael Stevens

New York has yet to cash in on legal marijuana as it struggles to open enough retail dispensaries and rein in illicit operators.
This week, regulators announced an expansive new framework that will make licenses available to the general public as well as large multistate manufacturers and medical companies.
While likely to be a boon for the state’s overall legal market, the change might leave behind hundreds of social-equity businesses that have been unable to open amid legal challenges to their legitimacy.

A woman walks by a smoke shop in New York City that displays a marijuana leaf in the window, June 16, 2023.
Spencer Platt | Getty Images News | Getty Images

Coss Marte’s marijuana dispensary in lower Manhattan has already cost him over $1 million, and it’s not even open yet.
He was awarded a coveted dispensary license last year on the basis of his prior marijuana-related convictions. It was a part of New York’s Conditional Adult Use Retail Dispensary, or CAURD, program, which has thus far limited retail licenses only to this group.

But now, as the state tries to boost the slow-moving legal weed rollout, Marte’s business is one of hundreds in limbo and potentially on the brink of ruin as the state prepares to release general licenses.
“I could go bankrupt,” Marte said.
In addition to the obstacles faced in finding locations and funding required to open dispensaries, lawsuits have prevented most CAURD licensees from getting their businesses up and running.
On Tuesday, the state’s Cannabis Control Board voted for new regulations that would expand New York’s meager marketplace for legal weed by allowing a wider range of applicants. The state has struggled to open enough dispensaries and meet demand amid regulatory hurdles and a thriving illicit market.
“Today marks the most significant expansion of New York’s legal cannabis market since legalization, and we’ve taken a massive step towards reaching our goal of having New Yorkers being able access safer, regulated cannabis across the state,” Chris Alexander, executive director of the Office of Cannabis Management, or OCM, said in a statement Tuesday.

Entrepreneurs already awarded licenses feel as though they’ve been left behind.
New York has prioritized retail licenses for people who had been convicted of marijuana offenses before weed became legal in 2021. It’s part of a restorative justice effort aimed at giving those affected by prohibition a chance to get their footing before large companies enter the industry.
But lawsuits by medical marijuana and veterans groups have paused the program and barred New York regulators from issuing more licenses or opening businesses for existing licenses. The groups argue the program is unconstitutional.
As a result, across the state, only 23 of these licensees have opened their businesses. The vast majority, over 400, have been unable to open. In the meantime, some 1,500 unlicensed businesses have been operating in New York City alone.
Tuesday’s announcement made no mention of these licensees or the legal challenges to their legitimacy.
“This could really mess up my whole entire life,” Marte said. “I may not be able to come back from this.”

‘Monumental’ change or a ‘nightmare’?

Starting in October, applications for licenses will become available to the general public, as well as large multistate manufacturers and medical companies, for retail, cultivation, processing and distribution.  
The move will pave the way for big players — including Columbia Care, Cresco Labs, Curaleaf, Green Thumb and Ascend Wellness Holdings — to get in on the action.
The new framework is likely to be a boon for the state’s fledgling legal market, which needs more dispensaries to boost sales and tax revenues.
As of late August, the state’s licensed dispensaries have reported cumulative sales of over $70 million, according to the Cannabis Control Board. At maturity, New York’s recreational market should be generating over $1 billion annually by 2025, growing to $4.41 billion by 2030, according to New Frontier Data, a marijuana research firm. That will put it on par with states such as California, which has so far generated $4.51 billion this year, the firm found.
By broadening eligibility requirements for participation in the legal industry, New York is back on track to meet these targets, said Jeff Schultz, a marijuana attorney at Foley Hoag.
“This is monumental,” Schultz said. “New York needs hundreds of retailers open to meet the existing consumer demand and to move all of the product tied up in the supply side of the current market.”

Marte, who was awarded a CAURD license in April 2022 after serving prison time for dealing drugs, said he’s invested hundreds of thousands of dollars into opening his dispensary on Manhattan’s Lower East Side.
Yet, amid the pause and ongoing litigation, Marte’s been unable to open, and his location sits empty.
When contacted by CNBC, the OCM said it cannot comment on pending litigation.
“I just want to express on behalf of the office a continued commitment to the success of those licensees,” Alexander said Tuesday of the CAURD businesses. “We will continue to work diligently.”
The uncertainty nonetheless haunts Marte.
“It was an opportunity that was a dream,” he said. “And now it’s become a nightmare.” More

Kevin Hart’s tequila brand Gran Coramino reached a sponsorship deal with the NFL’s Philadelphia Eagles.
Hart told CNBC that he hopes marketing inside the stadium will allow the tequila to reach a wider customer base.
The agreement comes as celebrity liquor brands grow, and sports teams and leagues try to leverage a consumer shift away from beer.

When the Philadelphia Eagles kick off their home opener on Thursday Night Football, the National Football League team will also start a new sponsorship deal with Gran Coramino, the luxury tequila brand co-founded by comedian, entrepreneur and Philadelphia native Kevin Hart.
“It’s a big deal! To be in partnership with the Eagles and aligned with Philadelphia in any way is a good and dope feeling!” Hart told CNBC’s Frank Holland in an exclusive interview about the agreement.

The deal with the franchise will include signage inside the team’s Lincoln Financial Field, branded bars in the stadium and marketing on the Eagles’ digital platforms.
The Eagles hope to seize on the recent success of celebrity spirits brands and a rise in tequila sales, as many U.S. drinkers drop beer in favor of liquor. Gran Coramino is the latest luxury spirits brand to try to gain market share through a league or team partnership, as the association between beer and sports starts to fade.
“I think sales will grow simply based off of awareness and that awareness will go from inside the stadium to outside the stadium,” Hart said. “The hope is that people fall in love with the product, and they will buy it to have it at home.”

Kevin Hart with a bottle of his Gran Coramino tequila.
Source: Global Brands Equities

Eagles Senior Vice President of Corporate Partnerships Brian Napoli said the opening of the branded bar “will add value and another layer to the premium experience for Eagles fans and guests in attendance.”
For Hart, a lifelong Eagles fan, the deal is particularly sweet. Ahead of the Eagles’ Super Bowl loss to the Kansas City Chiefs in February, Hart posted an Instagram video claiming to have paid $16 million for an actual eagle that he named after the team’s quarterback Jalen Hurts.

Hart told CNBC, “It’s a massive win! I’ve been with the team through ups and downs.”

Spirits and sports

Beer is the alcoholic drink most synonymous with sports. Ads tying together beer and baseball started as early as 1909, when Budweiser used the headline, “BALL PLAYERS USE BEER IN TRAINING,” quoting the president of the then-Brooklyn Trolley Dodgers, according to Sports Illustrated.
In recent years, spirits brands have made a push into sports sponsorships with major American leagues. The effort has come as spirits overtook beer in market share for the first time in 2022.
Jagermeister became the official shot of the National Hockey League in 2019 and the two renewed the deal in 2022. Distill Brands inked a deal to be the official vodka of Major League Baseball in 2022.
Hennessey, a brand owned by luxury giant LVMH, became the first “global spirits partner” of the National Basketball Association in 2021. Global Spirits giant Diageo also reached an agreement to be the first spirits sponsor of the NFL in 2021. It now sponsors 20 NFL teams.
The companies said the deals have helped them reach new consumers and build brand strength.
“Through our relationship with the NFL, we have seen positive and measurable lift in impact to the perception of our brands in the eyes of consumers,” Rick Pineda, director of sports for Diageo, told CNBC. “Our league and team partners have been very collaborative in finding innovative ways for our iconic brands to reach their passionate and engaged fan bases.”
Jean-Baptiste Descours, NBA global program lead for Hennessy, also told CNBC the sponsorships are “about awareness and visibility.” He added the cognac brand increases marketing efforts when there are higher levels of fan engagement.
“When the season tips off, Christmas games, All-Star, we focus on those type of events and even more focus on the playoff season because fans tune in,” he said.

Spirit of success

Spirits are often marketed with a focus on history, country of origin or distilling process.
Gran Coramino is made with agave from the Tequila area of Mexico, as all tequilas are. Hart co-founded the brand with Juan Domingo Beckmann, CEO of Becle, which is the parent company of Jose Cuervo tequila, and James Morrissey, CEO of Global Brand Equities.
However, Hart aims to differentiate Gran Coramino from brands in those companies by partnering with the Eagles, a Super Bowl contender known for its hard-nosed play.
The deal also gives the brand direct contact to a higher-end consumer with ample disposable income. The average NFL ticket will be $377 in 2023, a 60% increase from the previous season, according to TicketSmarter. Its CEO told USA Today, “demand has never been stronger.”
“Look at the fan base. If you are able to do anything that can get you to that consumer, that’s only a pro. There are no cons!” Hart said.
He added, “If we can be the spirit of choice for the Eagles, that’s a big deal. The takeaway is this is an inclusive drink, one appropriate for all environments — family, friends, corporate luxury, you name it. We feel like our product fits within it all.”  More

On site at the 2023 edition of the World Satellite Business Week conference in Paris, France.
Michael Sheetz | CNBC

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Overview: Au revoir, bon temps

I’m wrapping up my time at the World Satellite Business Week conference, after a whirlwind of panels, meetings and more. Paris, lovely as ever, played host to insights from old and new sources, and I could spend the rest of the year writing solely about everything I learned here.

My big takeaway: The “bon temps,” good times, are over – in so far as speedy capital and the competitive landscape are concerned – but we’re not necessarily in bad times for the space sector. Competition is fierce and investors are demanding more for their money, so strategies are about executing and delivering.
A trio of themes emerged from conversations: SpaceX is top dog, the recent satellite malfunctions are putting immense pressure on the insurance market, and it’s more difficult for space companies to raise funds than it has been in years.
1. Bogeyman
SpaceX feels a bit like Voldemort here: Whether it’s the launch or satellite communications markets, SpaceX’s dominance was a hot topic. They’re the bogeyman, evoking more jealous respect than pure fear, however.
SpaceX’s Starlink has disrupted the multi-billion dollar satellite communications landscape, which has really been the playing field of only a few major incumbents for decades. 

And its Falcon rockets are the only game for most launch customers who have hundreds of satellites looking for rides. Aside from those small enough to fly on Rocket Lab’s Electron, it feels like satellite leaders are tapping their watches, eager to see next-generation large rockets begin flying and provide new supply and competition to Falcon. But satellites can’t wait around and SpaceX has made it clear in both words and actions that they’ll fly even competitors of Starlink.
2. Uninsurable
 Viasat’s pair of satellite malfunctions was the next conversation piece. While the company hasn’t made any claims yet, the insurance market ramifications are looming. Here’s a few excerpts from the CFO panel that I moderated on Tuesday, which sum up the situation:

 “There’s only so much capacity in the space market … just like any non-standard type of insurance product, they need to earn a certain amount of money over time … the whole market’s roughly a $750 million [a year] premium market, they’ve now got about a billion dollars of possible losses … can they actually make it up in the future, and is there enough high value assets to insure? Because I think the one issue that creates dysfunction in this insurance market is … do you have enough volume to make up for this loss? And the answer is no, right now. … They’re trying to figure out what 2024 is going to hold.”  – Redwire CFO Jonathan Baliff

 “Also, a lot depends on the size of the placement that you’re looking for … given the size of our current satellites, they’re in the neighborhood of about $10 to $12 million, the interest rates are going up and the insurance premium will likely go up at least in the near term … if you’re trying to place 10 to 12 to 15, you probably have a better situation than if you’re trying to place like half a billion or something like that.” – BlackSky CFO Henry Dubois

 “In the launch insurance market .. our costs have come down, as we now have 40 Electron launches, so it’s a matter of getting that heritage behind you.” – Rocket Lab CFO Adam Spice 

3. Greenbacks
Finally, EXIM made a big splash on the opening day by saying it is processing over $5 billion in space-related financing – and threw the door wide open for more companies in need of funding. The U.S. export credit agency’s Vice Chair Judith Pryor even shouted out members of her team in the crowd, exemplifying EXIM’s eagerness to put money to work in the industry. Last month, two of the biggest deals in the sector, an acquisition and a fundraising, were done by non-American firms and Pryor emphasized EXIM’s goal to finance U.S. projects as a U.S. backer.
This hectic summer of space news has made me realize that there’s never been a more exciting time to be a space reporter than this year. We’re in the thick of it – progress, obstacles, dealmaking and the like – and I don’t expect that to slow down any time soon. If you have anonymous tips, reach out to me via encrypted means, such as CNBC’s Signal number or my Proton email. Au revoir from another great WSBW!

What’s up

SES and Starlink partnering to offer combined service, beginning with the cruise operator market. SES CEO Ruy Pinto emphasized that “there is unmet demand that neither of us by ourselves can provide to certain cruise customers,” and noted the companies expect to bring the joint offering to other markets as well. – CNBC
SpaceX no longer taking losses on Starlink antennas, with VP Jonathan Hofeller saying the company has “been iterating on our terminal production so much that we’re no longer subsidizing” them. – CNBC
FAA chief: Starship launch license could come ‘sometime next month.’ Acting FAA Administrator Polly Trottenbergh said the agency is “optimistic” about issuing the license to SpaceX in October, as the FAA is “working well with them.” – Reuters
SpaceX launch market dominance concerns banker, but not the military: Dueling opinions on the company’s near-monopoly on the rocket market came from conferences on either side of the Atlantic. Air Force Secretary Frank Kendall said he’s “not really concerned about” SpaceX’s majority share of the global launch market, while Lazard Managing Director Vikram Nidamaluri thinks “it’s a huge concern” and “probably not healthy” for the commercial side of the industry. – CNBC / SpaceNews
NASA leaders admit SLS rocket is ‘unaffordable,’ with senior officials telling the Government Accountability Office that the giant moon rocket currently has “poor measures of cost performance over time” and the overall program lacks transparency. – GAO
ULA launches second mission of the year, with its Atlas V rocket carrying the SILENTBARKER mission for the NRO and U.S. Space Force. The satellite is intended to improve the U.S. ability to track and inspect other spacecraft in orbit. – ULA / NRO
SpaceX launches 64th mission of the year, with a Falcon 9 rocket carrying 21 Starlink satellites into orbit from California. This was the 11th flight of that Falcon 9 booster. – SpaceflightNow
Terran Orbital opens California facility expansion that adds 60,000 square feet of manufacturing space to the company’s previous 38,000 square feet of room to build satellites. The company says the expansion will increase its capability to more than 20 satellites per month. – Terran Orbital
Law firm DLA Piper announces space practice: The group will be led by Houston-based partner Christian Ford, who said “DLA Piper recognizes the industry’s promising future and is scaling global teams and resources to help commercial space companies succeed.” – DLA Piper
Axiom’s third mission to feature trio of European customers: The company announced the Ax-3 flight to the ISS, set to launch in January, will fly astronauts from Italy, Turkey, and Sweden via the European Space Agency. – Axiom
Germany to sign Artemis Accords, becoming the latest nation to sign the cooperative space agreement that’s led by the U.S. – SpacePolicyOnline
Rocket Lab testing Neutron upper stage tank, preparing to test a Stage 2 tank to demonstrate and verify structural integrity. – Read more
Blue Origin reportedly targets early next month for New Shepard’s return to flight, with the suborbital rocket having remained grounded since its launch failure a year ago. – Ars Technica
NASA astronaut Frank Rubio breaks U.S. record for time in space, becoming the American who has flown the longest space mission by surpassing 255 days, ahead of the mark set by NASA’s Mark Vande Hei last year. – collectSPACE

Industry maneuvers

Telesat buys 14 launches from SpaceX for its Lightspeed satellite internet constellation, with Falcon 9 missions set to begin in 2026. – CNBC
Leidos orders four more of Rocket Lab’s HASTE missions, buying more of the hypersonic rocket variant after the success of the first launch. – Rocket Lab
Ball Aerospace wins $486.9 million NASA contract to build a hyperspectral infrared instrument for NOAA’s Geostationary Extended Observations satellite program. – NASA
Firefly awarded $18 million NASA lunar contract, to provide “radio frequency calibration services” for the agency’s LuSEE-Night radio telescope during the second Blue Ghost mission, set for 2026. – Firefly Aerospace
Relativity further expands at NASA’s Stennis center, with the company signing a lease for the A-2 vertical rocket engine test stand in Mississippi. The company noted it plans to invest $267 million at Stennis. – Relativity
Satellite startup SWISSto12 raises about $28 million in debt from UBS to scale its manufacturing. – SWISSto12
Momentus raises $5 million from direct ‘at the market’ offering. – Momentus
Satellogic and SkyWatch sign partnership, to use imagery from the former’s satellites on the latter’s EarthCache platform. – SkyWatch
Thaicom selects Airbus to build a geostationary satellite for launch in 2027, with French operator Eutelsat agreeing to lease half the Thai satellite’s capacity over Asia. – SpaceNews
Intelsat signs with Arianespace to launch IS-45 satellite on an Ariane 6 rocket. – Arianespace

Market movers

Planet lowers annual forecast for second consecutive quarter when it reported Q3 results, with the company revising its fiscal year 2024 revenue outlook to a range of $216 million to $223 million, or about 15% year-over-year growth. That’s down from the range of $248 million to $268 million in FY24 revenue that Planet gave at the beginning of the year, previously expecting about 35% year-over-year growth. – Planet
Redwire given buy rating by Roth Capital, which set a $10 price target implying the stock could more than triple over the next year. – CNBC
Astra performs 1-for-15 reverse stock split, as the company moves to avoid a Nasdaq delisting. Shares traded near 20 cents before the split, and between $2 a share and $3 a share after. – Astra

Boldly going

Rob Rainhart named President of HawkEye 360, having served as the satellite radio frequency company’s COO since 2019. – HawkEye 360
Space & Satellite Professionals International (SSPI) recognizes ’20 under 35′ young professionals, to honor excellence by employees and entrepreneurs in the sector. – SSPI

On the horizon

Sept. 14: Firefly’s Alpha launches VICTUS NOX mission for the Space Force from California.
Sept. 15: SpaceX’s Falcon 9 launches Starlink satellites from Florida.
Sept. 15: Russia’s Soyuz launches the MS-24 crew mission from Kazakhstan.
Sept. 19: Rocket Lab’s Electron launches Capella satellites from New Zealand.
Sept. 19: SpaceX’s Falcon 9 launches Starlink satellites from Florida.

Follow and listen to CNBC’s “Manifest Space” podcast, hosted by Morgan Brennan, wherever you find podcasts.  More

Sweetgreen is facing a lawsuit in New York for alleged racial discrimination.
The lawsuit alleges that Black workers at seven Sweetgreen restaurants were subjected to racist comments and passed over for promotions.
The plaintiffs claim complaints to the salad chain’s upper management were ignored for years.

Workers prepare apples and avocados inside a Sweetgreen Inc. restaurant.
Adam Glanzman | Bloomberg | Getty Images

Ten Sweetgreen employees are suing the salad chain, alleging racial discrimination at seven of its New York City restaurants.
The lawsuit, filed Thursday in New York Supreme Court in the Bronx, alleges that the plaintiffs’ co-workers and managers subjected them to daily use of the N-word and other racist comments.

The complaint also alleges that managers failed to hire or promote qualified Black employees and gave preferential treatment to Hispanic workers. The plaintiffs allege that store managers said Hispanic people work harder than African Americans and called Black employees lazy.
The plaintiffs also claim complaints to upper management, including Sweetgreen’s human resources department, were ignored for years.
The lawsuit claims managers sexually harassed female workers, making sexual comments and touching them inappropriately.
“At Sweetgreen, we are committed to diversity as well as a safe and inclusive workplace. We take these accusations seriously and do not tolerate any form of harassment, discrimination, or unsafe working conditions,” a Sweetgreen spokesperson said in a statement to CNBC.
The spokesperson said the company was unable to comment further on pending legal matters.

The plaintiffs are seeking monetary and punitive damages and payment of attorneys’ fees.
The lawsuit was originally filed in March with only two plaintiffs. Thursday’s amended complaint includes eight new plaintiffs and adds more restaurants.
The seven Manhattan locations named in the lawsuit include restaurants in the Meatpacking District, the Financial District, Greenwich Village, Midtown East, the Upper East Side and the Upper West Side.
Companies are liable for their managers’ discriminatory conduct under New York City law.
The lawsuit also names two of Sweetgreen’s “head coaches,” or general managers, as defendants. More

Delta cut its adjusted earnings forecast for the third quarter.
American, Spirit, Frontier and Southwest previously cut estimates.
Airlines are grappling with higher fuel and other costs.

Delta Air Lines airplanes at the Hartsfield-Jackson Atlanta International Airport (ATL) in Atlanta, Georgia, U.S., on Tuesday, Dec. 21, 2021.
Elijah Nouvelage | Bloomberg | Getty Images

Delta on Thursday joined other carriers in trimming its profit estimates as costs rise.
The airline said it expects to report adjusted per-share earnings of between $1.85 and $2.05, down from an earlier forecast of $2.20 to $2.50. Delta said it is paying more for fuel than previously expected this quarter, but added that maintenance costs were also more than it anticipated.

Delta forecast unit revenue would fall between 2% and 3% in the third quarter from last year, better than the previous estimate that sales could drop as much as 4%. The company also reiterated its estimate for full-year adjusted earnings of $6 to $7 a share.
The company trimmed its quarterly guidance as the industry faces increased expenses just as it enters a period of lower travel demand.
American Airlines, Spirit Airlines and Frontier Airlines warned Wednesday that higher costs would cut into their profits in the summer quarter. Their lowered outlooks followed similar guidance from Southwest Airlines and Alaska Airlines.
Delta shares rose more than 2% in premarket trading Thursday. More

Anti-fraud company Riskified polled 300 global companies and found losses from policy abuses, such as return fraud and coupon stacking, are costing retailers $100 billion annually.
In one case, just 4,000 users created 137,000 fake accounts to take advantage of a discount code, resulting in $14 million in annual losses.
One survey respondent said they would rather have a customer break into their warehouse and steal an item than order it and return it, because their returns process is so long and costly.

Oscar Wong | Getty Images

For the last three years, Robert has used a different email address to take advantage of a Black Friday Hulu promotion that most recently offered new customers a yearlong subscription for just $1.99 a month instead of the usual $7.99 monthly cost.
The social media manager has used similar tricks to score multiple first-time customer deals on sports betting websites and when buying Manga, a form of Japanese comics. 

“I really don’t have empathy for a major company. I genuinely just don’t care,” Robert, a 31-year-old who asked to be referred to by his first name only because of privacy reasons, said in an interview with CNBC from his home on Long Island, New York. 
“It’s easy to do it online where all you’re doing is just creating a new email address or creating a new account and it’s like, you’re never actually going to have to speak to anyone about it and there’s really no accountability, so, why not do it?” he said.
This type of “friendly fraud” might feel harmless and seem like a small drop in the bucket for powerful corporations. But taken together with more nefarious forms of fraud, it’s costing retailers more than $100 billion per year, according to Riskified, which published a new study on the problem on Thursday. 
Riskified uses artificial intelligence and automation to fight fraud and boost revenue at major retailers including Wayfair, Peloton, Revolve and Canada Goose. For the study, it surveyed over 300 global companies with more than $500 million in total annual revenue.
The firm found retail policy abuses, such as return fraud and using fake email addresses for promo codes, is rising for some retailers. The practices tend to spike during the holidays or during times of high inflation. 

About 90% of the companies polled in Riskified’s study said offering generous refunds, return policies and promotions to drive sales and increase customer loyalty are important to their overall business strategies. However, the misuse of such policies is proving to be a major drain on profits, forcing some to think twice about offering such freebies as retailers look to protect their margins while they face high costs, rising shrink and a slowdown in discretionary spending.
“In our experience with merchants over the past two years, especially as they’ve been sharpening their pencils around profitability, they’ve really started to take a harder look at this,” said Riskified CEO Eido Gal.
“When you think about how easy it is to call in and say I never received my item, I received the wrong item, I want a different size, you can get a refund or a new item incredibly easily,” Gal said. “It’s much more easier to do that than it is to steal financials or credit card information and I think fraudsters have caught up to that.” 

The spectrum of abuse 

In some cases, friendly fraud is considered a cost of doing business and something retailers must contend with as part of customer acquisition.
It includes practices like using multiple email addresses to take advantage of promotions more than once, buying multiple items with the intention of returning most of them or wearing an item with plans to return it and not pay for it. 
However, serial and professional fraudsters are exploiting those lax policies and taking those abuses a step further, according to the study.
In one example analyzed by Riskified, a company identified 137,000 fake accounts created by just 4,000 abusive customers looking to take advantage of a steep 35% discount promotion for first-time customers. It cost the company more than $14 million annually. 
In another case, a top pet supply company based in the U.S. lost $3.5 million in the first quarter of 2023 alone after a small group of serial fraudsters exploited a promotion code for a 35% to 50% off discount.
In other cases, fraudsters claim they never received an order when they actually did, so they can receive a refund and get the items for free.
A majority of respondents, 55%, said their costs from those kinds of tactics were “very significant” in 2022, suggesting it has become more common and costly compared with other types of abuse, the survey said.
“Merchants don’t have the time or resources to follow up on claims. In fact, it could cost them more to investigate these claims one by one than to just accept what the customer claims,” the survey said. “Companies that ship products to consumers all over the world may not have visibility into who their last-mile delivery partners are, thus they can’t invalidate claims with any certainty.”
Other types of nefarious policy abuse include returning empty packages for a refund or using bots to buy out highly valued, limited-edition items, only to resell them for a higher cost on a third-party platform. The technique is common for limited-edition sneaker drops and concert tickets, which happened during sales for Taylor Swift’s Eras Tour. 

What are retailers doing about it? 

Sixty-five percent of the survey’s respondents said they rely on manual reviews for at least a majority of their refund and return claims. The process can be costly, time-consuming and ineffective. 
“One survey respondent even said they would rather have a customer break into their warehouse and steal an item than order it and return it because their returns process was so long and costly,” the survey said. 
Gal, Riskified’s CEO, said the “smartest” companies are starting to be more selective about who should receive freebies, and are using customer histories to determine who should have to pay for a return and who can send one in for free. 
“Let me give my best customers free returns always because that’s the convenient thing and that’s what I want to do to be competitive and let me work through and understand the identities of who’s not my best customer, and they would still have that restocking fee,” said Gal. 
ThredUp, which sells pre-owned clothes online, has a dedicated fraud and abuse task force that uses data and enhanced account monitoring to fight bad actors who are taking advantage of programs, the company told CNBC. 
For example, the company recently introduced a feature dubbed “Keep for Credit” where customers interested in making a return are given the option of keeping the items in exchange for store credit. It cuts down on the cost ThredUp faces for restocking returned items and brings shoppers back into the store to buy more.
Disclosure: Comcast, which owns CNBC parent NBCUniversal, is a co-owner of Hulu. More