Despite topological protection and the absence of magnetic impurities, two-dimensional topological insulators display quantized conductance only in surprisingly short channels, which can be as short as 100 nm for atomically thin materials. We show that the combined action of short-range nonmagnetic impurities located near the edges and on site electron-electron interactions effectively creates noncollinear magnetic scatterers, and, hence, results in strong backscattering. The mechanism causes deviations from quantization even at zero temperature and for a modest strength of electron-electron interactions. Our theory provides a straightforward conceptual framework to explain experimental results, especially those in atomically thin crystals, plagued with short-range edge disorder.