CNBC: Refund fraud schemes promoted on TikTok, Telegram are costing Amazon and other retailers billions of dollars
KEY POINTS:
*Refund fraud groups, organized like businesses, are exploiting lenient refund policies, robbing retailers of billions of dollars, experts told CNBC.
*In a suit brought in late 2023 against dozens of alleged fraudsters, Amazon said consumers “must bear the brunt of increased costs, decreased inventory, and service disruption that impacts genuine customers.”
*Amazon also suffered more than $700,000 in losses at the hands of another alleged fraud ring in which 10 people were indicted last year, according to court documents.
THERE IS A LONG STORY ON CNBC EXPLAINING MANY OF THE DETAILS
CNBC: Refund fraud schemes promoted on TikTok, Telegram are costing Amazon and other retailers billions of dollars
KEY POINTS:
*Refund fraud groups, organized like businesses, are exploiting lenient refund policies, robbing retailers of billions of dollars, experts told CNBC.
*In a suit brought in late 2023 against dozens of alleged fraudsters, Amazon said consumers “must bear the brunt of increased costs, decreased inventory, and service disruption that impacts genuine customers.”
*Amazon also suffered more than $700,000 in losses at the hands of another alleged fraud ring in which 10 people were indicted last year, according to court documents.
THERE IS A LONG STORY ON CNBC EXPLAINING MANY OF THE DETAILS
33 replies
Seller_WAZNnMBpd99sI
Amazon also suffered more than $700,000 in losses at the hands of another alleged fraud ring
Just imagine how much 3rd party sellers are losing!!!
Seller_hnKu5Y8FFUG3l
This is exactly what we all have been screaming about for years but Amazon just ignores. Years ago buyers were first required to contact sellers before initiating a return. This gave sellers a chance to rectify issues honest buyers were experiencing and also weed out potential scams and theft.
Then Amazon took this away from us with the ridiculous auto-authorized return program.
Once that happened it was open season on sellers (well, more so than before)
Gone were our abilities' to address customer's concerns in a fair and timely manner with resolutions that were fair to both parties.
Couple that with the new and exuberant return shipping charges dumped on sellers hidden behind the veil of secrecy that is the mystifying "Other" charges on your transaction history report, sellers are basically required to enable returnless refunds (what Amazon wanted all along) or go out of business.
All this is is a big recipe for fraud. For example, customer orders ten items, has a problem with one, realizes that they don't have to return the item, then they open return requests for the other nine items and get everything for free.
If Amazon cared one bit about their sellers they would go back to the old system requiring customers to contact the seller for a return (FBM).
Amazon won't do that though because happy customers at seller's expense is good for Amazon.
Seller_HP0CuTSNvJvu9
Imagine if that 700,000 is just the listing fees, and third party sellers are losing the other 85-88%
Obviously it's not the case, but I bet a large chunk of it is.
Seller_FiswKMx7uPaJ8
Amazon is starting to have a death rattle in its operations, your seeing it with the sudden fee increase, the nonsense with non-dangerous goods suddenly after years becoming dangerous so they can charge more fees for storage, on top of the new FBA fees to move your shipments. This is what happens when a company grows fast in good times, when weak times come the fractures really start to show.
Seller_1JEfNWgSwIUeY
Im glad that finally the media is picking this up. Have been on Amazon for almost 15 years and I've been telling them for awhile that buyers make fraudulent returns. We just take losses and are told by Amazon "That's the cost of doing business"
Seller_jvpxdrhdlNEo5
Kick the [Moderator Edit: Remove Inappropriate Commentary] seller out and the problem will be solved.
Seller_8UYHnTIxJNqVK
no not Amazon losing $700,000 !!! Its the sellers losing $700,000!!!!
Seller_hLH0bAcCwYcos
Just had a customer return 2 toys that we sell for $60 apiece, and swap them out with 2 products from the same brand (Star Wars, Transformers) worth about $15 apiece. Both items they swapped out are sets we have never sold before, or even heard of before. We have sold 100 of this set, and never had a single return where customer received the wrong item, except for the 2 returns from this customer. The customer has a 100% return rate. He is swapping out and returning EVERYTHING he buys on Amazon, and replacing it with JUNK. We just lost a day's pay, $120 due to this product swapper. This is STEALING. We reported said customer to Amazon's fraud dept. for product swapping 100% of their orders with products we have never even sold. We told them if they purchase and steal/swap anymore of our products, and replace them with junk, we will contact the police, and report them for ONLINE PRODUCT THEFT.
Product swapping is THEFT. It's no different from going in a retail store, and stealing a product. Report it to Amazon. Thats the ONLY way to stop theft until Amazon allows us to BLOCK bad customers.
IF they are stealing from your store, they are likely stealing from others. REPORT THEM TO AMAZON, and the police if necessary. The more Amazon receives reports on these fraudulent customers, the sooner they can catch them and shut them down. At times like this, it would greatly benefit Amazon AND US, for Amazon to give us the benefit of BLOCKING customers with fraudulent/high returns such as the one above with a 100% product theft rate. Amazon loses 100% of it's commission, and we lose 100% of our revenue, on theft where product swappers steal our product, and send back junk. And if Amazon reimburses us, they lose even more money. When we see a customer swap products out with items we have never sold, and we KNOW are not ours, we would instantly block them, and save Amazon and ourselves, collectively MILLIONS of dollars a year. Every small seller such as myself potentially blocking $1000-2000 worth of fraudulent customers would save Amazon MILLIONS of dollars, and ALOT of heartache. And BLOCKING customers would probably reduce overall returns on amazon by as much as 15% (see post below on BLOCKING bad actors...
https://sellercentral.amazon.com/seller-forums/discussions/t/ef8a4afe-d801-4cf8-be34-7a507205cab3?
Seller_gozLblKS3jpfF
Amazon didn't lose any money, WE DID!
Amazon never loses..lol. If they did, they'll tackle the issue head-on, but the lackadaisical efforts by them speaks volumes.
Seller_roNdLQpqbVoOH
Unfortunately, all I see this story doing is directing other, new-to-the-game customers to these online sources to learn how to get in on this windfall.
And I can't imagine Amazon addressing it with any vigor until Amazon itself gets squeezed enough that they can't breathe.
