Returns fraud on Amazon harms sellers and brands

 

 

Returns fraud is becoming more than an occasional nuisance for Amazon sellers. The National Retail Federation found that in 2023, 13.7% of all returns in the US were fraudulent, resulting in a loss of $101 billion. With strict consumer-centric returns policies in place in many countries and marketplaces, retailers often have no choice but to expose themselves to potentially damaging fraudulent returns.  

 

A return occurs when a customer is not satisfied with their purchase and sends it back to the retailer. However, in the case of fraudulent returns, the seller finds an unexpected item in the returns box instead of the product they originally sent out.

 

Amazon sellers have reported receiving used or damaged products instead of the brand new one they had dispatched. Similarly, flip-flops have arrived in place of Nike sneakers, Christmas decorations instead of a French press coffee maker, or counterfeit luxury wallets in lieu of the originals the seller sent out. Some sellers have even found thin air in the highly anticipated returns box.

 

Take a look at globaleyez’s services aimed to detect and eliminate counterfeits in the market!

 

 

Amazon returns policy in favour of customers

When it comes to returns policies, most marketplaces, including Amazon, heavily favour the customer. This means that a customer can usually send back the product without citing a reason, and the refund is often granted right away.

 

This practice leaves no time for the returned product to actually arrive at the seller’s address, which would allow them to check what they got back before the purchase price is repaid to the customer.

 

 

Illustration of a person handling a returns box

 

 

While getting the odd fraudulent return by a dishonest customer may not pose a big problem for businesses, the situation is unfortunately much worse than that. Analysts believe that a whole network of thieves may be at work behind the scenes, with dedicated internet fora coaching people on how to make a fraudulent return - and get away with it.

 

Defrauded sellers can turn to Amazon by reporting a theft. The e-Commerce giant remarked that it doesn’t tolerate fraudulent returns and has employed a task force to investigate, detect and prevent cases of returns fraud. Last year, Amazon filed a lawsuit against REKK, accusing the company of operating a large-scale international returns fraud scheme.

 

That said, Amazon’s sellers claim that the procedure for reporting a fraudulent return is long, difficult and often comes to an unsatisfying conclusion when they receive only a fraction of the amount stolen. This leads to many sellers not even reporting an issue, or changing their entire business profile from high value items to a less costly product group, like pet food or other consumable goods.

 

 

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Fraudulent returns are not exclusive to America. In fact, German police have recently discovered and dismantled a network of criminals called the German Refund Crew, an organisation that stole several hundred thousand euros from online vendors in the form of fraudulent returns. The criminals advertised their “services” via a Telegram channel.

 

In another case, a Spanish individual managed to defraud Amazon sellers in the value of 330,000 euros by ordering smartphones from the platform and subsequently returning their boxes - albeit filled with dirt. Since he ensured that the returned package weighed the same as the outgoing one, the scam went on for quite a while before someone noticed the unusually large amounts of returns sent by a single customer.

 

 

Illustration of a box filled with dirt created by AI

 

 

How to protect your brand against returns fraud

While it’s impossible to completely eliminate all fraudulent returns, certain measures may contribute to significantly reducing the risk of them.

 

1. Try to set clear returns conditions (unless you’re bound by what your marketplace, e.g. Amazon dictates). Let your customers know in which cases and under what conditions are they entitled to a return.

 

As mentioned earlier, this may be tricky as many countries and marketplaces currently offer free returns to customers. However, this trend may be changing. Since free returns encourage customers to order more products than they need, this practice is bad for the environment (think of all that shipping back and forth) and generates lots of extra costs for retailers. Stricter returns policies may be more efficient in curbing overconsumption and reducing carbon emissions.

 

Find out how a Swedish retailer introduced tighter returns conditions

 

2. Inspect all your returns carefully. If you have any doubts about the products you got back, contact Amazon (or the marketplace you’re active on) right away. If you feel you’ve been a victim of fraud, contact the police as well.

 

3. Keep track of your returns. Several software tools could aid you in this process by recording each return and analysing the patterns. They’ll let you know if any red flags emerge, e.g. a customer regularly returning their purchases.

 

4. Let your employees in on the issue. Organise training to help them recognise cases of returns fraud and encourage them to speak up, should they come across anything suspicious.

 

5. If you’re able to, introduce a returns fee, or give your customers store credit instead of their money back. This will make them think twice before treating your store as a free changing room, ordering different sizes and colours of products and keeping only a select few they actually like.

 

Of course, due to legal restrictions and marketplace policies, there’s only so much you can do. Luckily, globaleyez is here to help you.

 

Depending on your e-Commerce presence, we can offer several measures to help you with returns fraud. For example, our experience shows how difficult communication may be between a brand and large marketplaces like Amazon. Due to their size and enormous area of operation, it may be difficult to get your case across to people who can actually do something about it.

 

Therefore, we’d be happy to help you gather evidence of your returns fraud case. Thanks to our screenshotting tool screenseal, we can provide you with court-admissible evidence of fraudulent activities that can further your case with Amazon, and even contribute to the success of an eventual lawsuit.

 

 

Conclusion

Returns fraud is an increasingly problematic issue and an ever growing cause of revenue loss for brands and sellers alike. Don’t let it ruin your business!

 

Contact us and let’s come up with effective means to combat returns fraud together.