Dangers of Selling on Amazon and eBay
Return Fraud With Online Marketplaces.
Many sellers have complained about product returns fraud over the past few years with major online marketplaces such as Amazon and eBay. Only to fall on deaf ears doing nearly nothing about the problem. The old saying “The customers is all ways right.” allows for product return fraud to flourish.
In a June 2020 post from the Department of Justice, a buyer allegedly cost Amazon half a million dollars in product return fraud. The buyer in question was Michael Chaves, 40, former owner of CAT, who Inc created a fraudulent scheme to defraud Amazon through theft of inventory and false representation of returns.
The U.S. Department of Justice said that the man single-handedly ordered thousands of products from Amazon to replace the original ones with products of lesser value. The man skillfully replaced the original products before returning the actual packages to Amazon for refunds.
Chaves had open many customer accounts with amazon using various names and email addresses. Chaves approximately return most of the 10,795 orders totaling approximately $713,970.78, of the merchandise purchased over time. Product returns fraud is a significant issue in the online marketplace. This problem isn’t isolated to Amazon or eBay. Other online operators have similar problems.
How does return fraud happen on Amazon and eBay?
Curbing returns fraud depends on one key factor; how you fulfill your orders and how you handle returns.
Your order fulfillment and return fraud
If you fulfill your orders on Amazon, it means that all returns come directly back to you – which means that you will have access to all returns. Regardless, you might not be immune to returns fraud.
Here’s how returns fraud might happen in this scenario:
• The box might be empty. Buyers avoid weight detection at the postage system by using a drop-off delivery service.
• Buyers can fill the package using dirt, garbage, or even potatoes. That is a tactic to overstep the weight recording system.
• Buyers can replace it with a different product. For a long time, buyers replace the original product with cheaper versions of the product.
• The packaged return is counterfeit. That is when things can get out of hand. Buyers can acquire a genuine item, replace with a counterfeit, and then demand a refund by saying you dispatched a fake to them. You wouldn’t contest that, would you?
• Damaged product. Buyers can accidentally cut through products when opening up their packages. They can go ahead and make the damage look worse and claim they received it that way.
• Used items. Also referred to as ‘free renting,’ this involves buyers using items before returning them for complaints.
• You might receive a late return. Buyers can capitalize on late returns to pressure you into processing a refund.
• Sometimes the package doesn’t arrive. Amazon can issue a refund before the seller has even received their return. As such, fraudulent buyers can capitalize on that and quit sending the item back.
Why do people try to cheat the returns system?
Whereas it is vital to understand the buyers’ motive, it is in the best interest of the seller to prevent any fraud in the system. The following are the common ways buyers are likely to commit fraud on Amazon and eBay alike:
Deliberate Product Return Fraud
Some buyers are more than willing to exploit loopholes in the return policies to their benefit. If a buyer cab successfully obtains a genuine product via a return scam and resales it, then to some, it might be a lucrative business idea. To that effect, there are high-profile fraud cases too.In June 2018, an Indiana couple, Erin and Leah, were each sentenced to a six-year jail term for defrauding Amazon a sum of $1.2 million worth of electronics. This case was just a highlight, but there are more fraudsters who haven’t been caught yet.
• Product Return Opportunism
Depending on individual circumstances, buyers can quickly capitalize on Amazon’s generous return policies to their advantage.
As such, it is unsurprising that one-fifth of us shoppers have admitted to ‘wardrobing,’ which is the purchase of wearables to wear and then returning them later.
Nevertheless, most shoppers still believe what they are doing isn’t illegal so this behavior is bound to continue.
• Seller sabotage
Seller sabotage is quite common in the online marketplace. For their part in suspending accounts at will, Amazon can be notorious, especially if you couple that with return fraud. Instances of seller sabotage include, but are not limited to:
• A seller could place a substantial clear out orders to their competitors and the whole order late but still within the return window.
• Some sellers can effectively frustrate their competitors through the returns policy. To do so, sellers can use several accounts to purchase and return products from competitors over and over again.
Therefore, it is essential always to remember that marketplaces such as Amazon are cutthroat. As such, sellers can go overboard as long as they have the edge over their competitors.
• Honest mistakes or carelessness
Sometimes buyers on Amazon can make errors when requesting returns. For instance, a buyer can genuinely select the wrong reason for returns, oblivious that it will affect the seller.
Some amazon technicians can mislead buyers to opt for problem resolution through the returns system, even if they have other avenues of resolving the problem. The alternative avenues may as well include providing a spare part or offering a partial refund.
In other isolated scenarios, buyers might opt for a refund if a product doesn’t arrive on time. The product arrives later when they have forgotten about the refund or sometimes choose to ignore the product for convenience.
How Sellers Can Fight Back
As mentioned earlier, the ways scammers defraud sellers on Amazon and eBay are limitless. From simple, honest mistakes and casual opportunism to deliberate scams and seller sabotage, the online marketplace couldn’t be more frustrating. On the other end of the spectrum, the generous return policies by Amazon and eBay alike encourage career criminals to make money from loose ends. With the anger that stems from all these frustrations, is there anything sellers can do on their part to fight back? Let’s explore the options.
• Fulfillment by Amazon (FBA) and return fraud.
Using FBA or outsourcing your order fulfillment means your return inspection will be done by a third-party logistics company (3PLs) to establish if anything dubious is happening. In that case, the buyers are obligated to, first of all, send the item back to an Amazon fulfillment center for inspection.
However, because of the pressure, Amazon workers get in processing returns, the risk of misclassifying items is real. As such, a disposable item can easily slip its way through and back to the shelves for resale. The next customer would surely raise complaints, resulting in a returns fraud, which would consequently put the seller account in danger.
