A Couple's Scheme: Exploiting Amazon's Lenient Return Policy for Profit
Criminals will always find a way, and here is one scenario like a never-ending story using auction swapping to grow their business. In our scenario, recently, a couple purchased a truckload of product return goods from an auction website at pennies on the dollar, and there’s absolutely nothing wrong with this. The couple realizes the truckload they purchase is that of product returns and may need parts and work before selling. But this is okay because they only give pennies on the dollar and can easily make a profit. Oh, but this couple has a better idea for generating a higher profit with less work and expense, not to mention that the merchandise packaging isn’t in the best shape.
Product return goods are where consumers ship or bring back a product to the store for whatever reason for an exchange or refund. Let’s face it, who wants to purchase something that doesn’t work?
Retailers are losing ten percent of their sales during the holiday season, which has not improved over the last few years and will worsen. In most cases, the store can’t resell the merchandise, and according to Gartner Research, less than half are resold at full price and must send the product to a warehouse for auction. An Amazon seller must pay for the product to be shipped back to them or destroyed.
Now, the couples scheme is pretty simple, purchase the exact product, get a receipt, switch the two items, return the non-working item, give a reason as simple as “it did not work,” and repeat. The returned product will go back to the warehouse to start the process over again. In this scenario, our couple has purchased a truckload of brand-new merchandise for only pennies on the dollar with very little work and tremendous profits.
The Loopholes of Product Return Fraud: How Criminals Exploit Auction Websites
The more lenient Amazon’s return policy gets, the more frustrating it gets for sellers. Amazon offers free return shipping back to buyers on some products; in some situations, a buyer can keep the merchandise with a full refund.
Amazon makes money from these practices off of the seller’s back. If a buyer gives the reason ” arrived damaged,” “doesn’t match the listing description,” or “is the wrong item,” you will have to accept the return even if your returns policy says you don’t accept returns with most marketplace policy rules.
Return fraud for retailers can be a nightmare, and it will worsen before an actual solution gets implemented. It is frustrating that most marketplace platforms let buyers return items with missing parts and no packaging or instructions. Most sellers have had buyers return an item they suspect was fraudulent more often than not.
Addressing the Growing Problem of Product Return Fraud in Amazon and eBay Online Marketplace
Could you imagine having a system that warns you of a consumer’s likelihood of making a fraudulent return, allowing you to decline an order? A design like this would be a game-changer for all online marketplace sellers. If you could see if a consumer intended to abuse a return policy beforehand, would you? Could this save your business from future return abuse? Of course, would you be willing to add a return of your own to the system? I think you would.
Give a consumer a choice to use an affordable technique that identifies a fraudulent serial returner. The question is, would they use it? We think the answer would be an overwhelming yes. A system that identifies fraudulent returns would be a method to help stop or at least.
If you’ve ever sold on Amazon, eBay, or any third-party marketplace platform, then you know product return fraud is out of hand. Ninety-nine percent of the time, the marketplace platform will side with the consumers to protect the consumer’s best interest. Whether online or brick-and-mortar, the return fraud problem needs a real solution to fix all the chaos.
Finding a solution
As the e-commerce industry continues to thrive, businesses are facing an increasingly pressing issue: product return fraud. With consumers expecting lenient return policies and free shipping, retailers are struggling to find ways to mitigate the financial impact of fraudulent returns and find a solution to the growing problem without alienating legitimate customers. One potential solution is to offer drop-off options for returns, such as at a Kohl’s or UPS store.
However, it’s important to note that fraudulent activity can occur on both sides of the transaction. Sellers may also engage in product return fraud by purchasing goods from auction sites and returning them for a profit.
As the COVID-19 pandemic has accelerated the shift toward online shopping, it’s likely that e-commerce sales will continue to grow in the coming years. As a result, it’s crucial that businesses take steps to address the problem of fraudulent product returns before it becomes an even bigger issue.
Auction Swapping The Never-Ending Store Return
However, the couple then proceeded to return the same items to the original retailers, claiming they were defective or not as described. This type of fraud, known as “auction swapping,” is a growing concern for retailers as it results in significant financial losses.
To combat this issue, retailers are implementing stricter return policies and utilizing technology such as RFID tagging and data analytics to track and detect fraudulent returns. Additionally, some retailers are turning to third-party companies that specialize in preventing fraud to assist in identifying and stopping fraudulent activities.
Furthermore, consumers should be aware that participating in this type of fraud is illegal and can result in serious consequences. As online shopping continues to grow in popularity, it’s crucial that both retailers and consumers take steps to prevent and address fraudulent product returns.
Who Are Fraudulent Serial Returners
From a marketplace seller to sweet little old grandmothers, anyone who takes advantage of a store’s return policy system. More often than non, it is a person who has justified it in one’s mind as nothing wrong. If you’re returning a dress worn for a day or a tool needed for a quick job, you’ve committed return fraud no matter how you see it. Marketplace sellers are in more danger from other marketplace sellers than consumers because they need to be on the lookout for dropshipping Scams.
Amazon Returns vs. eBay On Product Returns.
It may not be as simple as you think to answer that question. But from all our research, we will do our best.
According to seller central on amazon forums
Sellers who sell the same essential items on Amazon and eBay, from selling a few thousand items per month to only a few on both sites, had this to say.
“Our Amazon return rate is 300% higher than the same products we sell on eBay.”
“We are selling around 1200 items a month on Amazon compared to 400 items a month on eBay with a return rate of 8.12% on Amazon and 0.02% return rate on eBay. The reason for the returns given is less than 1% due to “damaged items,” “buyers remorse,” and “item not as described,” with the rest suspect as return fraud.”
“Product returns are much higher on Amazon than on eBay, because Amazon is too friendly with the product return policy, which is excellent for the buyers but terrible for the sellers. Amazon needs to only allow returns for valid reasons. On eBay, you can’t return an item missing all packaging or broken by the customer.”