Amazon Refund Scams: Common Examples & How to Keep Yourself Safe
The Amazon Marketplace is a great platform on which to reach your customers.
Whatever you’re selling, there is likely a demand for that product on Amazon. The visibility and exposure you can expect are outstanding. However, it isn’t always sunshine and rainbows. There is a darker side to selling through Amazon that you should be aware of.
We’re talking about Amazon refund scams.
Refund abuse is a common occurrence on the platform. Why is this the case? And how can you protect your business and safely sell your products on Amazon? Let’s find out.
Recommended reading
- What is Chargeback Fraud? How do You Protect Yourself?
- Stop Buyer’s Remorse: Tips to Beat the Second-Glance Blues
- What is Return Fraud? 10 Tips for Merchants to Fight Back
- What is First-Party Misuse? Accidental Chargebacks Explained
- Is AI Being Abused to Commit Chargeback Fraud?
- Accidental Friendly Fraud: a Fast-Growing Online Threat
What is Return Fraud?
Let’s start from the beginning.
Return fraud is the act of returning merchandise to a retailer for a refund in violation of the merchant’s stated returns policy. The merchandise may be ineligible for a refund because it was purchased from another retailer, because the item is used, or was marked as otherwise ineligible for a refund before purchase.
Amazon is a hot target for this activity, but it’s not limited to the platform; it’s a huge problem across the board. In 2020 alone, about 6% of all return requests — some $25.3 billion — were fraudulent.
Return fraud can be the result of an honest mistake on the part of the consumer. However, an increasing number of cases involve premeditation and malicious intent. Regardless of the source, though, return fraud is a real and growing threat that costs merchants both time and revenue.
Learn more about return fraud4 Reasons People Engage in Amazon Refund Scams
Understanding your customers’ reasoning and motivation is a big part of discouraging this activity.
Scammers who engage in refund fraud assume there’s very little likelihood of it even being noticed. This is bolstered by the fact that Amazon is such a massive company. Many consumers see illicit returns as a “victimless crime,” assuming that the company won’t be impacted.
What the average consumer doesn't realize is that products listed on the site are not always sold by Amazon. While small businesses contribute many of these products through Amazon, consumers fail to make the distinction.
Here are just a few of the leading reasons why consumers might carry out an Amazon refund scam:
Most return requests are not malicious. It’s best to be wary of potential Amazon refund scams but always keep an open mind. Also, don’t forget to practice excellent customer service at all times. It can save you a lot of headaches later on.
Common Amazon Refund Scam Examples
So, now you know the motivation behind most Amazon refund scams. How exactly do they work, though?
Here are a few ways your business might be targeted by return scammers:
The Empty Box
The old “empty box” trick is a classic. This happens when a customer uses a prepaid label and then drops off a box with a delivery service, so the weight (or lack thereof) isn’t being recorded. In other tactics, the box could be filled with paper, garbage, dirt, or some other debris to game weight measurement systems. If the merchant initiates a return before receiving and validating the goods, they will lose that money.
The Switcheroo
Some customers will remove the goods, then fill the box with different or used products, then claim you sold them a fake product to force a refund. This one can be especially tricky if you are unable to prove the product you shipped is not the one they returned. This is a practice sometimes known as “box swapping.”
‘It Came Like That.’
“Bricking” happens when a customer buys an item, strips out valuable components for parts for resale, then returns the item and pockets the profits. Frankly, if a customer breaks an item and then returns it, there isn’t a whole lot you can do about it unless you have proof that it arrived undamaged.
Wardrobing
A shopper buys some merchandise, but already plans on returning the item after using it. For example, an expensive outfit that is worn once and then returned, or a book that is returned after reading. This problem has become so rampant that many merchants have opted to start renting apparel, rather than face a bevy of unusable returns.
The Slowpoke
For whatever reason, the buyer failed to return their purchase within your return timeframe. Regardless, the buyer then kicks up a fuss if you refuse to accept the return request.
‘It Never Arrived’
This is less common on Amazon than it used to be. Regardless, every once in a while, Amazon will still provide a refund on items which the buyer claimed never arrived or were never returned. Avoiding this issue is really a matter of avoiding delivery oversights.
How Amazon Fulfillment Could Affect Returns
Do you fulfill orders through Amazon using their Fulfillment by Amazon (FBA) service? If so, this means you’re depending on Amazon to not just process returns for you, but also detect when there might be irregularities and determine whether or not items are fit for resale.
The Fulfillment By Amazon process usually handles returns in the following way:
- A return is initiated by the customer
- Items are received by FBA services
- Items are inspected by FBA staff
- Items are sorted as “sellable” or “unsellable”
- Sellable items are added back to inventory and relisted
- Unsellable items are stored until seller removes or asks for it to be recycled
FBA is a great service, but as you might imagine, Amazon workers aren’t brand experts. Things you may have noticed about your products can be easily overlooked by a third party. This is especially true when you consider that the FBA crew is under pressure to review and process returns as quickly as possible.
A customer that buys a resold item is bound to notice if the item doesn’t match the description, or if the item is damaged or broken in some way the FBA crew missed. Customers who identify these mistakes are bound to complain. And, without having the returned item in your hand to verify those claims, you’re unable to accurately diagnose the issue or pinpoint illegitimate returns.
Marking every return as non-resellable presents its own problems. Remember: every returned item must be stored in the Amazon warehouse until it is sent back to you or destroyed at your expense. In the latter case, you’ll end up destroying a lot of perfectly good merchandise… especially if those refund requests are invalid (i.e. refund scams).
While fulfilling your own orders is ideal, not every company is capable of fulfillment at scale without help. This is why it’s important to recognize potential weaknesses in your order and delivery process to prevent issues later on.
How to Respond to Amazon Refund Scams
Odds are you’ve already been hit with a refund scam or two during your time as an online seller. It’s never great to learn that someone has targeted your business for any scam. However, there are some steps you can take here:
Calmly Contact the Buyer
You should absolutely not become threatening or aggressive with a buyer. Instead, try to reach out and discuss the issue.
Frame the conversation as a means to resolve an issue with their return, and presume good faith on the buyer’s part. Inform them that, after careful inspection, their return did not meet acceptable return standards, and ask them how they would like to proceed.
You may politely reiterate the pertinent points of your return policy and attach the full document to your email. Most scammers dislike friction of this sort and will likely back down fairly quickly if they know they’re not entitled to a refund. You could even try offering a promo code for a future purchase or some other incentive to expedite the process.
If they don’t back down, don’t waste your time engaging with them. Inform them that you will be forwarding your evidence to relevant agencies and to have a good day. Never engage in petty arguments or debates with your customers.
Report the Buyer to Amazon
You should always report refund scams to Amazon as soon as you spot them. At the very least, it will alert Amazon to the suspicious buyer. This may help them pick up on repeat offenders and get bad actors banned from the marketplace.
Abusive feedback, reviews, messages, and returns can all be reported. If the order was fulfilled by Amazon, a return specialist may escalate the case over fraud concerns, and it will be further investigated by Amazon’s fraud detection service reps.
You can contact Amazon support to file an Abusive Buyer Report via Amazon Seller Central, or by emailing suspect-abuse@amazon.com. If the buyer ever decides to file a dispute in the future, you can leverage your “Abusive Buyer Report ID” to expedite your case.
In other instances, if your buyer provides a false reason for a return, you can file a “SAFE-T” claim for reimbursement of return costs to receive a free return label.
Report the Buyer to the Authorities
You may be able to pursue legal action against offending buyers. Specifically, reporting fraud to the Federal Trade Commision can help prevent that customer from becoming a repeat offender.
Aside from the police and the FTC, you can report return fraud using the USA.Gov website, as well as the US Department of Commerce.
You can also try contacting the police, or even the media, depending on the severity of the scam. Most local news agencies and state Chambers of Commerce have hotlines set up to report fraud.
Act to Prevent Future Scams
Chasing down scammers can be a stressful full-time job for eCommerce merchants. This is why it’s crucial to prevent scams before they happen. You’ll never be able to fully eliminate fraud from your business. That said, you can drastically reduce the volume and frequency of incidents by doing the following:
A Last Note: Don’t Forget About Chargebacks.
Monitoring performance metrics is a critical aspect of any eCommerce business, particularly when it comes to chargebacks and other post-transactional threats.
Even if you catch a customer in the act of an Amazon refund scam, they could still approach their bank to dispute the transaction when they fail to get what they want. If this happens, you’ll fork over additional funds in the form of chargeback fees… even if you can prove the dispute is illegitimate!
In order to fight back against Amazon refund scammers and prevent the chargebacks that could result from them, you need to combine your fraud detection resources with an effective, comprehensive chargeback management strategy.
Call Chargebacks911 today to find out how fraud management services can benefit your business, or click here for your FREE ROI analysis.
FAQs
Do people abuse Amazon refunds?
Yes. Unfortunately, Amazon refund scams are a frequent occurrence on the platform, despite (or because of) the company’s generous refund policies.
How do Amazon refund scams work?
Scammers approach fake refunds in many ways. Generally speaking, though, scammers will attempt to initiate a refund without returning the item they purchased.
What is considered refund abuse?
Any activity related to illicit refund scams is considered a form of refund or merchant abuse. Essentially, when customers attempt to defraud a merchant in pursuit of a fake refund, then a case of refund fraud has been committed.
What are the most common Amazon scams?
Shady customers use several tactics in the pursuit of refund scams. These include returning empty boxes or boxes full of junk, claiming their items arrived broken, claiming their items never arrived, or just inventing a fake reason to return the item outside of a merchant’s return policy.
Can you go to jail for scamming Amazon?
Actually, yes you can. Amazon refund scams are prosecutable, like any other act of fraud. Responses will depend on the scale of the offense. Most offenders are handed fines and infractions for fraud. But, every once in a while, someone will go to jail for refund scamming.
