Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Mon Oct 2 2017 21:06:48

Rethinking Returns in Wake of $1.2 Million Amazon Fraud

By: Ina Steiner

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Amazon and eBay may wish to rethink their requirements around seller return policies in light of a criminal case in which the Feds charged a husband and wife of defrauding Amazon of over $1.2 million through returns fraud.

Prosecutors said the couple defrauded Amazon by falsely claiming that the electronics they ordered were damaged or not working, and then requesting and receiving replacements from Amazon at no charge:

"Amazon's customer service policy allows, under certain circumstances, customers to receive a replacement before they return a broken item. Amazon closely monitors customers' accounts and orders for possible fraudulent activity. The Finans allegedly went to great lengths to conceal their fraud, creating hundreds of false online identities to perpetrate the scheme. Eventually, however, Amazon and federal law enforcement caught up with them."

We took a look at the plea agreement petition signed by one of the defendants in May. (The court accepted the plea agreement on September 14th and adjudged him guilty, sentencing is set for November 9.)

According to one example provided in the document, the couple ordered a Samsung Gear Fit2 smartwatch from Amazon on September 12th with a retail price of $179.99. 

"On or around September 13, 2016, before the original order had been delivered, the Finans fraudulently requested a replacement Samsung Gear Fit2 smartwatch, falsely claiming the item from the original order was damaged.

"Later that same day, before either the original order or the replacement order had been delivered, the Finans fraudulently requested a second replacement Samsung Gear Fit2 smartwatch, falsely claiming the first replacement was damaged." 

The document states that Amazon sent replacements, despite the fact that the claims were made before the items were even delivered, and indicates the couple never returned either item. (Prosecutors charged them with fencing goods to a third party.)

Online sellers who sell on marketplaces like Amazon and eBay have little recourse when it comes to returns fraud - take a look at this one example that demonstrates the powerlessness of an Amazon seller. 

Unlike Amazon, which has skin in the game since it sells on its own platform, eBay makes money even in cases when a seller is defrauded - and it keeps increasing the pressure on sellers to offer ever more generous returns policy.

If two people can use returns abuse to allegedly defraud Amazon to the tune of $1.2 million, the monetary loss from returns abuse on online marketplaces must be staggering.

Raise your hand if you *haven't* experienced returns fraud as a seller.




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Readers Comments

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by: pace306 This user has validated their user name.

Mon Oct 2 21:39:28 2017

But Devin Wenig and Co says that if you don’t offer 60 day free returns - you’re a bad bad man!

Worse, we need to have buyers segregate you and your items from the general public in search- “CAUSE YOU ARE OBVIOUSLY AT FAULT” and a cheap SOB for not doing it.  

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by: eBay Shill Buster This user has validated their user name.

Mon Oct 2 21:44:25 2017

It's good to see Amazon getting burned by their own idiotic policies, too bad Devin thinks he has to follow the very same folly.

These companies are both sad outfits, it is just a matter of time before a new entry in the market forms and plays off of the mistakes both companies are making and that will be the best thing that will ever happen for sellers.

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by: Nuts2U This user has validated their user name.

Mon Oct 2 21:56:52 2017

eBay won't do squat. One of my last transactions before I bailed as a seller was with a UK buyer who claimed nonreceipt. After eBay sucked the money out of my PayPal account and refunded her, the buyer contacted me THROUGH EBAY to say "This is so cute! Got another one for my sister?"

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by: dans parts This user has validated their user name.

Mon Oct 2 22:59:27 2017

Ina -

You're not going to see any hands raised.

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This user has validated their user name. by: Ming the Merciless

Mon Oct 2 23:06:31 2017

Ebafia should be similarly charged for encouraging, aiding, and abetting returns fraud. They are legally co conspirators in the rampant returns fraud on its platform. Further, ebafia acts as judge, jury, and executioner; there is NO due process for sellers who've been victimized nor are there any effective appeal remedies.

Wake up, Wenig before the feds come for you! Sellers can hasten this by reporting ebafia to the Justice Department (USDOJ).

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by: TomH This user has validated their user name.

Mon Oct 2 23:11:01 2017

eBay is just hopeless.  Amazon, mostly plays the percentage game completely. It does not matter if it is theirs or your product. Amazon will always take the least hassle, keep the customer, even most crooks, way.

Product choice and price range and anger management and blood pressure stability are very important decision points when deciding to sell there.

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by: Trying-My-Best This user has validated their user name.

Tue Oct 3 01:32:31 2017

This begs the question ... why did it take Amazon,  to the tune of $1.2 Million,  before they stopped this buyer???  A Red bot flag should have been raised after 3rd return complaint.  

Amazon should also be found at fault for allowing this run-up. And against scanned delivery is outrageous.

A bit off topic, anyone else noticed a growing %age of 90 to 95% feedback sellers on eBay?  I thought eBay had bots to seek and destroy lousy sellers - to protect their buyers.    ... this past weekend, on my searches, it looked like Best Match was favoring  some pretty poor performing sellers.








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by: mcposty This user has validated their user name.

Tue Oct 3 03:13:04 2017

That's bs that lots of accounts were made..how many credit cards do they have in different names?

No..Amazon just doesn't care that they are a popular place to steal from sellers.

There are very few protections that amazon offers its partners..everyone needs to bail.

EBay too of course.



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by: FeelingFroggy This user has validated their user name.

Tue Oct 3 05:11:26 2017

@tryingmy best

There is a very big difference between the hobby seller who sells 10 or 11 items a month and has a 99 percent feedback than the seller who sells thousands of items a month and has a 96 percent feedback.....

It would probably take a hobby seller months to run into the loose screw who knows no boundaries of leaving a negative while the larger seller probably runs into one of these morons daily.

Feedback is given at the whime of the buyer. Right Wrong or Indifferent.

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by: hopeforthebest This user has validated their user name.

Tue Oct 3 06:15:46 2017

Amazon closely monitors customers' accounts and orders for possible fraudulent activity....

...claims were made before the items were even delivered...

Yeah, they're monitoring things very closely.

Even by 'bot standards this was pretty stupid.

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This user has validated their user name. by: Rexford

Tue Oct 3 06:40:56 2017

How timely. I just received a return over the weekend where the buyer had claimed SNAD.  There is damage whatsoever to the item (she claimed damaged).  Followed up with her last night asking her about it and got a three word curt response.  I will speak to eBay about it, they will do nothing, but I will use the report buyer feature.  Perhaps (dare to dream)  reporting it will help a future seller she tries to rip off if they actually keep a database.  I doubt that that many humans review these cases though. I expect when the returns are challenged or one makes a call to a CSR they might be but if you do that eBay will likely find someway to punish you.

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This user has validated their user name. by: Rexford

Tue Oct 3 06:41:21 2017

Meant that there was no damage whatsoever.

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This user has validated their user name. by: blueribbon1844

Tue Oct 3 08:34:54 2017

People rent an item and then return it as snad. Its a scam and ebay should pay for the fraud, not the seller.

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This user has validated their user name. by: toolguy

Tue Oct 3 10:11:46 2017

HAND RAISED HIGH

I have never "experienced returns fraud as a seller."

I've been burnt twice on eBay, eBay ate the 1st one for $200 and a guy in Alaska was successful in ripping me off for $64.

I have very few returns, maybe 1 or 2 a year if that. . .

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by: dander This user has validated their user name.

Tue Oct 3 10:23:30 2017

lets not forget if they bought FBA, not only did the seller have to absorb the cost, they got dinged for selling a bad item. I've had my share of fraud, and I won't bore you with the details. The loss of fraud due to buyers is a lot less than theft at a retail store

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by: FeelingFroggy This user has validated their user name.

Tue Oct 3 10:40:11 2017

This would never happen on Fleecebay as all of their buyers are solid upright citizens and never every would do anything wrong.,,,,

I wonder how many scammers Fleecebay has paid off in the last week.

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This user has validated their user name. by: RKTOYS

Tue Oct 3 12:15:33 2017

Amazon (almost) got me for $100+ back in March/April when they refused to accept USPS delivery confirmation for a thief that filed their A2Z like clockwork the night it was received and refused to respond to me at all until the robot (and "appeals" robot) summarily decided in their favor.  They would not even make any allowance for an insurance claim or postal investigation.  I say almost because my card on file expired years ago and I was lucky enough to close the bank account before they could steal the money back.  Alas, my selling (and buying, for that matter) days on Amazon are over.

To add insult to injury, I was waiting for a small order of office supplies that Amazon kept delaying and delaying and delaying.  They wouldn't let me file an A2Z, wouldn't respond to status inquiries ("e-mail within 12 hours" is a lie), wouldn't let me cancel ("oops, try later"), and lied about overnight shipoping when I finally called.  After ~56 days of screwing off, they up and cancelled without so much as a "sorry, we goofed."

I never expected Amazon to behave worse than eBay and certainly never expected the forums to be such a raging case of Stockholm syndrome.  Amazon was, apparently, the real victim in both incidents.  You just can't make this stuff up.

If I was going to do it all over again, I would set up dozens of throwaway accounts and just close them the instant an A2Z claim was filed against them.  Selling there was rarely profitable and the trickle of sales delivered over half a decade was not enough to absorb even a single Amazon-sanctioned mugging.

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This user has validated their user name. by: eXtinctBay

Tue Oct 3 12:17:17 2017

@Tool

Seems like you HAVE experienced returns fraud by the guy in Alaska. Put your hand down.

The eBay Seller Support reps are now being trained to tell victimized sellers ''You should just forget about reporting this fraudulent buyer. Giving merchandise away for free is part of selling online. All retail businesses allow for these types of losses. Heck, Amazon even allowed a customer to steal over a million dollars from them, so your claim really doesn't matter''.

Perminate Link for Rethinking Returns in Wake of $1.2 Million Amazon Fraud   Rethinking Returns in Wake of $1.2 Million Amazon Fraud

This user has validated their user name. by: toolguy

Tue Oct 3 12:24:50 2017

@eXtinctBay

The Alaska guy wasn't return fraud it was postal fraud!

James Canitz Sr. ordered an airtool, his son James Canitz Jr. moved from Alaska to Texas.

He put in a change of address to the USPS.

Some of Sr.'s mail was being sent to Texas by mistake.

Sr. was at war with the USPS over this, when my package got forwarded to his son he exploded in anger and took it out on me!

eBay sided with him since the tracking showed the package was delivered to Texas and not Alaska.

That was 12 years ago, I haven't forgotten and will seek repayment when the opportunity presents itself. . . $64 dollars of pain is due, with interest!

Perminate Link for Rethinking Returns in Wake of $1.2 Million Amazon Fraud   Rethinking Returns in Wake of $1.2 Million Amazon Fraud

by: pace306 This user has validated their user name.

Tue Oct 3 15:05:39 2017

1) eBay and Amazon will NEVER rethink returns - as (in general) the loss(es) come from their 3p sellers and NEVER themselves. Forcing 3P sellers to eat the crap that comes back from buyers is a cash cow - its like having a money printing machine. THEY get happy customers, the sellers eat the garbage, the buyers get made whole ... "everyones happy" ... (well not really)

2) despite the comparisons, eBay and Amazon are TOTALLY different. On Amazon - its THEIR sandbox - their rules. When you sign in as a seller - you agree to the understanding that you will provide the same level of service that they do - and in their case - its unlimited returns (LOL). EBAY - was supposed to be A) "just a venue" (biggest joke EVER)(such liars) and B) you were supposed to be able to decide for YOURSELF on returns. HUGE difference between the 2.

Amazon doesnt "eat returns" (in general). 3P seller stuff goes back to the 3p sellers (at their cost)(account wise, money wise etc). THEIR defectives go back the makers - Amazon comes out "clean" (in the end).

eBay ... eBay owns and sells nothing (but hot air)(ok they hold eBayfests where they take lots of pictures of oddball mid aged women in ugly hats)(but I digress). So in eBays case - they decide(d) that ALL sellers are liars, all sellers are scum, and all sellers deserve the HONOR of taking back liar buyer crap - because selling on eBay (which any dope can do) is the best thing ever since sliced bread (hmmmmm toast).

eBay facilitates fraud, condones fraud, encourages fraud and that is how it works .... they slipped a line in the TOS stating that you give up your rights on returns - and what ever they decide .. thats it.

The "amusing" part is that if you "try to steal from eBay", they go berserk. Talk to a buyer, send an email, include a link etc - and eBay comes down on you like a ton of bricks... its ok to steal from sellers but not from eBay.

'Cause of that - theres a special HELL for eBay and its employees - shame on eBay for their behavior.

Getting back to Amazon ... the easiest way on Amazon to deal with it - is just to FBA the defectives. That will send back to Amazon (who takes back anything, at any time) the garbage they gave you, it will get commingled and you will be free of the issue(s). Its sneaky, its even slightly underhanded - but we as sellers signed up to sell goods and service buyers, not to be garbage dumps - what goes around comes around.

eBay only knows "60 day free returns"- 'cause why not? Theres no skin off their nose - its just telling the $3 per hour CS agents to lay it all on the seller.

Amazon (like eBay) has a factor - they wont eat any of that loss - I lose no sleep for either of them.

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