Does Amazon accept these faulty items back and refund the customers if they ask? Do they pay the return shipping cost? Assuming yes, surely this is costing them a lot as well.
So my understanding is this: as a seller, buy subpar version of whatever item. Send it to Amazon to be comingled with every other item sent to Amazon for that SKU. Sit and wait, Amazon will use some of your stock to fulfill orders from this listing (so other sellers' sales will result in buyers receiving some of your stock). You'll also make sales yourself, and Amazon will send whatever stock from that pool of item (so not necessarily the exact ones you sent in, and most likely the genuine/better quality ones other sellers sent it). You make the sale, keep the money. Meanwhile, the buyer who got your item when buying from another seller will complain and return their item. The seller (not you!) will have to issue the refund and eat the cost. Voilà, you've exploited amazon's comingling to your profit and actually made money off of it.
Amazon accepts returns for 30 days and pays for shipping if you select "Item defective or doesn't work" for your return reason. However, that kind of con may still be very profitable for merchant since many buyers won't bother returning.
1. Pay for couple hundred 5-star reviews before Christmas
2. Get tens of thousands of orders
3. Send people cheap defective items that costs 1/10 of price to manufacture
4. Profit! Even if 80% of buyers return, it could still be profitable.
The seller can also just hit and run leaving Amazon with the losses.
Not if they only get the money after the return period is over.
Exactly - any big company will usually pay for the stock 30, 60 or even 120 days after the delivery. I can't imagine Amazon pays their suppliers immediately.
"sellers", toy was comingled and Amazon doesnt track inventory source.
I guess that's the only legislation in place right now - that is, Amazon can't be sued / held liable for e.g. broken goods or false reviews if they offer a gratuitous return policy. Like how youtube can't be held liable for copyright infringement because they offer a gratuitous takedown procedure.
They do, but sadly, the remote control trucks that I bought had incredibly cheap packaging. Once I unpacked them, the kids immediately put them to use and everything got scattered to the wind (it's Christmas morning, after all) and I couldn't find enough of the packaging to do a return. I should have, though.