How a 'Refund Fraud' Gang Stole $700k from Amazon
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Everyone seems to be ignoring this part. Retailers have adopted a new "just keep it" return policy[1]. Which is pretty obviously causing this fraud. "Item never arrived" can be fixed by adding $1 to the shipping label to force a signature
With no bad intent - about 80% of my Target returns are "just keep it", about 10% for Walmart and 0% for Amazon. But I have neighbors with about 50% on Amazon. No idea how the algorithms work but perhaps these groups have also figured that part out.
Stop the "just keep it", require some sort of security on delivery (lock box, signature) and this problem disappears overnight
[1]https://www.cnn.com/2022/06/26/business/retail-returns/index...
In my experience, drivers will sign for and leave "signature required" deliveries quite a lot of the time. I've had signature-required international shipments worth thousands of dollars signed for by the driver and left sitting in front of my house.
As you say, makes delivery more expensive, as the drivers can no longer just leave packages and makes the interaction longer (+ more redelivery required).
In the early 2000's I was adjacent to a company designing a locking box that delivery services would have the code to and leave packages in. I don't think this went anywhere because it was too far ahead of its time, but I could see Amazon encouraging something like this for customers in problematic areas (weren't/aren't they trying something with being able to open your garage door?).
IME whether you need to return something really depends on the item and why. If it's damaged grocery items from Target/Walmart/Chewy, nobody really wants them back. Whereas Amazon invariably wants the stuff back through their automated solution, but talking to someone (which I only do for exceptional cases) seems to invariably result in "just keep it" and a refund. I'm sure there is some surveillance-based solution behind this, deciding based on social credit score and whatnot. My only questions are how singular it is (eg Retail Equation), and when that dystopian hammer is finally going to drop.
Your delivery service costs $1B per year with the current throughput (without considering peaks etc.). Imagine now adding those constraints such as signature: it means that for each package you add another 1-2-3 minutes at least. For 100 packages a day it's almost 2 hours. With a salary of 7$ per hour = 14$ per day just to have signatures. And that's 100 packages, which is probably a joke for a delivery person.
14$ per day = almost 5K per year. Basically 700K is peanuts.
The problem of course starts when everyone believes "oh I am smarter than you, I can also do it". And then you lose not 700K but 50 millions or more.
Another way is to build up your own delivery company, measure performance of the delivery people (with feedback) and fire/sue them when you notice a continuous loss of packages and reward the good ones.
Walmart often tells me to keep $5-$10 items despite the fact I have Walmart+, they are often in the neighborhood and happy to leave it outside for pickup.
Amazon is being less generous with customers because they’re an aging company built around a technology solution (automated listing, searching, and service) that couldn’t actually satisfy global scale in the face of automated listing spam; because they’ve largely won as many customers as they ever will and have few radical growth avenues; and because now they’re facing these challenges in a world where money is much more expensive and needs to be more carefully allocated.
Amazon’s giving you grief with your refunds because their whole 2000’s-era style of online retail is past it’s peak and is starting to crumble beneath its titans, just like search is for Google and graph-centered social media did Facebook.
While we can hope exciting new retail approaches take hold, the experience with Amazon is only going to get worse, regardless of little scams like this.
So what is the modern style of online retail that is/has taken its place?
Source?
I also received an item that was shattered in transit and had to send it back. I felt bad for the UPS store employee dealing with the broken glass.
Then they claimed to my credit card company I never requested a return.
Then they told the state AG that they had accepted my return when I filed a complaint (perjury!)
In the end, I lost 2500$ USD.
YMMV
At this point I would have thought retailers would have fixed their own shipping processes to pack things so they're less likely to get destroyed. But nope, the best I've found is to break up orders on my end, assuming I don't forget and the shipping minimums allow. I'm just waiting for the other shoe to drop and retailers to start "cracking down" somehow. It seems like the classic Silicon Valley approach where they set up a poor process, planned to make it up on volume, and now have no visibility into the actual problems causing inefficiency. But yet somehow it's still working out financially.
The best I've been able to figure is that price fixing ("minimum advertised price") keeps margins high enough that retailers can eat multiple shipping costs, and retailers have gotten manufacturers to eat the cost of "defective items", creating at least a stable situation (although an inefficient one). But it still boggles my mind, especially seeing the trade in bulk pallets of returned goods, which makes it seem like many new condition resellable items still end up being considered salvage.
I'd guess it's something to do with the margin being much much higher than we imagine. Like it's sold for $100, but it only costs $10-$20 incremental cost to produce. Hence why I'd think the manufacturer would be eating returns, because that allows them to keep their margin higher.
So, often, sellers just refund these because they know fighting it is fruitless. Oh, and you get to pay a chargeback fee on top of losing the item value and cost of shipping if you choose to fight and lose.
Also, if fraud is a cost of doing business, then that society is going to start wasting a lot of resources and be less productive than societies with less fraud.
I wonder why they keep those stores open sometimes.
I used to live in SF and would see shoplifting all the time but now live in NYC and haven’t seen it that much.
I never worked retail myself, but I've heard plenty of stories from people who do.
One person I knew called it "taking out the trash". They would fill trash bags with cds. He had a room full of unopened ones.
You can cheaply discourage someone from robbing you and instead rob someone else. But 0 nationwide would be vastly more expensive.
I'm not asking for sympathy here, I'm explaining why it's a free for all. It would be fairly easy for the credit card companies to aggregate the data and revoke cards from these people (when there's a pattern) because they have that visibility. Or, if revocation is too hard, give me back a "return fraud risk score" when I do a pre-auth....even if said score has a very high threshold before it shows. But they have no reason to, because it doesn't hurt them in any way.
I'm actually surprised businesses don't do it more often as a deterrent. At a minimum, they could go win a few easy cases, then tell future customers threatening chargebacks about those cases and the outcome.
They could send a simple letter saying "We see you have initiated a chargeback against us. After investigation, we believe this chargeback not to have any merit. In cases of false chargebacks, it is our policy to take clients to court to reclaim our costs, which in past cases have averaged $X on top of the value of the goods.".
Yes, I know police in the West tend to not bother with helping with such mundane stuff.
Even if it goes no where legally, them getting an investigative phone call from their AG might be enough to deter future scamming, or maybe even convince voluntarily pay you back.
Either way, good luck! (Btw, have you seen that service where you can mail order cow dung? Just sayin')
A gang steals, we can't have nice things.
When amazon steals from us, that's perfectly fine?
Amazon is an organized theft too, Amazon is no saint with their recent exposed tactics plus their historic controversies.
Maybe I missed it, but where in the article did amazon steal from "us"?
One could claim it is legalized theft via political corruption, but Amazon alone did not write the rules, and it does not seem relevant to a situation where businesses have to change policies/increase prices/reduce offerings due to theft.
There would also be less refusal in the first place if taxes were actually proportional to the percentage of public services you use, but some people are against paying their fair share.
You're right, but you also left it as an exercise to the reader about who the "some people" are. Those "some people" are mostly large corporate entities, like Amazon, that do all sorts of tricks to keep their losses inside the US and their gains outside the US so they can avoid paying taxes on income that was made from US consumers. While I'm more anti-tax than the average person, it's important to understand that anything which sends US consumer spending outside the US en masse is ultimately a detriment to the US society because it enriches other countries while depriving the US of that money continue to flow through the economic cycle. Dead money sitting in accounts in Ireland, Cayman Islands, Switzerland, Hong Kong, Singapore, and Macau reduce the velocity of money in the US and directly contribute to economic slowdowns as well as increasing income inequality within the US society.
It's the biggest reason why, despite being relatively anti-tax, I'm also very much pro buying things made in the US, locally if possible, because it's important that a dollar coming into the community gets spent many times over in the same community to actually improve community welfare. As soon as that dollar exits the community, it's likely lost.