Friday, June 21, 2024

Amazon Return Fraud: Customer Tricks Amazon for Nearly $300,000 in Returns Scam

Amazon’s customer-centric return policy has long been used by scammers to conduct fraudulent activities. One such scam was conducted by Charlotte resident Hudson Hamrick, who was found guilty of wire fraud by tricking the return scheme. This customer dupes Amazon for $300,000 in returns scams for many years.

According to the court hearing, Hudson Hamrick ran the scam from 2016 to 2020 and was involved in up to 300 fraudulent transactions. As a result, the court has sentenced him to 20 years in prison and a fine of at minimum $250,000.

  1. Everything You Need to Know About the $300K Scam
  2. Amazon has a History of Refund Scams
  3. Amazon Customer-Centric Return Policy isn’t Friendly for Sellers

Everything You Need to Know About the $300K Scam

Hamrick’s return scam is not a new scam in Amazon’s history. This is a popular scam that many individuals do every year.

In the case of Hamrick, he was found to order expensive items on Amazon, such as computers, electronics, tools, guitars, and similar other products. After receiving the products, he would get fraudulent refunds via Amazon’s return policy by returning cheaper/broken alternatives.

For example, Hamrick purchased a coffee machine in 2019 for over $3500. After a week, he asked for a return and managed to get a refund. Besides that, he returned a different coffee machine that was significantly lower in price. So, he not only got the refund but also sold the expensive coffee machine online.

Similarly, Hamrick ordered an Apple iMac Pro for around $4250. After two weeks, he initiated the return process and got a refund. Here again, he returned a different model that was much lower in value with a different serial number. In fact, he even sold the original iMac he purchased on eBay a week before initiating the Amazon return.

This way, Hamrick ordered different expensive items from 2016 to 2020 and tricked Amazon’s return policy. Hamrick even managed to resell some items using his own Amazon account. According to court documents, Hamrick was involved in over 300 fraudulent transactions, which cost Amazon over $290,000.

Since Amazon has systems that can detect suspicious behavior, it was able to discover the alleged fraud and then directed the case to law enforcement. Amazon worked with the FBI and the US attorney’s office in North Carolina.

Amazon has a History of Refund Scams

The Hudson Hamrick case is not new for Amazon. Amazon sellers have to deal with return scams on a routine basis. The concerning thing is the prolonged duration of these scams before they get detected.

Some of the previous similar refund scams are listed below:

  1. A Rhode Island man got a 30-month federal prison sentence in 2021 for running a similar return scam and causing Amazon to bear over $50,000 in loss.
  2. A woman from Florida was arrested in 2020 for doing a shipping and return scam. She used 31 Amazon accounts, all registered under her name, resulting in over $100,000 reimbursed to her. Her method involved exploiting prepaid shipping labels generated for canceled orders, which she then applied to other returns. This created the illusion that she had covered her own shipping expenses on returns.
  3. Return policy abusers got 6 years of sentence in 2018 for defrauding Amazon for over $1.2 million.

Besides the above large-scale scams, return scams are also executed on a smaller scale for cheaper products.

Amazon Customer-Centric Return Policy isn’t Friendly for Sellers

Looking at the above case of how a customer dupes Amazon for $300,000 in returns scams, it is evident that Amazon’s customer-centric return policy isn’t beneficial for sellers. There are many loopholes in this policy that are helping scammers to hunt third-party sellers on Amazon. The 30-day return policy, A-Z claim system, chargeback period, and similar others are easy to use for scamming.

Recently, Amazon introduced the “first scan” refund procedure with which the customer can get the refund instantly when the prepaid label of the returned item is scanned by the carrier. According to the company policy, Amazon has the right to reverse the refund if the shipped item does not match the original item purchased. But the fact is, Amazon mostly depends on the barcode of the product packaging. This means that scammers can put a different product in the packaging but ensure the barcode remains the same. This makes Amazon think that the return is accurate.

Since Amazon has a massive customer and seller base and millions of products are sold every month, it isn’t possible for all scams to be detected. That’s why it is important for third-party sellers on Amazon to remain proactive about such scams and report them timely.