Amazon refund tricks you need to watch out for as an FBA seller

In this article we’re going to go through some of the most common refund tricks that fraudulent buyers use for financial gain, as well as some of the ways that you can protect yourself from this type of crime.

Why do buyers try these refund tricks?

Put simply, buyers do this for financial gain. They know that Amazon is extremely consumer-centric and has very customer friendly return and refund policies, far beyond that of most other retailers. The ease of fraud on Amazon has led to these practices which are largely unchecked.

While Amazon is doing what it can to combat these tricks, for example, banning accounts who repeatedly claim not to have received items that have been sent, unfortunately it’s not enough to discourage fraudulent buyers from continually committing refund fraud.

What’s more, if you’re an FBA seller, there’s very little you can do if you’ve fallen victim to this – in fact, in many instances you may not even know you were a victim, as Amazon assumes complete control of the returns process. You won’t even get to see the item unless you ask for it back (and pay for it to be shipped) and if it turns out that, for example, the customer has switched the item out for a cheaper one or has clearly damaged it themselves, it’s often too late and the customer already has their money back.

Make no mistake, however – every one of the refund tricks we’ve identified below constitutes fraud and if a customer tried this in person at a big-box retailer, they would almost certainly have the police called on them. The lack of immediate consequences emboldens some users to do this online when they’d never dream of doing it otherwise.

Common fraudulent refund practices customers use

Returning something different to what you sent them

This is a very common one. Put simply, the user will keep the item you sent them and send an item of similar weight and size back in the box. Amazon will confirm the item was sent and will very often just refund the customer straight away when they’ve confirmed the item has been dropped off at a post office or handed to a courier. In many cases Amazon will receive the item at a fulfilment center and will check it to make sure what’s in there is what should be in there – often, however, they don’t check, and the item is either put back on the shelf as inventory or is destroyed if it is considered unsellable.

Amazon workers are under extreme pressure to process returns quickly and this can lead to items being misclassified. For example, you may have shipped out a brand new MacBook and the buyer fraudulently sends you back an old, broken one. An Amazon worker may not know the difference between a Macbook that’s a few years old and doesn’t have the time to power up the item and check it’s what was actually sent. They just see that a MacBook was sent, and a MacBook was returned back – and the buyer gets away with fraud.

Amazon will either class the item as unsellable, at which point you can ask for it to be returned to you or destroyed, or Amazon will determine the product can be resold, and will put it back into your available inventory. This can lead to some real problems for you because if a new buyer receives that item, they will (quite rightly) complain about it. This can then lead to you receiving order defects against your account and even put you at risk of getting banned.

Of course, we’re assuming the buyer has returned something plausible – there are many cases where buyers have returned empty boxes, boxes filled with dirt, garbage or even vegetables. In 2019 there was a man arrested in Europe for making hundreds of thousands of dollars by sending Amazon return packages filled with dirt that was the exact weight of the product he was sent. Of course, he went to jail over this, but small time fraudulent buyers get away with this every single day, and it’s because Amazon workers simply can’t open every single package that gets returned.

Customers claiming they never received the product

This is again another instance where Amazon’s customer-centric policies mean that some unscrupulous buyers can get away with fraud. A customer will receive an item and their tracking will mark it as delivered, but they will simply claim they never received it and will ask for a refund. Sometimes Amazon will ship them another item out – sometimes they will just grant a refund. The most important thing is that you have no control over this as with FBA, you sign away all control over customer service matters to Amazon.

Be aware that this does sometimes genuinely happen – porch pirates are a huge problem in the US, and also many people living in apartment buildings find that their parcels go missing either because neighbors steal them, or because couriers can’t find the address and put parcels in communal areas, or in wrong apartment blocks, etc.

Sometimes you will be covered by Amazon’s A-Z guarantee, but you must make sure you have a signature on delivery – if you don’t, your claim will likely be rejected. Amazon does also have policies to identify persistent INR (item not received) claimants, but unfortunately people still get away with this.

Customers falsely claiming the item was damaged or destroyed

Sometimes customers will falsely claim that they received a destroyed or damaged item. Usually they will be required to provide proof of this, but this is very easy to fake. The customer in some cases might be told not to send the item back and will be just granted a refund – in other cases they will be required to send the item back. Again, Amazon won’t inspect every single parcel so there’s every possibility a customer will put something else in the box, or may have damaged the item themselves while unboxing it.

Overexaggerated complaints to try and get a discount or money back

This usually goes hand-in-hand with feedback extortion. Often a buyer will have experienced a minor issue with their order – perhaps it was delivered one day later than expected, or maybe it was delivered to a neighbor (but later recovered so the customer did actually receive their item) – issues that are completely out of your control. However, the customer will then complain about how much of an inconvenience this was to them and how much they’d like a portion of their money back, or to be compensated in some other way.

Sometimes Amazon’s customer service will ignore these complaints and say that there’s nothing that can be done. Sometimes they will grant gift cards or will refund a portion of the customer’s order. Unfortunately there’s very little you can do about this if you’re using FBA, as again, you’re passing over complete control of customer service to Amazon and it’s up to them how they resolve these kinds of queries.

Claiming to be a victim of fraud

Some buyers will simply claim that their account was hacked, they don’t know what’s happened to the item that was shipped out and are requesting a refund or threatening to place a chargeback with their bank. Amazon will usually investigate this and will check the IP address that was used to place the “fraudulent” order, comparing it to previous orders and the account’s purchase history. Some users try to get around this by saying that, for example, their ten year old son or daughter placed the order by mistake and they don’t know where it was delivered to.

Even if there’s insufficient evidence to support the buyer’s claim, Amazon will often refund anyway out of goodwill – which causes a financial loss to you as the seller. Amazon does have systems in place to detect this kind of fraud, but how effective they are is up for debate and some buyers will always be able to get through and beat the system.

How can FBA sellers protect themselves from refund fraud?

Sadly, there’s very little you can do directly to stop a fraud attempt in progress if you’re an FBA seller, as it depends entirely on how Amazon themselves react to the fraud attempt. If you have a savvy customer service agent who can spot the fraud attempt, or you have an Amazon worker who is particularly switched on and decides to open and inspect the return properly to determine that it might not be the same product as what was sent, then you may not suffer any financial loss. However, it’s equally as likely that the buyer will get away with their fraud attempt due to the reasons we stated above.

However, there are a few ways you can better protect yourself and ensure that it’s not quite as easy as it otherwise would have been for a buyer to scam you.

Know Amazon’s policies inside out

You can’t win the game if you don’t know the rules. Seasoned fraudulent buyers will know Amazon’s policies inside and out, and if you take your Amazon FBA business seriously, you should too. Knowing all the rules helps you take advantage of any protections that are offered to you by Amazon against fraudulent buyers.

Keep detailed records of all sales and communications

You never know what you might need in order to disprove a fraudulent claim, and so it can be invaluable to keep records of all transactions, communications with buyers, receipts and invoices, and any other relevant documentation. For example, if a buyer is claiming you sent them a counterfeit item, but you have the invoice from the wholesaler which proves that you sent them a genuine one, it will be much harder for them to win this claim.

Ask Amazon to investigate anything suspicious

Reporting fraud every time you experience it, even if it was unsuccessful, is a must – even though Amazon might not take the action you expect it to (such as banning the user’s account) every report helps improve Amazon’s anti-fraud systems.

Use a signed and tracked delivery method

This will help you to disprove claims of non-receipt. There will always be instances where Amazon sides with the buyer, but these will be a lot fewer in number if you get everyone’s signature on delivery and use a trackable delivery method, as it’s much harder for a fraudulent buyer to dispute this.

Consider legal advice

If you’re the victim of repeated or significant fraud, you should consider consulting with a legal professional to see what options are available to you. This is probably only worth it if you have someone or a group of people persistently trying to scam you – in this case it might even be another seller trying to sabotage your business. However, if Amazon isn’t helping the situation, this may be your only option.

Conclusion

While this article is not meant to scare you, unfortunately return fraud is one of the costs of doing business on Amazon, and as long as people can keep getting away with it, it will continue. However, there are a few ways you can protect yourself from falling victim to these types of scams, but ultimately if you’re doing FBA, much of your fate is in Amazon’s hands. The only way around this is to do FBM, where you have much more control over your inventory and customer service and therefore will be able to better identify fraudulent opportunities.

Frequently asked questions about Amazon return fraud

Can I refuse a return if I suspect fraud?

If you’re on FBA, no – you have no way of refusing a return as when you ship items to FBA, you give Amazon total control over shipping, fulfilment, customer service and returns. As an FBA seller, you are not allowed to dictate whether a buyer receives their money back – only Amazon can do this.

Does Amazon reimburse sellers for losses due to return fraud?

Generally, no – because Amazon return fraud is either identified and the refund refused, or is not identified and the buyer gets away with it. There’s no circumstance where the seller is reimbursed by Amazon for buyer return fraud – not even for your FBA or shipping fees.

Can return fraud affect my seller rating?

Yes, in a big way. Whereas you might not notice that a buyer has committed fraud as Amazon simply tells you they’ve received an item back, refunded the buyer and put it back on the shelf, if that particular buyer returned something different, for example they returned a box full of potatoes instead, the next time you sell that item an Amazon warehouse worker is going to pick the box full of potatoes and send it out to the unsuspecting customer.

This will lead to a very unhappy customer when they open the box – and they’re likely to make a complaint and give you negative feedback, all of which will affect your seller rating.

Can I take legal action against fraudulent buyers?

If you can conclusively identify them and the fact that they are committing fraud, then sure. Don’t expect Amazon to back you up – and this is usually only going to be worth it if someone is persistently targeting you individually by placing fraudulent orders.