ECONOMY & WORK
MONEY 101
NEWS
PERSONAL FINANCE
NET WORTH
About Us Contact Us Privacy Policy Terms of Use DMCA Opt-out of personalized ads
© Copyright 2023 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
MARKETREALIST.COM / NEWS

Amazon Unearths Refund Scam Facilitated by its own Employees; Here's how They did it

The lawsuit, filed in the U.S. District Court in Seattle, sheds light on a sophisticated scheme that exploited the retailer's returns system over nearly a year, between June 2022 and May 2023
UPDATED JAN 22, 2024
Cover Image Source: Amazon | Getty Images
Cover Image Source: Amazon | Getty Images

Getting easy refunds for flawed products is one of the perks that adds convenience to the overall consumer experience on e-commerce platforms. But turns out some con artists are exploiting this essential service to run scams in cahoots with employees of such platforms. In a shocking revelation, e-tailer giant Amazon has filed a lawsuit against an alleged international fraud organization known as REKK, and has accused seven former employees and accomplices of orchestrating a systematic refund abuse that cost the firm a staggering $500,000. The lawsuit, filed in the U.S. District Court in Seattle, sheds light on a sophisticated scheme that exploited the retailer's returns system over nearly a year, between June 2022 and May 2023.

Amazon mentioned in detail how REKK executed its fraudulent scheme by ordering products through Amazon's marketplace, charging a fee, and then manipulating the system to obtain refunds without actually returning the items. One example cited in the lawsuit involves the ordering of five iPads, with a REKK member allegedly collaborating with an Amazon fulfillment employee to falsely register the iPads as returned, triggering refunds. REKK received the refunded amount, but also kept the iPads, according to the legal filing.

Source: GettyImages | David McNew  Stringer
Source: GettyImages | David McNew Stringer

Another instance involved the impersonation of an Amazon customer ordering two MacBook Air laptops. REKK allegedly falsified a police report, claiming that the products were never delivered, and then received refunds as part of the fraudulent act. The lawsuit asserts that REKK recruited Amazon employees through platforms like Reddit, LinkedIn, and Telegram, using these channels to advertise its illicit services.

The legal document specifically names seven former Amazon employees, accusing them of aiding and abetting the fraudulent returns. Notably, REKK recruited an employee from a Chattanooga fulfillment center, Janiyah Alford, who approved fraudulent returns in exchange for payment. Amazon accuses Alford of approving 76 fraudulent returns, resulting in over $100,000 in refunds to REKK members. Alford claims that she felt threatened to participate, as the messages from REKK included her home address and those of her family members.

Image Source: Pexels | Sora Shimazaki
Image Source: Pexels | Sora Shimazaki

Noah Page, another former employee at the Chattanooga center, is accused of approving 56 fraudulent returns, costing over $75,000 in refunds to REKK. Amazon, which invests over a billion dollars annually in combating fraud, uncovered the scheme through an investigator who posed as a customer and interacted with REKK through Telegram.

Return fraud is not a new challenge for Amazon, but this case reveals the true extent to which scammers have penetrated the system. Eleanor Ritchie, product manager of return abuse solutions at fraud prevention vendor Signifyd, notes that fraudulent returns constitute 8%-10% of total returns in online retail, with an estimated $20 billion of the $200 billion in online returns in 2022 being fraudulent. Ritchie suggests that the REKK case might not be isolated, indicating a broader problem that retailers, especially e-commerce giants like Amazon, need to address.

As retailers face the growing threat of return fraud impacting their bottom lines, it is likely that they will increasingly invest in monitoring returns more closely. Rather than tightening return policies across the board, experts predict the use of machine learning and other AI tools to intelligently track returns and identify potential fraud, so that customer satisfaction isn't affected while preventing fraud.

MORE ON MARKET REALIST
While all the Sharks were out, Mark Cuban saw the potential in "Garage Celebrations."
12 hours ago
The loss was ironic as the retired teacher coulnd't get a phrase commonly used in classrooms.
14 hours ago
The recalls were issued for a range of products including tires, air conditioners and power banks.
15 hours ago
The guest who got the item as a gift from a neighbor had little to no idea about its significance.
17 hours ago
Harrison got a good deal for the fossil although it wasn't what he had thought.
1 day ago
The player, Beth Barbee left everyone in the dust with her impressive puzzle solving skills.
1 day ago
Given her celebrity status, Harrison cut her some slack in the negotiations.
1 day ago
The deal ultimately fell apart as the seller, Scotty was looking to get $375,000.
2 days ago
The guest was blown away by the six-figure appraisal for his father's John Falter illustration.
2 days ago
Harvey just couldn't believe that the contestant could come up with an answer like that.
3 days ago
Antoinette's win was even more special because she needed a car more than anything at that point.
3 days ago
The player, Catrice Sandt, nearly blew the Bonus Round puzzle by saying too many words in the end.
4 days ago
The co-founders of Nature's Wild Berry left the Sharks in shock with their miraculous product.
4 days ago
The contestant named Whitney could barely control her emotions as she celebrated with Ryan Seacrest.
4 days ago
The player named Kathy Young missed out on the Showcase Showdown as she had to leave.
5 days ago
Harrison closed a mega deal by scooping up three post cards for the price of one.
5 days ago
The guest who brought his father's prized possesion, had already made up his mind.
5 days ago
Harvey got a genius solution to avoid asking an awkward question to Carson Kressley's family member.
6 days ago
The player could barely control her excitement as she had a near-perfect game on the show.
6 days ago
Harrison knew it was too good of a collection to let go, and he decided to raise the stakes.
7 days ago