Noah P. worked at an Amazon warehouse in Tennessee.
One night, while working his graveyard shift, Noah was approached by police and a loss prevention employee.
It turns out Noah was working with an organized criminal ring to make fraudulent returns.
For example, in one instance, Noah processed a customer’s return and marked it as returned in Amazon’s system.
But the item wasn’t actually returned.
The organized crime ring paid Noah $3,500 for his part in carrying out the crime.
When questioned by police Noah said he didn’t know the person he was working with but said his name was “Ralph.”
Ralph was part of a criminal group that targeted retailers and recruited employees by giving them large amounts of cash.
Refund fraud, like the one carried out by Noah, is when criminals trick retailers into refunding money without the item being returned.
These types of return scams have been made popular thanks to social media like TikTok.
The reason that returns fraud is easy to pull off is that retailers have lenient return policies.
The goal for many retailers is to make the customer happy so they go out of their way to make returns or refunds simple – sometimes to their own hurt.
In the past, some retailers allowed unlimited returns.
They would even tell customers to keep the item instead of sending it back.
But things are changing.
For instance, Amazon lost over $700,000 to the organized crime group that Noah was working with.
And this was just one group.
Today, retailers are cracking down like we haven’t seen before.
So far, about 80% of retailers have implemented pay-to-return policies.
When an item is returned to a retailer it costs the retailer about 40% of the price of the item to put it back on the shelf.
Which means the retailer is losing money on both ends.
With fraudulent returns at an all-time high, retailers are cracking down.
So here are a few ways you might be impacted by this fraud even if you have legitimate returns.
Third-party tracking:
Most retailers track customers’ returns, but they don’t always do it themselves.
Big retailers use third-party companies to track customers’ return habits.
One company used by retailers is The Retail Equation.
The Retail Equation is a software company that tracks customer return behavior.
The software gives customers a return score, which is then provided to retailers.
It’s like having a credit score.
But your customer return score isn’t private. Instead, it’s given to retailers who use the software.
The scary thing is this is yet another company who’s harvesting and selling your data.
Return denied:
With a stricter return policy, more customers are going to be denied returns – whether they’re justified returns or not.
You see, just like your credit report, mistakes can be made on your “return report.”
And a retailer could deny a return because they believe you have a history of fraudulent returns.
Even if you haven’t committed fraudulent returns the store could argue that your returns mimic fraudulent behaviors.
Imagine spending thousands of dollars on an item just to be denied a legitimate return.
Know your history:
It’s a good idea to contact companies who create reports about your shopping habits.
For instance, you can contact The Retail Equation and request a copy of your “Retail Activity Report.”
This will show you your “score” and will give you a rough idea of whether you want to stay away from a specific retailer.
If you have a return that is denied, you can contact the third party to dispute the denial, much like you can dispute a credit report.
Protect your personal and private information as much as possible – especially online.
