A 22-year-old returns dirt and scams Amazon out of $370k

Amazon return fraud is a real problem, and it is getting worse. In one of the most infamous cases, a 22-year-old scammed Amazon out of $370,000 by exploiting the return system. He would order expensive electronics, ship back boxes filled with dirt, and collect full refunds. It took Amazon months to catch on. This story is not just a headline. It is a warning sign for every seller on the platform about the vulnerabilities in Amazon's return system and what you can do to protect your business.

Insights from Andrew Morgans and the Marknology team in Kansas City.

How Amazon Return Fraud Works

The basic scam is simple: a fraudster orders a product, claims a return, and sends back something worthless (dirt, water bottles, empty boxes). Amazon's return system is designed for speed and customer satisfaction, which means refunds are often processed before the return is inspected. By the time anyone realizes the returned item is fake, the money is gone.

Common Types of Amazon Return Fraud

• Empty box returns: The customer sends back an empty box or a box filled with random items. The weight may match the original shipment, making automated checks ineffective.
• Switcheroo scams: The customer orders a new product and returns an old, damaged, or counterfeit version of the same item. This is especially common with electronics, designer goods, and high-value items.
• Wardrobing: The customer uses a product (clothing, tools, electronics) and returns it as "unused." While less malicious, it still costs sellers money.
• Serial returners: Some buyers systematically order products with the intent to return them after use, exploiting Amazon's generous return policy.
• Fake "item not received" claims: The buyer claims the package never arrived, triggering a refund even though tracking shows delivery.

How Return Fraud Affects Amazon Sellers

If you sell through FBA, Amazon handles returns for you. That sounds convenient until you realize that Amazon often refunds the customer before verifying the return. Here is how it impacts your business:

• Direct financial loss: You lose the product and the revenue. If the returned item is unsellable, you eat the entire cost.
• Inventory contamination: Returned items sometimes re-enter your sellable inventory. If a customer receives a used or damaged item that was fraudulently returned by someone else, you get the bad review.
• Higher return rates: Elevated return rates can trigger Amazon's automated listing suppression systems. If your return rate exceeds category norms, your listing may be flagged or removed.
• Tax and accounting complications: Processing fraudulent returns creates accounting headaches, especially when refunds have already been issued.

What Amazon Is Doing About Return Fraud

Amazon has been investing in better fraud detection, including:

• Machine learning detection: Amazon uses AI to identify patterns of suspicious return behavior across buyer accounts
• Account bans: Buyers with abnormally high return rates or suspicious patterns get warnings and eventual account suspension
• Return verification: For high-value items, Amazon has implemented additional inspection steps before processing refunds
• SAFE-T claims: Amazon's Seller Assurance for E-Commerce Transactions program lets sellers file claims for fraudulent returns and request reimbursement

How Sellers Can Protect Themselves

1. Monitor Your Returns Closely

Do not assume Amazon is catching every fraudulent return. Check your FBA returns report regularly. Look for patterns: the same buyer making multiple returns, returns with different reasons than expected, or returned items that do not match what was shipped.

2. File SAFE-T Claims

If you receive a return that is clearly fraudulent (wrong item, empty box, heavily used product), file a SAFE-T claim in Seller Central immediately. Include photos and documentation. Amazon does not always approve these claims on the first try, so be persistent and thorough.

3. Use Serialized Products

If you sell high-value items, consider serializing your products. Record serial numbers before shipping so you can verify that the returned item matches what you sent. This is especially important for electronics and luxury goods.

4. Improve Your Packaging

Tamper-evident packaging makes it harder for fraudsters to return fake items undetected. Security seals, shrink wrap, and unique packaging features all create barriers to fraud.

5. Set Realistic Return Policies for FBM

If you fulfill orders yourself (FBM), you have more control over your return process. You can inspect returns before issuing refunds and deny refunds for clearly fraudulent returns. FBA sellers do not have this luxury, which is one of the tradeoffs of using Amazon's fulfillment network.

6. Document Everything

When you identify a fraudulent return, document it thoroughly with photos, weights, serial numbers, and any correspondence. This documentation is essential for SAFE-T claims and can also support legal action in extreme cases.

The Bigger Picture

Return fraud is a cost of doing business on Amazon. You cannot eliminate it entirely, but you can minimize it with the right systems and vigilance. The sellers who treat return monitoring as an operational priority rather than an afterthought protect their margins and their account health.

If you are seeing unusual return patterns or losing money to suspicious returns, it is worth getting expert eyes on the problem. At Marknology, we help sellers build operational systems that catch these issues before they become expensive.

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