A refund fraud gang was prosecuted, and sellers were defrauded of tens of millions

Amazon files lawsuit against fraud gang, seeking millions of dollars in compensation

As we all know, Amazon's return policy has certain loopholes, which has led some people to think of "making money" by taking advantage of it. This problem has actually been criticized by sellers for a long time. Whether it is a small seller or a large seller, almost all of them have encountered consumers who maliciously return goods for refunds, and some sellers have even gone bankrupt because of this.

Amazon has finally taken action on this issue.

Recently, Amazon filed a lawsuit against a gang that specializes in refund fraud and demanded compensation for millions of dollars in losses caused by the fraud.

The group, called Chin Chopa , has up to 20 members , one of whom lives in Burnaby, British Columbia, Canada. Local media referred to the man as BW and said he was the only Canadian named in the lawsuit filed last week in the U.S. District Court in Seattle.

According to the lawsuit , BW ordered more than $9,000 worth of Apple products earlier this year, then claimed that it only received an empty box and successfully applied for a refund with the help of Chin Chopa , after which the two parties split the spoils in a certain proportion.

But after verification by investigators, it was found that the actual situation was that BW and Chin Chopa had teamed up to steal a laptop and an iPad . There are many examples like this. According to preliminary estimates, Chin Chopa earned at least millions of dollars by assisting in the fraud .

Amazon said in the lawsuit that such fraudulent refunds have a particularly severe impact on honest sellers, who have to bear additional costs and inventory losses.

Additionally, the lawsuit states that Chin Chopa has members from all over the world who operate through "a Telegram channel with more than 2,000 followers where they openly advertise their refund services, which they themselves have bluntly called scams.

Consumers who work with Chin Chopa usually need to pay a certain amount to Chin Chopa, usually 30% of the product cost, if they want to receive free products.

According to the chat records released by the investigators, Chin Chopa would require the other party to purchase an order with a minimum value of US$500 before he would help the other party with a refund . In addition, Chin Chopa also told the investigator that after the order was completed, he needed to log in to the ordering account to operate the refund.

The investigator then placed an order for an iPad worth more than $600 and asked Chin Chopa to log into his account to make a refund.

It is understood that during the operation, Chin Chopa first lied that he had not received the package and said that he had reported the matter to the police. Then, he opened and closed the customer service chat window many times and switched back and forth between English and Spanish until he found a customer service representative who was willing to refund the money.

In fact, this is not the first time Amazon has filed a lawsuit against a fraud organization.

As early as 2023, Amazon sued a fraud gang called REKK. According to the lawsuit filed by Amazon in the U.S. District Court for the District of Washington at the time, REKK's fraudulent methods included requesting a refund after purchasing goods from Amazon, but not returning the goods.

Additionally, REKK would resell the fraudulently obtained items from Amazon and charge customers a discount based on the retail price for expensive items such as MacBook Pro laptops and car tires .

It can be seen that the fraud methods of the two gangs are basically the same, but in fact, this method is not sophisticated, it is nothing more than taking advantage of loopholes in platform policies. Although Amazon is stepping up its efforts to crack down on related crimes, if the platform policy cannot be effectively optimized, it may still be impossible to eradicate such fraud organizations.

Amazon sellers suffer from refund fraud for a long time

In recent years, some fraudulent sellers have taken advantage of the "loopholes" in the platform's refund service. After purchasing products from regular sellers, they applied for a refund but did not return the products. They then moved the free products to major platforms such as Amazon, eBay, Walmart, and independent sites for resale, making a fortune out of nothing!

According to feedback from seller Xiao Li, he has opened stores on platforms such as Walmart, Amazon, Homedepot and Rakuten, among which Walmart is the key operating platform.

All along, the return rate of our products has basically remained within a controllable range, but there was a period of time when the return rate of some products suddenly exceeded the normal value, and the return rate of one product was even close to 50%.

Faced with the abnormally high return rate of certain products, Xiao Li did not find the crux of the problem at first. Until by chance, Xiao Li found that someone was selling the same product as his on other platforms, but at a much lower price.

" If sellers buy their products at high prices and then sell them at low prices on other platforms, they will not make any profit but lose money, which violates the most basic business logic, " Xiao Li analyzed.

Considering this situation and the previous abnormally high return rate, Xiao Li realized that he was being used as a "cash machine" by some sellers who were committing return fraud.

After investigation, it was found that after receiving the orders, the platform stores of these fraudulent sellers would use their fake Walmart buyer accounts to place orders with Xiao Li to "purchase" the products. After Xiao Li sent out the goods, the fake buyer accounts would start to find various reasons to apply for refunds, such as poor product quality or not wanting the products. Basically, all the applications were successful, but they did not return the products after receiving the refunds. Each buyer account would only place two or three orders and then abandon them, in order to evade platform supervision.

Fraudulent sellers repeat this operation over and over again, saving on various expenses such as product procurement fees, first-leg logistics transportation fees, and directly eliminating the risk of stockpiling. In this way, the operating cost is almost zero!

It is understood that the return rate of many products in Xiao Li's store has soared , especially large products. The return rate of bicycles is about 30%-50%, and the return rate of a certain outdoor product is over 40%. "The stocking cost of large products is very high. In order to save costs, this group of people is equivalent to directly robbing the products of regular sellers."

According to rough estimates, Xiao Li's total losses over the past few years are about two to three million US dollars, which is equivalent to more than 10 million RMB .

Judging from these cases, the main targets of refund fraud gangs are sellers of large items with high average order values. Therefore, if any seller finds that these situations are similar to their own, they need to be vigilant, provide feedback to customer service in a timely manner and take relevant actions.

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