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The cost of refund fraud to Amazon (and how it fought back)
  • By SellerBites
  • March 20, 2024
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The cost of refund fraud to Amazon (and how it fought back)

Surprise!

If you’re wondering if we accidentally sent you another email on a Wednesday—we didn’t.

The truth is, we realized that 4 days ain’t gonna cover all the crucial updates and information that can help you become better and successful sellers.

Here’s to another day of bringing you sizzling ecommerce news! Let’s start with a juicy mid-week lineup:

BLACK MARKET

Retailers like Amazon boast generous return policies. However, this leniency unintentionally opened the floodgates for refund fraud. And with the power of social media, information—even tutorials—on how to carry out these schemes spreads fast. ⚡

According to The Times of India, retailers lost $101 billion to refund scams in 2023 alone. To avoid falling victim to such tactics, here’s what you need to know about refund schemes:

🥷 Web of deception

Return fraud comes in different forms and involves various perpetrators. Here are some tactics from the fraudster’s playbook:

  • Meet Noah Page, an Amazon warehouse employee-turned-shady operator. His scheme to mark orders as “returned” without actually sending them back earned him $3,500. But Noah was just a cog in a much bigger wheel.
  • Enter Rekk, an extensive organization that targets major retailers. They tempt employees with a cut of the profits earned from their illegal actions.
  • For normal customers, wardrobing is prominent. It’s the practice of returning worn clothes.

Amazon fights back

Amazon calls these operations "illegitimate businesses" that prey on honest consumers and sellers, with losses amounting to $700,000 from just one alleged fraud ring.

But fear not, Amazon isn’t taking this lying down. In December 2023, they fired back with a lawsuit against Noah Page and 47 others suspected of orchestrating a massive refund fraud scheme

It's a bold move that sends a clear message—fraudsters will never be welcome on the top online marketplace. ⛔

BITES OF THE WEEK

HOT TOPIC

Should you still sell on Amazon FBA in 2024?

Should you still sell on Amazon FBA in 2024?

With over 600,000 FBA sellers worldwide, selling on Amazon is just getting more competitive. So, you might be wondering: is it still worth it to sell on Amazon FBA? 

According to Jungle Scout, it is! In 2023, Amazon raked in a whopping $574 billion in revenue, mostly driven by third-party sellers who use FBA. About 40% of sellers make $1,000–$25,000 a month in sales, and 57% have profit margins above 10%. 🤑

To find out if selling on Amazon FBA is the right choice for you, you need to weigh the pros and cons:

✔️ Pros

  • Large customer base. Access to millions of loyal customers ensures a ready market for your products.
  • End-to-end logistics. Amazon takes care of storage, order fulfillment, and customer service, thus streamlining your operations.
  • Prime shipping. Using FBA gives your product the ‘honor’ to wear an Amazon Prime badge, which boosts visibility and attracts customers seeking fast shipping.

Cons

  • High storage fees. If not managed properly, the fees you pay when storing items in Amazon’s fulfillment centers can eat into your profits.
  • Hefty FBA fees. Of course, FBA’s convenience comes with a price. Specifically, you must bear the costs for storage, picking, packing, and shipping of your products.
  • High return rates. Amazon's customer-friendly return policy may lead to increased return rates; do we even need to tell you how large of a headache it is to manage and handle returns inventory?

All in all, selling on Amazon FBA can be a rewarding venture—but only if you pair it with careful consideration and strategic planning. So, is it a deal or no deal? ⚖️

SELLER REFRESHER

ICYMI: Amazon’s expanded benefits for FBA New Selection

ICYMI: Amazon’s expanded benefits for FBA New Selection

In a recent announcement on Seller Central, Amazon has unveiled its expanded benefits for the FBA New Selection program.

🔔 Quick recap

The FBA New Selection program is designed for brands that want to launch new products on Amazon. It also allows sellers to test if FBA is the best fulfillment option for their store.  

Previously, only Professional seller accounts with an Inventory Performance Index (IPI) score of 400 or higher enjoy benefits, such as:

  • Free monthly storage for the first 50 standard-size units or the first 30 oversized units for 90 days, 
  • Free liquidations (U.S.) for the first 50 standard-size units or first 30 oversized units within 180 days
  • 5% monthly rebate for eligible sales of either of the following:
    • First 50 standard-size units or first 30 oversized units for 90 days
    • First 100 units of shoes and apparel items for 120 days

But last March 1, the following changes were made to extend the perks to Professional sellers with an IPI score of 300:

  • Rebate on sales. An average of 10% sales rebate is available for eligible ASINs.
  • More oversized units and extended days. Up to 50 oversized units now have the same benefits as standard-size units. Plus, storage perks and rebates are extended to 120 days for ALL eligible new ASINs (not just apparel and shoes).

But wait, there’s more

There are additional program updates scheduled for the year, including a discount on Vine enrollment fees. So, keep your eyes out to get the first snoop on new features and updates. 👀

Author : SellerBites
Faith began working on SellerBites in 2021, a weekly newsletter that provides sellers with the latest news and updates in FBA. With first-hand experience in managing various seller and vendor accounts, she understands what sellers face on this platform. Her background led to the conception of SellerBites, which main goal is to help people become better, more informed entrepreneurs in the Amazon marketplace.
Email: [email protected] | Post Categories and Tags :

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