Are you worried you might become a victim of Amazon buyer fraud? Then read on to learn how you can avoid them!
Amazon buyer fraud has long been a significant issue for sellers on the platform, but recently, it has become an even greater challenge. While Amazon does provide guidelines and support to help sellers address these scams, these measures often aren’t enough to fully protect against the many fraudulent tactics used by scammers.
This is why Amazon sellers have to be aware of the different types of buyer scams they might encounter. In this guide, we’ll cover the most common Amazon buyer scams and share practical ways to avoid them.
Together, we can help prevent these scams from disrupting your business and ensure a safer selling experience on Amazon.
What is Amazon Buyer Fraud and How Does It Impact Sellers?
Amazon buyer fraud involves deceptive practices by buyers to gain unfair advantages, often at the expense of honest sellers. These tactics range from abusing return policies to manipulating reviews, leading to significant financial losses and operational challenges for sellers.
A notable example of such fraudulent activity is the case of the group REKK, which defrauded Amazon of millions by purchasing high-value items, requesting refunds without returning them, and leveraging insiders to approve these fake refunds. This scheme not only impacted Amazon but also highlighted the severe consequences for sellers caught in the crossfire of these types of scams.
How Amazon Fraud Impacts Amazon Sellers
- Account Health Damage
Frequent fraud issues, like high return rates or negative feedback manipulation, can lead to warnings, and suspensions. This also harms a seller’s reputation, reducing product visibility and sales.
- Decrease in Earnings and Profit Margins
Fraudulent activities result in lost revenue from refunded amounts and unrecovered products, cutting deeply into Amazon sellers’ profits.
- Inventory Management Hassles
Fraudulent returns create inventory management disruptions, forcing sellers to make space for unsellable items, which affects their ability to stock new products.
- Increased Operational Costs
Combatting fraud requires additional resources, such as handling disputes and investing in detection tools, which raises overall operating expenses.
10 Types of Amazon Buyer Frauds and How Sellers Can Prevent Them
Despite Amazon’s significant investment in combating fraud—spending over $1.2 billion annually and employing thousands to protect its platform—buyer fraud remains a persistent issue.
For sellers, this means the next best line of defense is being vigilant. By understanding the various types of buyer fraud, sellers can take proactive steps to protect their business from potential scams.
Here are the ten most common types of Amazon buyer fraud and the strategies you can use to combat them effectively.
1. Return Scam
In this type of scam, fraudulent buyers exploit Amazon’s lenient return policies by purchasing products, using them, and then returning them for a full refund, often with a different or damaged item. This not only results in lost revenue but also poses significant challenges for maintaining inventory and account health.
A recent example involved a client whose business suffered from a damaging return fraud. A buyer returned a visibly stained diaper, exploiting Amazon’s lenient return policy.
The item was mistakenly relisted as “new” and resold, leading to a customer receiving the used diaper and posting a damaging review. Efforts to remove the review were challenging, further harming the seller’s reputation and sales.
This incident highlights how easily buyers can manipulate Amazon’s return system, leaving sellers on Amazon to bear the financial and reputational consequences.
How to prevent return scams:
- Implement Clear Return Policies
Communicate your return policies, including conditions for acceptable returns.
- Implement Clear Return Policies
- Thoroughly Inspect Returns
Carefully check all returned items to ensure they match the original product and are in resalable condition.
- Thoroughly Inspect Returns
- Utilize Restocking Fees
For high-value items, consider implementing restocking fees to discourage fraudulent returns.
- Utilize Restocking Fees
2. Feedback Manipulation
Feedback manipulation is another common form of Amazon buyer fraud where buyers use threats or false claims to gain advantages, such as discounts, refunds, or free products. In some cases, buyers may threaten to leave negative reviews unless the seller complies with their demands, while others may leave false negative reviews or claim the item was “not as described” to harm the seller’s reputation.
This tactic can severely impact a seller’s account health, decrease sales, and damage product rankings, especially if negative feedback is not addressed promptly.
How to prevent feedback manipulation:
- Maintain Clear Communication
Politely refuse any buyer requests that violate Amazon’s policies, such as refunds in exchange for removing negative feedback.
- Maintain Clear Communication
- Report Abuse
Use Amazon’s “Report Abuse” tool to report buyers who attempt feedback manipulation or make threats.
- Report Abuse
- Encourage Positive Reviews
Focus on delivering excellent customer service to generate genuine positive feedback, which can offset any potential negative reviews.
- Encourage Positive Reviews
3. Fake Refund Requests
Fake refund requests are a prevalent scam where buyers falsely claim that an item never arrived, arrived damaged, or did not match the description to receive a refund or a replacement without returning the original product. This type of fraud can be particularly frustrating for sellers, as it results in direct financial losses and potential inventory shortages.
How to prevent fake refund requests:
- Use Tracked and Insured Shipping
Always provide tracking information and consider requiring a signature for high-value items to prove delivery.
- Use Tracked and Insured Shipping
- Keep Detailed Records
Maintain comprehensive records of all transactions, including shipping confirmations and communications with buyers, to support disputes.
- Keep Detailed Records
- Use Fulfillment by Amazon (FBA)
FBA can handle shipping and customer service, reducing the risk of fake refund claims.
- Use Fulfillment by Amazon (FBA)
4. Switch Fraud
Switch fraud occurs when a buyer purchases an authentic item and then returns a counterfeit or damaged version for a refund. This scam allows the buyer to keep the genuine product while the seller is left with a fake or unsellable item, resulting in financial loss and potential inventory issues.
How to prevent switch fraud:
- Inspect Returns Carefully
Verify that returned items match the original by checking serial numbers, unique identifiers, or other distinguishing features.
- Inspect Returns Carefully
- Use Tamper-Proof Packaging
Packaging with security seals can deter buyers from switching items, making it easier to identify tampering.
- Use Tamper-Proof Packaging
- Report Suspicious Returns
If you suspect switch fraud, report the incident to Amazon Seller Support and provide evidence to support your case.
- Report Suspicious Returns
5. Coupon Fraud
Coupon fraud involves buyers exploiting promotional codes or discounts beyond their intended use. Scammers may use multiple accounts to repeatedly use a coupon or share discount codes publicly, resulting in significant financial losses for sellers and making marketing efforts counterproductive.
How to prevent coupon fraud:
- Set Clear Terms and Conditions
Clearly define the usage limits for promotions, such as one use per customer or one-time offers.
- Set Clear Terms and Conditions
- Monitor for Unusual Activity
Keep an eye on your sales patterns during promotions to detect any suspicious or high-frequency purchases.
- Monitor for Unusual Activity
- Use Unique Coupon Codes
Distribute unique codes that are difficult to share or abuse, limiting exposure to fraud.
- Use Unique Coupon Codes
6. Unauthorized Reselling
Unauthorized reselling happens when fraudulent buyers purchase products from legitimate sellers and then resell them on Amazon without authorization, often at lower prices. These resellers may use deceptive tactics, such as selling counterfeit or tampered goods under the original brand name, exploiting the seller’s reputation and pricing, and ultimately deceiving customers.
A similar case happened to one of our clients, who struggled to remove unauthorized resellers that undercut their prices and used similar images, causing a significant drop in sales. Lacking distinct branding, the client faced challenges in getting Amazon to remove these hijackers from their listings.
How to prevent unauthorized reselling:
- Leverage Branded Packaging
Update your main product images to include branded packaging that prominently displays your brand name. This discourages hijackers who can’t replicate the packaging and makes it easier to report them to Amazon.
- Leverage Branded Packaging
- Monitor Listings Regularly
Keep a close eye on your product listings to spot unauthorized sellers quickly and take action.
- Monitor Listings Regularly
- Report Unauthorized Sellers
Use Amazon’s tools to file complaints against unauthorized resellers and provide evidence, such as order screenshots, showing differences between the listing and the received product.
- Report Unauthorized Sellers
7. Gift Card Fraud
Gift card fraud is a scheme where buyers use stolen credit cards to purchase Amazon gift cards, which they then use to buy products or resell for cash. This type of fraud leaves sellers vulnerable to chargebacks, where they lose both the product and the sales revenue, causing significant financial damage.
How to prevent gift card fraud:
- Use Payment Verification Tools
Employ tools and services that flag suspicious transactions or require additional verification for high-value purchases.
- Use Payment Verification Tools
- Set Purchase Limits
Limit the number of gift cards or high-value items that can be purchased in a single transaction.
- Set Purchase Limits
- Monitor Transaction Patterns
Regularly review sales reports to identify unusual purchasing behaviors that could indicate fraudulent activity.
- Monitor Transaction Patterns
8. Multiple Account Abuse
Multiple account abuse occurs when a single buyer creates multiple Amazon accounts to exploit promotions, discounts, or return policies. This fraud tactic allows the buyer to circumvent restrictions meant to limit benefits to one per customer, leading to skewed sales data and increased costs for sellers.
How to prevent multiple account abuse:
- Monitor Unusual Buying Patterns
Use analytics tools to detect multiple purchases of the same item or promotions coming from similar IP addresses or shipping addresses.
- Monitor Unusual Buying Patterns
- Set Limits on Promotions
Clearly define and enforce limits for promotions and discounts to prevent repeated abuse.
- Set Limits on Promotions
- Require Verification
Consider requiring additional verification for high-value orders or promotional use, like two-factor authentication, to ensure genuine buyers.
- Require Verification
9. Credit Card Chargeback Fraud
Credit card chargeback fraud, also known as “friendly fraud,” occurs when a buyer makes a legitimate purchase but later disputes the charge with their credit card company, falsely claiming that the transaction was unauthorized or that the product never arrived. This results in a chargeback, where the seller loses both the product and the payment, along with incurring additional fees.
How to prevent credit card chargeback fraud:
- Maintain Detailed Transaction Records
Keep comprehensive records of all orders, including shipping confirmations and communications with buyers, to provide evidence in case of disputes.
- Maintain Detailed Transaction Records
- Use Secure Payment Processing
Choose payment processors that offer robust fraud protection and regularly review chargeback cases for patterns.
- Use Secure Payment Processing
- Respond Quickly to Disputes
Act promptly when a chargeback is filed, providing all necessary documentation to challenge the claim.
- Respond Quickly to Disputes
10. Fake Product Reviews
Fake product reviews are a form of buyer fraud where competitors or malicious actors post false reviews—often negative—to harm a seller’s reputation, decrease their product rankings, and ultimately drive down sales. These reviews may come from accounts that systematically leave poor ratings or from services that offer “review bombing” for hire, targeting primarily U.S. and U.K. sellers who may be less likely to know how to counteract them.
How to prevent fake product reviews:
- Identify Suspicious Review Patterns
Look for reviewers with numerous one-star reviews or accounts with a history of leaving only negative feedback. These are often signs of bad actors.
- Identify Suspicious Review Patterns
- Report to Amazon
File a report through Seller Central by providing specific details, such as review links, buyer profile links, and any other relevant information. Use the “Report Abuse” tool and select “Another seller account is attempting to harm my business”.
- Report to Amazon
- Send a Cease and Desist Notice
Contact the suspected fake reviewer through Amazon, and if possible, send a formal cease and desist notice to deter further actions.
- Send a Cease and Desist Notice
Frequently Asked Questions About Amazon Buyer Fraud
How to Deal with Customer Fraud?
If you suspect customer fraud, especially with FBM orders, it’s crucial to follow these steps:
- Request the Return: Instruct the customer to return the item to a designated address, and provide a pre-paid shipping label with tracking for expensive items.
- Document Everything: Keep records of all communications, shipping labels, and any items received. If the customer returns an incorrect or damaged item, provide a partial refund and document the evidence.
- Handle A-to-Z Claims and SAFE-T Claims: If the customer files an A-to-Z claim with Amazon, prepare to submit a SAFE-T claim by providing all documentation that proves the item was not returned or was returned incorrectly. Clearly state the problem and the resolution you seek to Amazon.
- Be Persistent: Amazon often sides with buyers, so maintain thorough documentation, be proactive, and follow up regularly to ensure your case gets the attention it deserves.
These steps can help you contest fraudulent claims and improve your chances of a favorable outcome.
How Do I Report Buyer Fraud on Amazon?
Go to Amazon Seller Central and navigate to the "Report Abuse" section. Provide all necessary details, such as the buyer's profile link, order IDs, and specific evidence of fraudulent activity. You can also file a case with Seller Support to escalate the issue and seek further assistance from Amazon's team.
How Can I Prevent the Unauthorized Reselling of My Products?
Start by adding your brand name or logo to your main product images to discourage hijackers. If unauthorized sellers persist, contact them directly through Amazon's messaging system with a cease and desist notice.
Additionally, purchase their products to collect evidence of counterfeit goods, and file a report with Amazon through the Brand Registry portal, providing the ASIN, URLs, and seller information. Regular monitoring and proactive measures can help you maintain control over your listings and protect your brand.
Protect Yourself Against Scams on Amazon: Combatting Amazon Buyer Scams
Amazon buyer fraud continues to be a significant challenge for sellers, affecting everything from profit margins to account health. Despite Amazon’s efforts to combat these scams, sellers must remain vigilant and proactive in protecting their businesses.
By understanding the most common types of buyer fraud, sellers can better prepare themselves to identify and prevent these tactics. Implementing the right strategies can help minimize the impact of fraudulent activities.
Staying informed and taking swift action when scams occur is key to safeguarding your business and ensuring a successful and sustainable presence on Amazon. Remember, awareness and proactive measures are your best defenses against buyer fraud.
Do you need help to protect your Amazon business? Get expert help from our Amazon agency today!