Cybercrime and fraud are incredibly complex branches of the internet. Fraudsters have done everything from using artificial intelligence to steal gift cards, creating entire email services to steal Chick-Fil-A coupons (story on that coming soon), and hacking ATMs. These highly skilled hacks all involve years of programming experience and trial and error; however, what happens when executing a similar scale attack is as easy as editing a shipping label? Fraudsters have now found ways to evade detection and obtain free items through return fraud.
Returns make up a sizable portion of online orders, with nearly 30% of all online orders returned. These returns usually result in either a replacement item or a refund of the amount paid. Companies deal with these incredible amounts of returns in a myriad of ways. Some use return companies such as Yoox or HappyReturns, while some bigger companies such as Amazon have in house solutions. However, the only thing for certain is that these facilities often overwork, pay cheaply, and are riddled with flaws. These poor working conditions cause return facilities to often lose track of items or not scan in items, causing long refund and replacement processes. However, if the return facility loses the item, they often claim responsibility and refund or replace your item. This is where fraudsters come in.
Years ago, resourceful fraudsters began scamming Amazon by saying that their items did not arrive. The scam was simple and often worked due to the “Commitment to customer service” at Amazon and other large companies. However, this scam soon dried up as these companies began checking the package weight at arrival. However, these criminals were not ready to give up and began dreaming up new ways to get free items. At some point, they decided that the next possible vector of attack was the return. They began researching how returns worked and how they were tracked from shipment time to refund. Finally, they began testing out different methods of return and mail fraud to evade tracking from companies. Eventually, the thieves realized that they could remove some of the tracking information on the label, such as the return barcode and ship it in a small empty bubble mailer. The package would then often get thrown out by the return workers thinking it was ad mail, causing the companies to issue a full refund for the “lost” return.
Immediately a small group of the initiated began falsely returning everything from iPads to Macbooks and evading detection. However, they soon ran into a problem; they got return blocked after doing it at their address too many times. This is the crossroads many criminals run into, whether it be drug dealers or return fraudsters. They have the decision to either continue selling themselves and doing the fraud, or simply have other people do the selling for them. In that fashion, refund services began popping up on forums around the internet. Services started charging anywhere from 5–30% to refund the customers items from various companies. Customers began popping up, and soon thousands more were initiated into the return scheme. The top refunders began making large amounts of money per month, sometimes topping $10,000.
Because there is so much money in this return fraud, refund service owners are going to great lengths to bring in business. Forums such as Nulled are riddled with thousands of listings boasting the “fastest refunds” and “lowest prices”. Top refunders have brands complete with graphics and logos and often employees. Refunders pay hundreds to get their post “stickied” to the top of forum boards. The entire operation is incredibly business like and professional, and service owners can often be trusted more than your local payday lenders. However, these return frauds are starting to get caught by companies.
Companies have begun re-billing the refunds after finding that returns are not containing the requested items. Last year, Costco re-billed nearly all illegal returns after finding that people abused their automatic refund on return delivery. While events such as these have temporarily steered refunders off course, they seem to come back even stronger each time.
Currently, refunding seems to be as big as it ever has been, and it doesn’t show any signs of stopping as long as companies cannot track down illicitly returned items.
