An Amazon Refund Trick Can Destroy Your Store. Here’s How.

Last updated on March 9th, 2023

Written by Ken Zhou

Buying anything online is fast and easy nowadays. And if a customer isn’t happy with your product and asks, “how long does it take to get a refund from Amazon?” they expect to get it as fast as they bought it. In a study by Voxware, 95% of shoppers said the smoothness of the return process influences whether they'll buy again from the retailer. 

Malicious individuals exploit businesses' desire to give customers a great shopping experience. They do this by committing refund fraud, and the cost can add up quickly for a business that becomes a target.

In this post, we’ll explain how refund fraud can kill your business and how you can protect your Amazon brand from dishonest buyers. 

Does Amazon Refund Trick Still Work?

Unfortunately, many sellers still fall victim to refund fraud. Amazon has a reputation for being customer-centric because they make returns and refunds as hassle-free as possible for Amazon customers. But this policy exposes third-party sellers like you to an Amazon refund trick or fraud. It’s when a shopper attempts to obtain a refund for an item they never returned or did but in damaged or used condition. 

This scam costs sellers a lot of money. Left unchecked, it could ruin the Amazon selling experience for everyone.

How Can Return Fraud Kill Your Business

Returns and refunds are an inevitable part of retail. Sometimes you won’t satisfy customers because they didn’t enjoy using your product or because it arrived to them damaged.

Because of how common returns and refunds are, refund fraud has become a major problem in the marketplace. Here are five ways Amazon refund fraud hurts honest sellers.

Refund fraud can eat into your profits.

Refunding Amazon customers for items they never returned can reduce your profits. The same goes for refunding customers returning damaged products. It can sabotage your profits because you must also pay the shipping fee. This fraudulent cycle could eventually lead you to bankruptcy.

Refund fraud can damage your seller rating.

Getting a refund from Amazon is so easy that the rate of returns and refunds skyrocketed in 2021. That year, buyers returned $761 billion worth of merchandise. A high refund rate can negatively affect your seller rating and reputation, leading to lower overall sales.      

Refund fraud can lead to charge-backs.

Some buyers don’t reach out to Amazon to dispute a transaction. Instead, they go straight to their bank and ask them to reverse the charge. This case is called a charge-back.

Like the refund rate, charge-backs are a metric that Amazon uses to measure your business’s success. When you get a lot of charge-back claims, it signals to Amazon that buyers are unhappy with their purchases and you can hurt their reputation.

Refund fraud can cost you the Buy Box.

Bagging the Buy Box is a game changer for Amazon sellers. This Amazon feature allows customers to buy products from your store without comparing other offers. If your refund rate is too high and bogs down your seller rating, you can lose your spot in the Buy Box, leading to fewer sales.

Refund fraud can put you at risk of account suspension.

Because a high refund rate influences seller rating and account health, it can also lead to Amazon suspension. If Amazon sees that customers are regularly asking for refunds, it can decide to suspend your account to protect buyers.

So if your refund rate is unusually high, it's important to take action and figure out what's causing it. A competent Amazon suspension and reinstatement expert can help you with that before Amazon serves you a suspension notice. Otherwise, you could end up losing your selling privileges on the platform permanently.

How You Can Protect Yourself From Refund Fraud

If you're reading this, chances are you suspect someone is trying to pull a refund trick on Amazon. It’s a serious problem that can have far-reaching consequences, so if you suspect refund fraudsters are targeting you or you want to prevent situations like this, you can take steps to protect yourself.

Here are three things you can do.

Establish a strong returns policy. 

You must have a strong return policy if you're running an Amazon business. A return policy is a set of rules that an Amazon store follows when customers return products. It gives your customers confidence that they can return items if they're not happy with them. 

You have a few things to consider when creating your Amazon returns policy, such as who will pay for return shipping costs, how long it will take to get a refund from your Amazon store, and what kind of refund they’ll receive. Regardless of the terms, your policy should be clear, concise, and easy to find on the page. This way, you can reduce the risk of refund fraud.

Practice good record keeping of all transactions. 

Good record management can prevent refund fraud. Whenever someone tries to claim a refund, you can refer to your records to prove that they received the product. Ensure you keep track of all your orders to avoid any potential problems down the line.

Watch out for signs of fraud.

The best way to protect your business from fraud is to stay vigilant. Never let your guard down because refund fraud is rampant in the marketplace. 

Watch out for red flags that indicate someone is trying to commit fraud.

• The customer asked for a refund before receiving the item.
• The customer requested a refund multiple times.
• The customer ignored your returns policy.

If you see any of these red flags, take extra care in processing the refund. For example, you can request additional documentation or contact the customer to verify their identity. Good record keeping will also come in handy in cases like these.

Prevent Refund Fraud

Return fraud is a real problem in Amazon Seller Central for third-party sellers, but it doesn't have to be for you. By taking proactive steps and being vigilant about monitoring your Amazon returns, you can stop refund fraud before it seriously damages your Amazon store. 

If you need help getting started or want someone to talk to about this issue, book a call with us. We're always happy to help Amazon sellers protect their business.