Amazon filed a lawsuit on Thursday alleging that an international fraud organization called REKK stole millions of dollars of products through systematic refund abuse by tricking the company, including bribing employees. According to the complaint:
“Among other places, REKK operates a Telegram channel that has over 30,000 followers, where they brazenly advertise refund services that they fully admit are fraudulent. In this scheme, bad actors who want a free product (like an iPad) pay REKK a fee (such as 30% of the product’s cost) to obtain a fraudulent refund.
“REKK uses sophisticated methods to obtain the refund, including socially engineering Amazon customer service, phishing Amazon employees, manipulating Amazon’s systems through unauthorized access, and bribing Amazon insiders to grant refunds.
“The Defendants’ scheme tricks Amazon into processing refunds for products that are never returned; instead of returning the products as promised, Defendants keep the product and the refund. REKK boasts that the organization has fraudulently refunded over 100,000 orders from retailers (not just Amazon).”
The lawsuit described the methods the defendants allegedly used to fraudulently obtain refunds, including insider bribery. Amazon alleged “REKK identifies and recruits Amazon employees responsible for approving genuine returns. REKK then bribes these employees to falsely approve unreturned orders as returned.”
The defendants also used “materially different returns” (what online sellers refer to as “rocks in a box” tactics), according to Amazon’s lawsuit: “REKK requests refunds for products and REKK or its users return packages to Amazon that are empty or contain low value items different than the original product for which the users were issued refunds. These fake returns are designed to deceive Amazon’s systems into believing the Defendants returned the correct item.”
Amazon alleged that one method the fraudsters used was to manipulate UPS tracking data, describing an instance where an investigator working for its outside counsel bought an item on Amazon and allegedly used the REKK service prior to receiving the product:
“The UPS tracking data showed indications of manipulation. The UPS data indicated that the package was being returned to sender because a customer in Roswell, Georgia, had refused delivery of the package—even though the package was never in Georgia and the investigator never refused delivery. After Amazon had issued a refund for the purportedly undeliverable package, the investigator received the package at the intended address, and UPS shipping data was updated to reflect the delivery.”
Amazon sued seven former employees responsible for approving product returns. “Each worked in Amazon’s operations organization, which is responsible for handling product returns. Together, the seven Amazon Insider Defendants provided over $500,000 worth of fraudulent returns to REKK and its users,” Amazon alleged.
It also sued 20 unknown individuals or entities that it alleged operate the “refund fraud service provider” doing business as REKK, and 20 individuals it alleged used the REKK service to defraud Amazon. (A copy of the Amazon lawsuit is available on Court Listener.)
Vice President of Amazon Seller Partner Services Dharmesh Mehta wrote about the lawsuit in a post on LinkedIn. Neither his post nor the complaint mentioned whether third-party merchants were impacted and, if so, whether they would be compensated. Nor did we see Amazon mention whether law enforcement would be filing criminal charges against the defendants. Mehta ended his post by writing of Amazon’s commitment to crackdown on fraud:
“We will continue to take direct legal action against the bad actors responsible for the harm, including working with law enforcement around the world to hold the bad actors accountable. In November alone Amazon supported law enforcement agencies across three continents to take action against multiple groups, resulting in multiple arrests and the disruption of crime syndicates responsible for millions of dollars in retail fraud.
“Amazon remains steadfast in our commitment to pursue those who intend to harm the integrity of our store through all available channels, and we look forward to building on our successes to eliminate this type of criminal activity.”
geez, crime really doesnt pay.
the criminals could have put all that time and effort into a legal business venture, and made out almost as well….notwithstanding the jail time, away from their families, they are facing
This is just awesome, while a seller cannot sue Amazon, Amazon keeps suing sellers.