Coordinated Refund Fraud Schemes Plague Retailers, Costing Millions
Retailers Battling Refund Fraud
Federal prosecutors have uncovered a coordinated refund fraud scheme that has cost online retailers like Walmart and Amazon millions of dollars. The scheme involves a crime ring known as the Artemis Refund Group (ARG), which recruits legitimate shoppers to purchase items, initiate refunds, and keep the refunded items for personal use or sell them for a profit.
How the Scheme Works
The ARG obtains order details from shoppers and interacts with customer service on behalf of the shoppers. If a no-return refund is offered, ARG takes a cut and the customer keeps the item. For return shipments, ARG sends fraudulent packages to the retailer. If a replacement is sent, ARG sells it and splits the proceeds with the customer.
Involvement of Company Insiders
The indictment revealed that ARG also recruited company insiders, including staff at Walmart’s returns department, to increase the success rate of the scam.
Amazon acknowledged losing over $700,000 to this particular scam, and prosecutors estimate that other retailers have lost millions of dollars due to refund fraud. The high-priced nature of the items targeted by the scheme enables shoppers to obtain items for as much as 85% off.
Open Online Communities for Refund Fraud
The investigation conducted by 404 Media and Court Watch also found numerous Reddit and Telegram groups openly sharing tips and advice on refund fraud. These groups provide specific guidance on perpetrating refund fraud against individual retailers.
Impact on Delivery Drivers
Delivery drivers, many of whom are gig-workers, often face customer complaints regarding missing or damaged shipments resulting from refund fraud. They bear the brunt of these complaints, even though they are not responsible for the fraudulent activity.
Source: Walmart, Amazon, and others lost millions of dollars to an organized online refund fraud scheme
