Scamming Amazon For Billions
Somebody has to pay for that. It’s falling back on either Amazon or the third-party seller.
Amazon
$161,000,000,000 worth of merchandise was returned. It’s no secret that people aren’t exactly fans of big tech, don’t like Facebook, don’t like Google, and they especially don’t like Amazon. Usually, the primary critique against Amazon is the way they run their business. Amazon has become infamous for cutthroat rules and miserable working conditions.
Their drivers often have to be in bottles, while their warehouse workers are often left with chronic pain. This is why many Amazon warehouses have turnover rates that are over 100%. Amazon has never really worried too much about this, as they found that high turnover is actually a good thing at warehouses.
interest
It turns out that people are usually more motivated and productive when they get a new warehouse job than they are a few months in. So it’s actually in Amazon’s best interest to keep things churning as long as there are enough people to churn through. Of course, hearing all this, I’m sure most of you have some level of distaste for the meat grinder that is Amazon. But many of our peers have actually been taking this distaste to the next level. They’re not just complaining about it on the Internet or advocating for unions.
Dollars Rate by Product
Scamming Amazon For Billions
Instead, they’re actually stealing from it and defrauding Amazon. The worst offenders rack up stolen merchandise in the hundreds of thousands of dollars and even over a million dollars. While these are the people who make it onto the news, there are tens of thousands and maybe even hundreds of thousands of everyday people who are pulling off the same scam on a much smaller basis.
Essentially
These guys usually have 500 or $1,000 worth of stolen merchandise. So here’s exactly how people have been stealing billions from one of the largest companies in the world. Getting Straight Into It the overview of this scam isn’t all that hard to understand. Essentially, people have been abusing Amazon’s generous return policy to get unjustified refunds on products. While simple in nature, there are actually a bunch of nuances that are involved in making this scam work because Amazon is, of course, not stupid.
Classic Gift Card Scammers
Scamming Amazon For Billions
They’re well aware of this scam, and they’re constantly tightening their procedures and protocols to minimize its occurrence. Nonetheless, many everyday people are still benefiting from this gamut, thanks to the existence of full-on scam businesses. I’m sure you’ve heard about the classic gift card scammers that will email you or call you pretending to be Apple, Amazon, or Microsoft.
Scam Amazon
Scamming Amazon For Billions
They’ll usually tell you that your computer has some sort of virus and that you need to pay them in the form of gift cards to fix it. If you’re interested in the inner workings of these scams, I would recommend that you check out Jim Garner’s videos on them. But anyway, some of these scammers have switched strategies. Instead of scamming everyday people, they’ve pivoted to helping everyday people scam Amazon. Usually, they’ll set up a discord community that’s filled with a couple of scammers. Then they’ll go out and discreetly promote their servers online. Really, they don’t need that much attention. They just need five or ten people to join up from there.
Scammers
These servers usually grow through word of mouth. Once these five or ten people get products for a super low price, they often tell their friends about it. And within no time, these servers end up boasting it thousands of users. All these users have to do is tell the scammers what products they want, and the scammers will get it for them for a 70 or 80% discount. If you were to do this, these cameras will start off by creating a fake Amazon account on your behalf.
Amazon that the product
From there, you’ll use gift cards or stolen credit cards to order a bunch of merchandise to an Airbnb or some sort of temporary address. Nowadays, almost all couriers take pictures of the delivery of products. So these scammers often meet the delivery drivers outside the Airbnb and prevent them from taking a picture. This makes it especially easy for them to turn around and convince Amazon that the product was never delivered and get a refund.
Fake Account
Scamming Amazon For Billions
From there, they’ll ship it to the Discord member who requested the product, and its cameras will keep the 20 or 30% that the members did pay. This strategy generally only works on cheaper products, though when it comes to more expensive products, the cameras have to turn to a different strategy. The first part of this Camel works exactly the same. They’ll use a fake account and fake credentials to order a product. But this time, they won’t try to convince Amazon that the product wasn’t delivered.
Product List
Instead, they’ll take the product, replace it with a fake counterfeit, and return it. This scheme is especially common with Apple’s AirPods Max. The sticker price of the headphones is $550, but you can buy an extremely convincing replica for just $120 on Alibaba, which is about 22% of the price.
This gives the scammers plenty of margins to give the Discord member a 60% or 70% discount. And that’s exactly how they pull off this scam. Throughout the pandemic, this scam has exploded in popularity, especially among college students and broke young adults. But for obvious reasons, engaging in this camp is a horrible idea.
Discord Scammers
First of all, there’s the whole moral dilemma. You’re essentially stealing products from Amazon and or Amazon sellers. Given that most people go to Discord scammers and get them to do the dirty work, this is obviously not something that they’re willing to do themselves. And if you can tell that something is unethical to do yourself, you probably should not be getting someone else to do it for you.
Record
Scamming Amazon For Billions
Some of these people like to argue that they’re just getting back at the evil trillion-dollar corporation that is Amazon. But this is just an excuse to justify their actions. Really, they’re not getting back at Amazon at all. If anything, they’re making the lives of Amazon employees even worse. Here’s the thing. What do you think Amazon is going to do? If a delivery driver racks up a record of quote-unquote lost deliveries?
They’re obviously going to fire them. Not to mention, the cost of stolen products usually ends up coming out of the paychecks of Amazon employees. While Amazon gets a lot of slack for not paying employees enough, the truth isn’t that Amazon doesn’t want to pay employees more.
AWS
It’s that they simply cannot afford to pay more. Yes, Jeff Bezos is one of the richest people in the world, but all of that is the stock value when it comes to actual cash flow. Amazon literally has negative cash flow. For decades, they’ve been using AWS to subsidize their retail business, which has basically never been profitable. With that being said, though, Amazon has never laced tied for profitability either.
Directly Preventing
They’d rather just maintain a breakeven income statement and reinvest everything into new warehouses, and logistics channels, and, of course, employees and the people who are stealing from Amazon are directly preventing this from happening. Now, you may not think that this would make that big of a difference, but that’s completely false. In 2021, a record $761,000,000,000 worth of merchandise was returned, and out of this, a whopping ten 3% of returns were fraudulent. That translates to 78 $3 billion every single year.
Category and Season
Scamming Amazon For Billions
And that’s just the ones that are caught. The good scams go completely undetected, so the percentage of fraudulent returns is probably closer to 15 or 20%. But even if we assume 10%, this works out to billions of dollars per year. For Amazon alone, the average Amazon return rate stands at five to 15%, depending on the category and season. We can just estimate in the middle and call it 10%.
Internationally
If 10% of Amazon orders are returned and 10% of those returns are fraudulent, amazon is being defrauded on roughly 1% of its top-line revenue. In 2021, Amazon had net sales of $279,000,000,000 in North America and $127,000,000,000 internationally, which adds up to a total of $460,000,000,000. Now, that’s net sales, meaning that it already accounts for the revenue loss due to returns. This means that their top line number was roughly $450,000,000,000.
Approximately four $5 billion last year
Using our fraud estimate of 1%, amazon lost approximately four $5 billion last year due to return fraud and stolen goods. And there are only two ways that Amazon can pay for this. They can either increase prices or decrease salaries. And given their history, we know that they’d rather decrease salaries than increase prices. Currently, Amazon has a total of about 6 million employees.
Scamming Amazon For Billions
If this money had gone towards their paychecks, each and every one of them could have earned an extra two $800 last year. And it’s not just Amazon employees that are being hurt either. Random customers and sellers are also feeling the pain. First of all, some random person is going to become a victim of credit card fraud. After that, once the Douchebags camera returns, the fake pair of AirPods Max. It’s more than likely that some other Amazon customer is going to end up with that junk, even though they pay the full $550.
When they realize this, they’re going to have to call Amazon and explain the situation. And Amazon is probably going to turn around and flag the seller’s account, and the customer will probably go leave a terrible review. If this happens a few times, Amazon will probably ban a seller thinking that they’re a counterfeit product seller. So in the end, you’re left with Amazon employees who are getting the short end of the stick. You have victims of credit card fraud. You have customers with fake products and a nightmare buying experience, and you have a seller who just lost their small business.
