5 Common Ecommerce and Amazon Buyer Scams

Buyer scams have existed since the start of online retail. The rapid increase in ecommerce has been a boon for buyers because of increased competition and lower prices. With people increasingly making their purchases online, many sellers have noticed a disturbing rise in fraud. Not only do sellers have to deal with other seller fraud, but they also have to contend with buyer frauds and scams. A 2016 Business Insider article puts the cost of fraud at 1.47% of annual revenue. For small businesses selling items like electronics, even a few percent of fraud can be ruinous.

Fraud cost businesses in time and money, but attempts to mitigate such fraud can have consequences as well. Applications that screens suspicious transactions are not perfect, and any false decline results in losses of customers, revenue, and reputation.

Small businesses that sell on marketplaces like Amazon stand to lose a lot not only from successful buyer scams but also from the cost of having someone review transactions. And sellers who use services like Fulfillment by Amazon (FBA) have no way of screening transactions. Note: sellers can change the option to have Amazon move returned items to unfulfilled inventory. Sellers must abide by the rules of those marketplaces, and these rules increasingly favor buyers at the expense of sellers.

Below are some common scams that people use.

Item Not Received

Item not received (INR) is perhaps one of the more common scams. Buyers claim that they never received the package. Some sellers just refund the order and buyers keep the items. This scam has been in decline because more and more sellers are using shipping methods that include tracking. Still, for low-value items, the additional cost of tracking orders may be prohibitive. And buyers can always claim they never received the item (stolen) or that the signature is not theirs. Many Amazon A-to-Z claims often settle in favor of the buyer.

Items Not as Described

This scam involves buyers using the reason “Item not as described” to get free return shipping. While there are valid reasons why people return orders, some people abuse this policy. Amongst customers who buy clothing, this is a favorite reason. Sellers who don’t configure their Fulfillment by Amazon setting may find themselves having to deal with customers who have received used items sold as new. When buyers return used items, the seller can no longer resell it as new. For some categories like clothing, sellers can no longer sell the item since some marketplaces like Amazon don’t allow sales of used clothing or accessories.


Like the fraud above, another common scam is to return an item that is different, damaged, or even an empty box. In this scam, buyers just switch out their used or broken product for the new one they ordered. Or they put something else in the box with similar weight and return that. This particular scam is common with high-value consumer electronics. One common fraud in 2016 was buyers purchasing iPhones and returning clay or putting enough litter in the box to match the original shipping weight.

Credit Card Fraud

While this fraud is committed by someone other than the buyer, it’s important to note here. Poor cybersecurity has meant that potentially millions of people have had their personal information, including their credit cards, compromised and leaked online. Even major retailers like Target are not immune. Many credit card scammers purchase credit card numbers and personal information online. Then they attempt to use those credit cards to buy items and ship them to different addresses or intercept packages before homeowners return.


A chargeback happens when a buyer disputes a purchase. Chargebacks can be increasingly frustrating because they require that businesses prove the legitimacy of the transaction, costing time and money. If the credit card company finds in favor of the customer, then the store owner can be hit with additional fees or penalties.

Buyer scams have proliferated with the rise of ecommerce. The anonymity of the internet, the relative ease with which buyers can return an item, and policies that favor buyers all contribute to this increase. But that doesn’t mean that small businesses should prohibit returns–in fact, a generous return policy creates goodwill and customer confidence.

Unfortunately, there will always be buyer scams and fraud. As sellers adapt and more security tools arise, scammers will only find other ways to circumvent such systems. Returns and fraud hurt the seller’s performance metrics, and marketplaces like Amazon hold sellers to a high standard. These sellers feel compelled to reach a satisfactory resolution to maintain their ability to do business on Amazon even if that means losing an expensive item due to fraud. Buyers know this and capitalize on sellers.

All hope is not lost, however. If sellers keep on top of their customer service by taking good notes and pictures, then they have options available to them. By providing clear evidence like serial numbers of items sold compared and serial numbers of items returned, sellers have a good chance of appealing the returns process. Better yet, such evidence can be used to file claims of mail fraud against people who scam businesses using the postal system.

Ultimately, fraud hurts both buyers and sellers because it not only increases the cost of doing business, but it also raises the price for everyone else. Sellers aren’t immune from scamming customers and Amazon either. Honesty in the marketplace would benefit everyone, but a few people ruin the experience for everyone else.

Common Amazon Seller Scams

Seller scams abound in any marketplace that is open to third-party merchants. Even a marketplace like Amazon is not immune. The constant marketplace evolution means that one mistake can mean the end of a business. As a result, some sellers will resort to underhanded, and sometimes illegal, tactics to gain an advantage or eliminate their competition. While most sellers are honest and provide fantastic customer service, just a handful of bad sellers can harm the marketplace as a whole.

The scams discussed below have damaged the trust amongst customer, marketplace, and sellers.

Drop shipping is one strategy that sellers use. In this tactic, sellers will target a merchant on a marketplace like Amazon. These sellers often have a suite of analytical and scraping tools that compare Amazon prices with other marketplaces like eBay. They choose products that they can profit from by charging a more on a different platform like eBay. Often, listings on marketplaces like eBay can be automated using product descriptions and pictures from Amazon, so there is little work involved.

When a customer purchases from the seller, the seller places an order on Amazon for delivery to the customer. With marketplace fees, these sellers may not be earning much at all, but for relatively little work and potentially hundreds of orders a day, even a $1 profit per item may be worthwhile since these sellers don’t run a business. In order to reduce costs, some of these drop shippers abuse their Prime membership to get free shipping.

The real scam occurs when these sellers initiate an Amazon A-to-Z claims process in the hopes that merchants will refund the sale without appeal. If the Amazon claim is successful, scammers get to keep the proceeds from the sale, and the merchant loses the product. He also gets a negative mark on his metrics. Meanwhile, the customer who received the product is unaware that a scam has been committed on his behalf.

Many will wonder why merchants should care in cases where sellers don’t initiate chargebacks or refund claims. While drop shippers may increase sales, the increase isn’t worth the potential frustrations and customer defection due to poor customer service. One possible scenario is this: a seller targets an Amazon merchant and makes a sale on eBay. The seller orders the item from the Amazon merchant. The merchant includes an invoice that shows the company details and lower Amazon price.

Customers become angry because of the higher price, so they contact the Amazon merchant. The Amazon merchant cannot refund a non-existent sale to that customer, nor would he reimburse the drop shipper. Thus, business has to deal with the upset customer. Of course, the simple solution for the merchant is to list on eBay, removing the seller’s ability to sell the same item at a higher price.

Other seller scams abound in the marketplace. Another common one includes the creation of new seller accounts on Amazon. Often, these sellers are identifiable because they set prices that are too good to be true. They may price an item at $10 when it retails for $40 everywhere else. Then they will claim that the item ships from outside the US or they will claim delivery issues to delay the customer from filing claims or requesting refunds due to Amazon’s settlement period.

If the customer files a complaint later, the seller has already left. Then Amazon has to handle the flood of complaints. While this scam may appear to hurt only buyers, merchants who also sell the same items may lose sales when those customers shop elsewhere.

“Just Launched” scammers are often identified by the products they carry. Their catalog may include hundreds or thousands of items, and their inventory remains relatively consistent across numerous accounts. Another indicator is the sheer number of negative reviews they receive. Most Amazon merchants will do their best to maintain good ratings for their performance metrics since low metrics can lead to consequences like suspension.

However, scammers will not care about their ratings. While they may deliver an item or two to appease some customers, they only care about the short term. This scam has harmed new and honest sellers the most, as shoppers eventually learned to avoid sellers with the “Just Launched” tag.

To avoid the stigma of the “Just Launched” tag, scammers then moved to purchase, hack, or hijack old and inactive Amazon accounts. Attempts include phishing for accounts or buying personal information leaked online. Even now, many Amazon sellers report receiving email spam requesting account details. Scammers hope that the history of the hacked account will give customers a false sense of security. Hacked accounts will often have previously excellent ratings, but current ones will be low. Scammers then repeat their behavior, setting too-good-to-be-true prices to capture customers and employing delaying tactics to stall more patient customers.

See this picture for an example of a Pokemon 3DS game that goes for around $30. Notice that all the sellers are “Just Launched.”

Similarly, scammers may begin by providing excellent customer support to build trust and confidence. They may accomplish this by selling small, low-cost items even at a slight loss. Once they feel confident they’ve established some trust, they then move onto the larger scam involving more expensive items.

Some unscrupulous sellers have resorted to other means to undermine their competitors. Some sellers file frivolous claims against their competitors to get the listings or accounts removed. Because of the way Amazon works, filing such complaints can lead to an automatic suspension regardless of legitimacy. The review process can take days or weeks, and in the meantime, the merchant under review loses revenue from sales while competitors benefit. While Amazon has banned against abusers of this reporting system, such action hasn’t deterred sellers from creating new buyers accounts and making false claims.

Several other underhanded seller practices exist as well. One popular one is purchasing a competitor’s stock, waiting almost thirty days, and then returning everything. Or they will buy an item and then leave negative feedback to undermine their competitors.

Even sellers who are not targeted by these scammers are subject to the consequences. Basically, these kinds of scammers, if left unchecked, will drive other sellers away from the marketplace. With sellers abandoning one platform, products and traffic will also decrease, creating a downward spiral. The fraud perpetrated by both merchants and customers have resulted in more restrictions on marketplaces like Amazon. While these new policies curbed scams, they have also resulted in limiting competition. Less competition is good for the sellers, but it’s terrible for the customer.

The rise of online scams has not really made shoppers more wary of making their purchases online. In fact, the opposite has happened: more and more people are moving to online purchases for price and convenience. This partly due to customer protections and marketplaces like Amazon, which is fervently on the side of the customer. But this dedication to the customer creates a lot of opportunities for both sellers and buyers to cheat the system.

As Amazon finds solutions to certain types of fraud, scammers rush to exploit other methods. New technologies will always provide scammers with tools to continue their scams. Everyone has to work together to keep fraud to a minimum for the overall health and success of the marketplace.