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Clearsale Blog

The Truth Behind Amazon Fraud

Sarah Elizabeth Zilenovski

By Sarah Elizabeth Zilenovski

Sarah is a Marketing Manager at Clearsale and has been with the company since 2012. During that time, she has developed deep knowledge about fraud prevention. She brings extensive expertise in planning, marketing, go-to-market strategy and sales experience, thanks to a background that spans financial planning, controlling and analysis. She previously spent 5 years with Proctor & Gamble, and she holds bachelor and master degrees in Business with great distinction from a top Brazilian business school.

The Truth Behind Amazon Fraud

Customers purchased more than 2 billion products from Amazon in 2015, and the company boasts more than 310 million active customer accounts. But with big companies and big sales often come increased risk exposure. Amazon has taken several steps to protect its third-party merchants from fraud, but is it enough? And if it isn’t, what should these merchants to be doing to protect themselves against rising fraudulent transactions and false claims?

Protecting Merchants Against Amazon Fraud

Amazon has implemented two policies that help them evaluate and resolve transactional disputes involving customers and third-party merchants. Even better, these policies can help merchants defend themselves against fraudulent claims.

A-to-z Guarantee

Amazon’s A-to-z Guarantee was established to promote confidence and trust among buyers shopping from Amazon’s many third-party merchants. For customers and merchants using Amazon Pay (Amazon’s integrated payment solution), the policy warranties the condition of the ordered item and its timely delivery, giving buyers the chance to receive a full refund or cancel an authorized payment if they’re unsatisfied with a purchase.

Amazon, however, encourages its customers to try to work out disagreements directly with the merchant first, before activating this guarantee. But if the issue does escalate and customers file an A-to-z Guarantee claim, Amazon will communicate with merchants to resolve the claim.

Chargeback Support Through Amazon Pay

Rather than filing a complaint through the A-to-z Guarantee, some dissatisfied customers will instead file a chargeback directly with their credit card company. The credit card issuer then contacts Amazon Pay for transaction details, which filter down to the merchant. Merchants have the option of either accepting the chargeback or having Amazon Pay dispute it. If merchants select the latter, they’re assessed a $20 representation fee and Amazon Pay will build, present and maintain the merchant’s case with the credit card issuer.

If the chargeback is covered by the Payment Protection Policy, the representation fee isn’t charged, and Amazon Pay won’t deduct the chargeback amount from the merchant account. Merchants also won’t be held liable for fraud-related chargebacks if they and their transactions meet the Amazon Pay Customer Service Policy.

Note: If a customer files a chargeback with their credit card company, Amazon denies any A-to-z Guarantee claim the customer makes.

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How Amazon and Its Merchants Experience Fraud

Despite Amazon’s protections, many of the its customers are still frequently perpetrating e-commerce fraud against Amazon itself and its merchants. For example, an Indiana couple recently pled guilty to stealing more than $1.2 million in electronics from Amazon. After creating hundreds of false identities, they made purchases from the retailer, reported the products didn’t work and requested free replacements. They then sold the merchandise to a reseller for approximately $725,000.

Another common scenario is for fraudsters to ostensibly return the merchandise and request a refund, claiming the merchandise received was materially different from what was ordered. Unfortunately for the seller, what the buyer returns isn’t what the seller actually sent: Sometimes the fraudster exchanges new electronics for older, defective models; sometimes they send a completely different (and worthless) product altogether. And many merchants find that in a dispute, Amazon’s loyalties lay with the customer, not the merchant.

How Merchants Can Avoid Becoming an Amazon Fraud Victim

Although it may not be easy for a merchant to win a transaction dispute, here are seven ways merchants can increase the odds of a dispute being resolved in their favor.

  1. Include clear, thorough descriptions for each item listed. Post photos from multiple angles, and include any identifying characteristics, such as serial numbers.
  2. Be clear about return and refund policies, and include retailer contact information.
  3. Keep the lines of communication open throughout the transaction, from the order confirmation to the delivery updates to the post-delivery follow-up.
  4. Ship promptly and use a shipping method that ensures reliable delivery and offers delivery confirmation. For high-value orders, purchase signature confirmation and insurance.
  5. After a customer makes a purchase, immediately email them a copy of the receipt or order confirmation. This documentation should include the date of purchase, shipping address, total purchase price, a description of the item (including condition and any serial numbers) and applicable return policies.
  6. Keep a record of all communications with buyers, and thoroughly document transactions.
  7. Respond quickly to notifications from Amazon regarding any filed A-to-z claims. Merchants have five days to respond; after that time, Amazon automatically assigns the claim to the merchant and debits their account to reimburse the buyer.

With even the biggest online retailers falling victim to today’s savvy fraudsters, it’s clear that merchants of all sizes must be vigilant about protecting their reputation and their revenue.

Amazon fraud protection is just one facet of growing your business. Download our free “The e-commerce technology trends that will shape 2017” white paper today to help you plan your e-commerce strategy and improve the online customer experience.

Sarah Elizabeth Zilenovski

Sarah Elizabeth Zilenovski

Sarah is a Marketing Manager at Clearsale and has been with the company since 2012. During that time, she has developed deep knowledge about fraud prevention. She brings extensive expertise in planning, marketing, go-to-market strategy and sales experience, thanks to a background that spans financial planning, controlling and analysis. She previously spent 5 years with Proctor & Gamble, and she holds bachelor and master degrees in Business with great distinction from a top Brazilian business school.

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