What: Amazon marketplace sellers report a 144% surge in fraudulent returns, threatening business viability and operational efficiency.

Why it is important: The surge represents a broader crisis in e-commerce operations, where rising return fraud threatens the viability of small and medium-sized sellers while challenging Amazon's customer-first approach.

Independent sellers on Amazon's marketplace are grappling with an alarming increase in fraudulent returns that significantly impacts their profit margins. Trucking Depot, a cargo control products seller, projects a 144% year-over-year increase in fraudulent returns for 2024, despite stable sales volumes. The fraud typically manifests in two primary patterns: customers returning damaged or used items whilst claiming they arrived in that condition, and returning entirely different items while claiming they're the original product. The situation is particularly challenging for sellers using Fulfillment by Amazon (FBA), who have limited ability to inspect returns. Complogics, a car charger seller, reports the number of repeat offenders has doubled in recent years, forcing them to raise prices to offset losses. While Amazon emphasises its commitment to preventing return fraud through specialised teams and investigation processes, sellers argue that current systems inadequately address sophisticated forms of abuse, especially as competition intensifies from low-cost Chinese entrants.

IADS Notes: Recent data paints a stark picture of the returns challenge facing retailers. The National Retail Federation's December 2024 report revealed an unprecedented surge in returns reaching $890 billion, while fraudulent returns alone accounted for $103 billion in 2024. This aligns with the current article's findings about increasing return abuse. The scale of the problem is further illustrated by Narvar's September 2024 study showing 39% of consumers return online purchases monthly. Amazon's January 2025 decision to end its 'try before you buy' service demonstrates how major platforms are re-evaluating their customer-centric policies in response to these challenges.

Amazon sellers report rising concerns over fraudulent returns