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Buyback and multi platform product "moving" are prevalent! The fraud team earns hundreds of millions of dollars annually by reselling goods

by PFTLCD 02 Jun 2023 0 Comments

As is well known, the return policy of cross-border e-commerce platforms provides consumers with a perfect shopping experience. If buyers purchase products that do not meet their expectations or encounter product quality issues, they can return or exchange them without reason. Such objective reasons lead to sellers having a certain return rate, which is understandable.

Under normal circumstances, the return rate of Hangzhou seller Xiao Zhang (pseudonym)'s products is basically within a controllable range, but they gradually discovered during the sales process that the return rate of some products seriously exceeds the normal value, and even the return rate of a product is close to 50%.
The increase in return rates caused by many abnormal external factors has become uncontrollable.

In recent years, some fraudulent sellers take advantage of the "loophole" in the refund service of the platform to apply for a refund after purchasing regular sellers' products, but do not return them. Then they resell the free products on Amazon, eBay, Wal Mart, Independent Station and other major platforms, and earn a lot of money by buying them with nothing!

As the most direct victim, Xiao Zhang is estimated to have suffered losses of tens of millions

“Only 2 brands have been resold by over 100 eBay stores”

At present, Xiao Zhang has opened stores in Wal Mart, Amazon, Homedepot, Lotte and other platforms, of which Wal Mart is a key business platform and belongs to DSV sellers. Faced with abnormally high return rates for certain products, the root cause of the problem was not initially identified.
Until receiving after-sales demand from consumers in 2021.

At that time, a buyer wanted to provide after-sales service, and the order number was not ours. Upon inquiry, it was found that the other party had purchased from the Amazon platform. After observing the screenshot of the order and the store link, it was found that the product prices of the Amazon store were much lower than ours, which had a clear logical problem. "Xiao Zhang immediately realized the problem. If the Amazon seller purchased their product at a high price and sold it on the Amazon platform at a low price, they would not make a profit but instead lose money, Violating the most basic business logic.
Afterwards, Xiaozhang and his team gradually discovered that many buyers who wanted to do after-sales service had similar issues with their order numbers. In addition to e-commerce platforms, there were even buyers who purchased their products offline.

With an abnormal order number and an unusually high return rate, Xiao Zhang reacted and inexplicably became a "cash machine" for some fraudulent sellers.
Some fraudulent sellers use multi platform product relocation methods, opening stores on e-commerce platforms such as Amazon, Walmart, Homedepot, Wayfair, Lowes, Target, Overstock, eBay, etc., and directly copying Xiaozhang's product listing. The product information such as images, product descriptions, and titles remains unchanged, but the price of the product is much lower than theirs. For example, a certain product originally sold for $100, Fraudulent sellers may only sell for $80 or less on the eBay platform to gain a price advantage.
After receiving the order, the platform stores of these fraudulent sellers placed an order with their Wal Mart fake buyer number to find a small piece of "purchase" products. After the small piece sent the goods out, the fake buyer number began to look for various reasons to apply for refund. For example, the product quality was poor and they didn't want it, but they could basically apply successfully, but after receiving the refund, they didn't return it. Each buyer number only placed two or three orders and then abandoned it, in order to avoid platform supervision.

On the one hand, refunds are not refundable, and on the other hand, these people will also adopt the method of returning counterfeit goods to achieve the goal of obtaining products for free.

In detail, after fraudulent sellers apply for a refund, many times it is not true to return the goods. For example, after applying for a refund with the Wal Mart buyer number, the platform will generate a return form, and the buyer needs to print it and paste it on the return package. These people will not send back the purchased goods, but find something worthless to replace them. The after-sales service of Wal Mart DSV sellers is mainly done by the platform staff, The seller cannot personally check whether the returned product is consistent with the sold product. After receiving the product, the platform's after-sales department often does not deliberately inspect it, which gives criminals the opportunity to do evil.
Fraudulent sellers repeatedly repeat this operation, saving on various expenses such as product procurement fees, initial logistics and transportation fees, and directly eliminating the risk of hoarding, resulting in almost zero operating costs!
Xiao Zhang was scammed and the seller easily collected wool, not just the product

Xiao Zhang was easily fleeced by fraudulent sellers. Not only did the product run out, but he also had to bear various additional expenses such as return shipping fees and deductions. He was also fined by the platform due to high return rates.

It is understood that the return rate of multiple products in Xiaozhang's store has skyrocketed, especially for large items, with a return rate of about 30% -50% for bicycles and over 40% for a certain outdoor product. The cost of stocking large products is very high, and this group of people are directly competing for products from legitimate sellers in order to save costs

After rough estimation, in recent years, Xiaozhang has suffered a total loss of about two to three million US dollars, which can reach tens of millions in Chinese yuan. In 2021, the loss was particularly severe. "On the eBay platform alone, it was found that more than 100 eBay stores were reselling goods from our two brands

In fact, in addition to the relocation of multi platform products, fraud is also very prevalent in Wal Mart's platform. The fraudulent sellers mainly take orders in the form of low price follow-up or copy normal sellers listing. In this way, it is also possible to directly open a store on the platform without stocking up.

Low price follow-up can directly grab the buybox of the real seller, and then find the real seller to place an order to purchase and deliver the goods. After the real seller delivers the goods, the fraudulent seller's buyer number will refund the goods, but they don't really return the goods. The shipping label of the returned goods will be pasted on a product randomly and returned to the warehouse. Many times, Wal Mart's return warehouse will not carefully review whether the fraudulent buyer has returned the same product, They may have purchased a bicycle but only returned one phone case.

In recent years, Wal Mart has intensified its efforts to crack down on low price co selling. It has dealt with many fraudulent sellers. Many people continue to cheat by copying others' listing in order to avoid the attack of the platform. At present, more and more fraudulent sellers use this operation. The price of copy listing is often lower than the normal price, so that more orders can be received.

Fraudulent sellers use the fraudulent buyer number to place orders with normal sellers after receiving the order. After the normal seller ships the goods properly, the fraudulent buyer number refunds but does not return the goods. Similarly, the returned shipping label is casually attached to a package or even an envelope and sent to the return warehouse.

In summary, sellers who engage in "fraud" on single platform often have the following three characteristics:

Firstly, the stores are generally relatively new, with few reviews, and most of them are new stores registered by Chinese companies.

Secondly, the store has built a large number of listings, using listings from co selling or copying other stores. The prices of listings are lower than those of normal sellers, and the unit price of products sold is generally above $50.
The third is that the store does not issue WFS and completely self ships. Fraudulent sellers generally make quick money, do not send WFS for long-term products, and do not advertise for promotion.

Relatively speaking, it is better to regulate the moving behavior of products on the same platform, and the platform has been cracking down on related violations. It may be difficult to promote the rectification of moving behavior of products on multiple platforms, which involves the sharing of information among buyers on different e-commerce platforms. Perhaps each platform has confidentiality requirements for its own consumer data, and the difficulty of cooperating with investigations between platforms is often very high. These are not things that merchants can control From the discovery of the problem until now, Xiaozhang has still been plagued by fraudulent orders.

Multi platform product relocation operations have formed a mature business chain, with some people earning hundreds of millions of dollars annually

Like Xiao Zhang, there are also a large number of cross-border sellers from different platforms who have been poached.

"Now there are more and more sellers who engage in such fraudulent operations! They are crazy about making money, moving Amazon products to eBay; moving Wal Mart products to Amazon; moving Homedepot, Lowes, Target products to Wal Mart; moving eBay products to independent stations... It can be said that it is a huge profit." Xiao Zhang said that although these people sell products with high prices at lower prices, they do not need to stock up, saving the cost of procurement, Listing can also directly plagiarize legitimate sellers, saving a lot of labor costs. Even after deducting certain commission fees from the platform, a single order can still earn a lot of money.

Some fraud teams with only a few people can illegally profit hundreds of millions of yuan annually.

The operation of moving multiple platform products has become a medium to long-term fraudulent business, spread across major e-commerce platforms and sales markets, with some estimates involving billions of dollars annually. Driven by interests, service providers specializing in multi platform product relocation operations have emerged, and the related black industry chain is becoming increasingly mature.

The moving operation of multi platform products requires the use of a buyer's account to place orders. After investigation, it was found that fraudulent sellers often use two methods to solve the buyer's account problem.

The first method is to register a real buyer number on the platform, but their consumption behavior is abnormal, with a high refund rate, especially for orders with high unit prices. Through the behavior of refunding but not returning, they occupy high value products at zero cost.

The second type is to deceive the seller to register a fake buyer number, which involves some resource issues during the entire registration process, such as how to obtain credit card, email, and other information. Yi' has learned that fraudulent sellers will register or purchase a large number of email addresses, phone numbers, virtual credit cards or black cards (embezzlement of others' credit cards), VPS or IP registration of a large number of buyer accounts. These buyer accounts perform the operation of purchasing orders, refunds, but not genuine returns. Some fraudulent sellers often register tens or even hundreds of thousands of buyer accounts to engage in fraudulent ordering work.
The payment method can be said to be the most important component of the buyer's account. Fraudulent sellers often use credit cards to make a big deal, either stealing someone else's credit card or using virtual credit cards, both of which have low costs. The prosecution period for credit card theft is 6 months, and it takes many credit card holders a long time to discover that their credit card has been stolen. At this time, there are many uncertain factors when going back to refund; and the funds in virtual credit cards can be almost infinitely recycled

Xiao Zhang and sellers with similar experiences are well aware of the operations and characteristics of fraudulent sellers. In summary, the fraudulent buyer numbers they use have certain characteristics, and the credit card number segment is relatively single (the first few digits of the credit card are relatively fixed); After registration, only 1-3 orders are purchased, but the refund rate for the buyer's account is extremely high, often exceeding 50%. After the refund, the buyer's account is no longer used; Moreover, orders with refunds often have a higher unit price, with a purchase price of over $100.

These people are very cautious, and many sellers are still in the dark, often unaware that they have been targeted by fraudulent sellers. It is understood that even if some sellers find that their product return rate is abnormal, they are often powerless and give up "resistance" directly, allowing fraudulent sellers to run rampant and resell their goods

Rampant fraudulent sellers: cannot do without the complexity of people's hearts, and also expose platform regulatory deficiencies

Since the discovery of this problem, Xiao Zhang has been trying to solve the problem, and has fed back to Wal Mart, Amazon platform, etc.

The account manager of the Amazon platform has not provided a response at the moment, and platforms such as Homedepot cannot find feedback channels, but these platforms are not the focus of sales. Therefore, Xiao Zhang focused on the Wal Mart platform. Wal Mart replied that it would take action, but no substantive progress has been made at present. The Wal Mart team in China has limited voice. Since 2022, Xiao Zhang has communicated with the Wal Mart official in the United States, "the overseas side said that it needs time to make a decision and investigate, and the progress of the whole thing can be said to be very slow".

As a gathering place for interests, cross-border e-commerce is mixed with various commercial struggles, and many people wander on the edge of the law, ignoring the legitimate interests of legitimate sellers and illegally accumulating wealth. This is inseparable from the complexity of people's hearts and also exposes the shortcomings of platform regulation.

"Wal Mart, Amazon and other platforms are too biased towards consumers, and the relevant policies are also biased towards them, which gives some fraudulent sellers an opportunity to take advantage of. At the same time, the platform does not verify the returned packages after receiving them, and the fraudulent sellers see the bugs in them, and the fraud operation is more rampant." In Xiao Zhang's view, the platform is dealing with refund and return issues, protecting the legitimate rights and interests of regular sellers, and reviewing the buyer number registration process, There is still a lot of room for improvement.

1. After scanning the shipping label of the return order on FedEx, UPS, or USPS, the system should match the weight of the product. If the weight difference is significant, the refund will be suspended. This requires checking whether the return is consistent with the original sales product. At the same time, the return warehouse will conduct a return and unpacking inspection on products with a high unit price ($100 or more) to see if they match the sold products. If the product is delivered and checked for matching, a refund will be made.

2. Allow legitimate sellers on the platform to pay to retrieve products from the return warehouse, so that legitimate sellers can promptly detect fraudulent returns of their products and provide the platform with fraudulent information and evidence; Wal Mart DSV can change the terms of the contract according to the actual situation, let the DSV sellers set up their own return warehouses, monitor whether the returned products are consistent with the products sold, or take other ways to detect fraudulent returns in a timely manner.

3. The technical teams of major e-commerce platforms should strengthen the review during the buyer registration process, focusing on the IP environment, browser environment, payment credit card information, and other aspects of buyer registration. They should establish a false information blacklist database. If the information provided by the buyer during the registration stage is related to the blacklist database, the buyer should submit verification materials such as credit card bills and water and electricity bills for review. Timely close buyer accounts with high refund rates, especially those with high unit price refund rates, and ask buyers to provide credit card statements to verify the authenticity of the buyer's account.

4. We should cooperate with the receiving company to investigate and confirm the fund flow of the fraudulent seller, determine who the ultimate withdrawing party of the funds is, and identify the ultimate beneficiary of the fraudulent behavior.

The platform reports the case to the Chinese public security department. The public security department takes the lead, and the third-party collection company, Wal Mart, and the public security department set up a joint investigation team to investigate the ultimate beneficiaries of the fraud and file criminal proceedings in China, so as to deter fraudulent sellers.

5. Major e-commerce platforms can collect evidence of platform fraud information through official websites and forums in the Chinese region, collect more evidence and provide feedback to the fraud joint investigation team.

A fraud team was arrested, with a case amount of several billion yuan

After careful investigation, it will be found that the operational logic of multi platform fraud is not actually complex. If you are willing to prevent it, fraudulent sellers will be severely affected. However, nowadays, the arrogance of fraudulent sellers and low-quality buyers to collect wool seems to be constantly increasing. Xiaozhang is still being "besieged" by high return rates, and more and more Xiaozhang is facing fraud difficulties. Which link is the problem?

It seems difficult to simply define who is right and who is wrong. With the rapid progress of the industry and the emergence of new situations, the standardization of the cross-border e-commerce industry has always been in a state of continuous improvement. Non compliant phenomena such as fraudulent operations are inevitable products of industry development. Have relevant regulatory and crackdown measures kept up? As Xiao Zhang believes, the platform cannot be left alone in the entire matter.

As a rulemaker, the platform's service policy based on benefiting consumers can indeed attract more buyers, and clearly provides opportunities for fraudulent sellers to take advantage of. It cannot be said that the path of benefiting consumers is completely wrong, as one side is the buyer and the other is the seller. The balance of e-commerce platforms needs to grasp the "degree".
Fraudulent operations are prevalent and can harm platform interests in the long term.

The platform needs high-quality sellers to provide high-quality products to supplement its product line, attract buyers to purchase, and attract high-quality buyers who have placed long-term orders on cross-border e-commerce platforms to lock in and ensure the continuous growth of platform traffic. Therefore, the platform needs a healthy ecosystem, not only to ensure a good shopping environment for high-quality buyers, but also to ensure the legitimate rights and interests of high-quality sellers. It is undeniable that platforms have been dealing with fraudulent sellers and buyers through policies, technical means, and other means. From the actual situation, the efforts are still far from enough. In building a good and fair online shopping order, many cross-border e-commerce platforms still have a long way to go.

Fortunately, everything is developing in a positive direction.

American lawyers have stated that they have dealt with many similar cases, and as direct victims, we will definitely be able to recover the losses in the end. We are now going through the process. "Now, while closely communicating with the platform, Xiao Zhang has also spent money to find relevant lawyers to handle the entire matter. The situation has not been resolved yet, but the lawyer's words have shown him hope.

Another person familiar with the matter said that there are already platforms paying attention to this matter and taking action. In addition, a buying and returning fraud team was arrested in March, involving several billion yuan, and a group of people were also arrested in April.

Those who disregard commercial order and walk on the red line in the cross-border circle will eventually face greater backlash, but it is only a matter of time, "said Xiao Zhang.

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