Almost every experienced online marketplace seller will have a story of how some smart – or not so smart – bad buyers have attempted to trick money or goods out of them.
These customers might claim that their goods didn’t arrive on time, or wear clothes to a party before returning them as ‘not as described’. At the other end of the spectrum, buyers have returned parcels packed with garbage instead of the item originally sent, or submitted completely false ‘item not received’ claims.
Some of the reasons for returning an item can be downright funny. In a Web Retailer forum thread about outlandish reasons given for returns, member Easiliving said, “We once had a customer return an eye patch because their kids thought they were being invaded by pirates!”
But bad buyers are not often a source of amusement. A significant number of buyers are tempted into scamming the system, often believing it to be a ‘victimless crime’. But it isn’t victimless if you’re losing money and having your reputation damaged in the eyes of the marketplace.
In this post, I’ll look at some common examples of buyer fraud, talk about steps you can to take to help prevent it, and explain how you can increase the likelihood of cases being resolved in your favor by eBay or Amazon.
Item Not Received
One of the most irritating tricks bad buyers play is saying that they have not received an item. By obtaining a refund or replacement they effectively get the goods for free, or obtain multiple items for the price of one.
Postal services around the world certainly do lose post – out of the billions of items handled every year, even a tenth of one percent loss rate means millions of items disappear each year. It’s an easy thing for dishonest buyers to exploit.
Many sellers have stories of customers falsely claiming their item was not received. In another forum thread, on the topic of buyer scams, Bigian13 said:
Customer claimed they had not received their item but had ordered several items from other eBay sellers and they had all arrived. We contacted other sellers who had left automatic feedback for the same buyer, and guess what, they had been told the same story.
If they hadn’t been contacted, those sellers might never have realized they were being scammed. Even if you feel certain that a claim is false, you still have to go through a potentially long-winded process with eBay or Amazon’s seller support team to deal with it. Without documentary evidence to back you up (and sometimes even with it) the claim could go either way.
At some stage you have to consider how much your time is worth. If the hours on the phone start to rack up, you may find it cheaper to write it off – even if the fraud is clear.
So what can you do to tackle the ‘item not received’ scam? Here are some suggestions:
Use Tracked Delivery
This is the most common solution. Using a tracked parcel delivery service means you get proof of delivery – usually a signature scan – to show that the item was received.
The problem with tracked delivery services is that the cost can be prohibitive, particularly for low-value items. It’s painful to accept, but the cost of tracked delivery might be more than just letting buyers get away with it.
For example, you might refund 10 orders out of every 200 due to false item not received claims. That’s a 5% fraud rate – a figure that many sellers give. Sending everything tracked might add $2 to each order, and you may need to absorb that cost to avoid losing sales. That’s $400 to avoid refunding 10 orders. In this example, if your average order value is below $40 then tracked delivery just won’t be worth it financially.
Perhaps surprisingly, using tracked delivery isn’t a completely watertight solution. Even when you have proof of delivery, buyers can – and sometimes do – claim that the signature is not theirs. But in most cases, being asked to sign for a delivery will deter most bad buyers.
What Else Can You Do?
If you have the time and ability to investigate bad buyers in-house, you might find you can fight back against some of them yourself. Web Retailer member Bigian13 caught one out who claimed not to have received an eBay order, but then made a direct website purchase using a discount code that was included in the package:
On each of our paper invoices we used to have a channel specific web address to guide people to our website. That way we could track the direct traffic better. This invoice had a customer specific discount code for their first order from the website. One customer claimed they had not received their order from ebay, around £60 worth, and then ordered several items from our website using their unique code. Bit of a tell tale sign! Unfortunately for them they lived quite close to our warehouse so a visit from our “debt collection agency” soon sorted this one out.
A lot of sellers include discount coupons with their eBay orders to encourage direct purchases in the future. A downside that few consider is the risk of upsetting bargain-hunters by making them feel like they have overpaid!
UK eBay expert Andrew Minalto has a more ‘black-hat’ idea (that he does not condone) to get the deterrence effect of tracked delivery without the cost, by adding a label to packages to give the appearance of tracking:
Basically you attach a label to the package that displays a barcode and a serial number… If you go this route, don’t make that label too similar to Royal Mail labels as then the post office may refuse to accept your parcel.
It may seem unethical (and ironic) to resort to deception to ward off scammers, but you could see it as similar to the decoy security cameras used by many businesses. Both give the appearance of being watched, when you actually are not.
Amazon and eBay have generous return policies that favour the buyer. It’s easy for customers to take advantage of that. The most common complaint for sellers is that orders are returned with a reason of ‘item not as described’, entitling the buyer to a free return, when the real reason is something completely different.
In a forum thread, Web Retailer member seller252gregb said:
I have had items returned because of the color not matching what they saw on their screen so it becomes item not as described and no cost to them for return. When the item arrives it appears to have been used at least once but cannot be proven.
Returning used items is such a common practice in fashion retailing that there is even a name for it: wardrobing. This is when shoppers purchase items with the intention of using them and then returning them. It’s a common practice, which 1 in 6 women have admitted to, but make no mistake – its fraud.
Wardrobing is very difficult to prove. Buyers who do this will often make efforts to keep items in pristine condition while they use them, leaving tags attached and handling the packaging with great care. A careful inspection may show up tell-tale signs of use, which might be enough to make it impossible to resell the item as new, but perhaps too little to satisfy eBay or Amazon that you’ve been scammed.
Even ordinarily honest people may be tempted to return an item that has been used, but others will go much further. It’s not unheard of for a customer to buy a product, say it was not as described, and then send back something entirely different.
On his blog, technology consultant and writer Jeff Reifman, describes his battle with Amazon.com over a fraudulent return. Reifman sold a valuable second-generation Apple TV unit for $199, only to have a used third-generation Apple TV, almost identical in appearance but worth only $65, returned instead of the equipment originally purchased. Amazon refused to believe him and spent over a year denying his claim against the buyer.
What Can You Do About It?
Returns abuse, particularly wardrobing, is very difficult to fight. It’s often just your word against the buyer’s, without any tangible evidence to help you make your case.
Essentially, you have to show two things: that you sent a specific product in a specific condition, and that the buyer returned the same product in a different condition (e.g. used or damaged), or a different product altogether. Despite the brazenness of this scam, once the return parcel has been opened the evidence is no longer reliable – as they might say on CSI!
It’s impractical for most businesses to record the packaging and dispatch of every order, but you should be able to show invoices to prove that you bought the product from your own supplier. In the case of high-end items, it’s a good practice to record the serial number or IMEI of products as they are sent out. Then you can compare it against the serial number of the product sent back.
When a return is received, one solution is to record on video the sealed return package being weighed, opened and unwrapped. Bigian13 describes how that approach has worked in his business:
eBay, in their wisdom, allowed the customer to send the item back to us at our cost. The item was returned in a medium jiffy bag. This immediately raised concerns as we do not sell any item small enough to fit in one. Luckily we took videos and photos of the item prior, during and after unwrapping. In the jiffy bag was a used roll of 2″ parcel tape and some bubble wrap. The item that was sent out to them measured 30″ x 20″ x 8″. eBay decided in our favour!
Such measures can save a lot of time in the dispute process, but there’s no guarantee that you will win when faced with a determined fraudster.
Can’t You Just Refuse to Accept Returns?
Whether you need to accept returns depends on two main factors:
- The laws of the country you are selling to.
- The rules of the marketplace you are selling on.
Under US law, online sellers do not have to accept returns, so it all comes down to marketplace rules. On eBay in the US, accepting returns is optional but from May 1, 2016, Top Rated sellers must offer a 30-day money-back return policy to keep their status. Amazon.com, however, sets a high bar for all sellers and does not allow them to refuse to accept returns.
In the UK, very detailed Consumer Contracts Regulations require sellers to accept returns – for any reason – for 14 days from when the buyer received the order. The customer has to pay for the return costs, unless the seller is at fault in some way. On eBay in the UK, their returns policy is in line with the law, but Amazon.co.uk goes further, requiring sellers to accept returns for 30 days from receipt of the item.
So even though eBay US sellers can technically refuse to accept returns, they are definitely encouraged to do so. Offering a generous returns policy can also be a good business practice, to give the buyer confidence that they can’t lose out by buying from you. But still, for some sellers protecting themselves against bad buyers, even if it means lower sales, is more important.
Stories abound of sellers fruitlessly fighting the marketplace for their money or goods back, after being defrauded by buyers.
Many sellers complain that marketplaces always side with the buyer, unless they can prove that the customer is at fault – leaving the seller to play detective. eBay proudly describe their seller protection system, but Amazon does not talk about their equivalent.
Both marketplaces describe abusive claims and bad buyers as “rare” – a word that many sellers would not themselves choose to describe their encounters with scammers. So they continue to fight bitterly, on the principle that dishonest customers should not be allowed to get away with it.
Other sellers have learned not to take it so personally, and can make calm financial decisions about bad buyers just like everything else in their business. Fraud becomes just another business cost, whether it’s returning used items (which many would agree only just crosses the line into criminality) to outright theft when items are ordered with the intention, right from the start, of claiming that they were never received.
Even if five percent of your revenue disappears to fraud, is it worth spending hours investigating and responding to each dispute, when there’s only a slim chance of getting your money back?
For many sellers, the battle against bad buyers continues to rage, even when it doesn’t make financial sense. Why is that? Well, we are all human. Our heads might tell us that it’s just not worth it, but in our hearts we know they just can’t be allowed to get away with it.
How do you protect yourself against bad buyers? I’d love to hear from you in the comments below.