Hello, I have an ecommerce store and the products that I sell have a low return rate. I typically receive approx 5 returns per year, but in the last few months I’ve received 8 returns on one product, then after I labeled it out of stock, I received another 10 returns on another, very different product.
The customers are from all over the U.S., but the scenario is nearly identical on every order.
Both of these products are under $25 dollars and all of the customers send nearly the exact same message: “I have just received the product and decided I no longer need it. It is still in the box, unused. Please send me return information”
This is clearly some type of scam, but I can’t understand what the scam is?
The products are an electrical power cable and a water spigot. I wouldn’t think these are likely counterfits and we inspect them upon return. The all appear unused.
I created a 15% restocking fee, but this hasn’t seemed to make a difference.
They pay shipping on the purchase + they pay for the return shipping & the restocking fee. All totaled, these end up costing the customer nearly as much as the returned product, so I can’t understand what they’re getting out of this?
Does anyone have any insight on what this scam is? Any suggestions how I can stop it?
The only solution I can come up with is to significantly raise my restocking fees on these low cost items, but I fear this may discourage “legitimate” customers from purchasing.
I totally understand this is a frustrating situation for you and it seems you are right, this does look like a scam.
Possible Scam Explanation:
Reselling for Profit:
Scammers might be purchasing your products to resell them elsewhere at a higher price. They return the items to you to get their money back, essentially using your store as a free inventory source if the product is not sold and the return date is near.
Credit Card Fraud:
Another possibility is that scammers are using stolen credit cards to make purchases. They return the items to get a refund to a different account, effectively laundering the stolen money. This may happen if they have sub accounts linked to the main account. You might be returning the money to the original source while they would be getting it in the sub account.
Fake Returns:
Some scammers might be returning counterfeit or similar but cheaper products, keeping the original items for themselves. I am sure, you are already validating this thoroughly when the return comes.
Competitor Sabotage
There maybe a case where one of your competitor is trying to discourage or show your store in bad light by allocating a set fund for all these activities. I may be wrong here, just thinking through ;( There may be a payment processor linked to your store, and every return/refund lowers your reputation with the payment processor upto an extent and eventually they may object and think twice before they continue offering their services as they do monitor return % for their clients as a parameter.
Steps to Mitigate the Issue1. Increase Verification:
Implement stricter verification processes for returns. For example, require proof of purchase and detailed reasons for returns.
Analyze Patterns:
Look for patterns in the return requests, such as similar email addresses, shipping addresses, or IP addresses. This can help identify fraudulent activities.
Adjust Return Policies:
Consider tightening your return policies for low-cost items. You could increase the restocking fee or limit returns to a shorter time frame.
Use Fraud Detection Tools:
Shopify offers various apps and tools that can help detect and prevent fraudulent activities. Apps like Fraud Filter can help you set up custom filters to flag suspicious orders.
Contact Shopify Support:
Reach out to Shopify Support for assistance. They can provide additional resources and tools to help you manage and prevent fraud.