Some of these merchants have pulled back from the Fulfillment by Amazon (FBA) program, while others say they want to simply leave the platform, CNBC reported Saturday (June 21).
According to the report, this issue is being driven by a spike in returns fraud, which has caused customers to mistakenly receive used items when they had purchased a new product.
That’s what happened to Rachelle Baron, owner of diaper retailer Beau and Belle Littles, a brand of reusable swim diapers.
“I really don’t think that consumers understand how many small businesses are on Amazon and how their return habits affect small businesses and families like mine,” she told CNBC.
Baron said that Amazon had shipped used swim diapers to customers after the soiled baby products had been returned to the eCommerce platform.
“There was actually two diapers that were sent out that were poopy,” she said. The incident, CNBC said, caused her business to plummet.
As the report noted, this is happening at a time when returns fraud is skyrocketing. In 2018, just 5% of returns were fraudulent, compared to almost 14% last year, per a report by the National Retail Federation (NRF) data. In all, the NRF report found that returns cost retailers $890 billion last year.
In June of last year, Amazon began charging FBA sellers a fee on products that exceed certain return rate limits.
But that change has led sellers to raise prices, CNBC said, citing a survey from eCommerce analysis company SmartScout which showed that 65% of merchants had hiked prices following the fee changes. Other sellers told CNBC they had increased prices due to returns fraud.
Amazon told CNBC it has no tolerance for returns fraud and has taken action against scammers, such as denying refunds and requiring customers to verify their identity.
Meanwhile, PYMNTS examined the normalization of returns fraud in a conversation last year with River Island Senior Operational Risk Manager Grant Shipway.
“Organized refund fraud as a service is becoming more common,” Shipway said. “Criminal enterprises are increasingly advertising and promoting these services on social platforms like Telegram, Discord, Facebook, TikTok and Instagram, tempting more and more consumers to act dishonestly. Cybercriminals are also informing consumers, via social media, about tricks and strategies they can use to become more adept at committing — and getting away with — fraudulent returns.”
