Returns are an unavoidable part of selling on eBay, even for sellers who try to implement a ‘no returns’ policy. While valid exemptions exist, there is also the issue of return fraud. With the aim of educating new sellers of ongoing selling risks, this article will explain the what, why and how of fraudulent returns on the eBay platform.

What is return fraud?

Return fraud is defined as a customer (or buyer, in eBay terms) misusing or taking advantage of a seller’s return policy. By doing so, they are defrauding the seller.

According to the National Retail Federation (NRF), almost 20% of merchandise purchased online in the US in 2020 was returned. Of this, about 7.5% of the returns were estimated to be fraudulent.

These numbers support the argument that return fraud accounts for a minority, but not significant, number of online transactions.

The purpose of return fraud

There are many different types of return fraud and a number of different reasons why someone would employ these techniques.

Some buyers are careless when shopping online and will push the limits of eBay’s Money Back Guarantee to suit their needs.

An example would be a buyer who purchases two similar items and later realizes they don’t want to keep both. The seller has a ‘no returns’ policy, so the buyer commits return fraud (claiming that the item was ‘Significantly Not As Described’) to force a refund. In this scenario, this buyer did not originally set out to defraud the seller but took advantage of eBay’s Money Back Guarantee policy.

On the other side of the discussion are unscrupulous buyers who purchase items with the express intent to scam the seller with a fraudulent return. Their aim is to complete the transaction with a free item and/or profit. These unscrupulous buyers use a variety of methods to intentionally commit acts of return fraud.

Fraudulent returns: common techniques and methods

Some of the most common methods of intentional return fraud experienced on the eBay platform are:

The Switched Item

In this scenario, the buyer purchases an item and then claims the item they were sent was not the item they believed they were buying. Returning the item as ‘Significantly Not As Described‘ under the Money Back Guarantee, they will send an entirely different item back to the seller.

The Counterfeit Item

Return fraud is just one of the risks associated with selling desirable, high value branded items like handbags and sneakers. After receipt of the legitimate item, the unscrupulous buyer will claim that the item is inauthentic (and therefore ‘Significantly Not As Described’) and then return a counterfeit version to the seller.

This creates multiple problems for the seller as it is then difficult to prove that the original item was authentic. In addition to being banned for sale on eBay, counterfeit products are illegal.

The Broken Item

eBay’s Money Back Guarantee also covers broken, faulty or damaged items that were not sold as such. A common return fraud scenario involves a buyer keeping the original item and then returning a broken version to the seller. Depending on the scam, the buyer may claim that the item was broken in transit or was already broken when sent to them.

The Empty Box

This example of return fraud has two variations. In the first, the fraudulent buyer claims that the package they received was completely empty (and the item is therefore eligible for a Money Back Guarantee return). In the second variation, the buyer will simply send an empty box back to the seller after requesting a return.

eBay’s Response to Fraudulent Returns

Misuse of the returns system or the Money Back Guarantee is against eBay policy. This includes falsely claiming that an item was not as described.

eBay has a long held reputation for siding with buyers and is often criticized for continuing this policy even in the face of obvious return fraud.

eBay claims that they are ‘constantly improving [their] systems’ and remain ‘on the lookout 24/7 for bad buyer behavior backed by large-scale, automated detection systems that examine millions of transactions every day.’

A member of staff on the eBay community forums stated that ‘fraudulent returns can be more difficult to deal with’ but admitted that ‘there are complications’ regarding their options for response.

The staff member continued to add that being that they physically cannot witness items being shipped out, delivered and then returned, appeals were not possible and this would be true for any kind of ecommerce business.

The suggested solution was for sellers to create themselves a ‘cushion’ to cover the loss, funded by increasing item prices.

What eBay Sellers Can Do

It is clear that eBay expects sellers to take the lead when dealing with fraudulent returns.

The best plan of action for sellers is knowledge and prevention.

As a seller, you should:

• Fully understand eBay’s Money Back Guarantee policy and how it can be abused by fraudulent buyers
• Know the limitations of eBay’s Seller Protection Policy
• Read eBay’s Abusive Buyer Policy, specifically concerning false claims and the misuse of returns
• Be familiar with spotting scams and fraudulent activity
• Take steps to proactively protect your eBay sales

If return fraud is suspected:

• Stay calm and continue communicating with the buyer in a professional manner
• Explain why the return is not acceptable and what proof you have
• Report the buyer to eBay via Seller Hub, with an appeal if necessary
• Consider reporting the buyer to police and/or shipping service used

Experienced eBay sellers, what are your experiences with return fraud? Share in the comments below