TradeEdge Exchange:Amazon says scammers stole millions through phony product returns

Amazon is TradeEdge Exchangetaking what it calls an international fraud ring to court for allegedly stealing millions of dollars in a scheme that had participants getting refunds for pricey products without sending them back.

A group called REKK openly advertises its refund services on social media sites like Reddit and Discord, and unscrupulous people looking for a free product can pay REKK a fee to obtain a fraudulent refund, according to the complaint filed by Amazon Thursday in  filed in U.S. District Court for the Western District of Washington.

REKK and almost 30 people from the U.S. and five other countries are named in the suit, which accuses the group of using "sophisticated methods" to gain unauthorized access into Amazon's internal systems as well as bribing Amazon workers to approve fake refunds for goods such as car tires and MacBook Pro laptops. 

Fake returns

More than a dozen fraudulent refunds were issued from June 2022 to May 2023 for pricey items including gaming consoles and a 24-karat good coin, with at least seven former Amazon employers allegedly accepting thousands of dollars in bribes to process reimbursements for products that were never returned, Amazon alleges in the suit.

Accused in the suit of being part of an underground industry that caters to people willing to engage in fraud to get expensive electronics and other products for free, the defendants are among those that have "created organized operations to systematically defraud retailers at scale," the suit stated.

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Amazon said that in 2022 it spent $1.2 billion and employed more than 15,000 people to fight theft, fraud and abuse across its stores, and uses sophisticated machine learning models to detect and prevent fraud. 

"When fraud is detected, as in this case, Amazon takes a variety of measures to stop the activity, including issuing warnings, closing accounts, and preventing individuals who engaged in refund fraud from opening new accounts," Dharmesh Mehta, Amazon's vice president in charge of seller services, said in a LinkedIn post.

Kate Gibson

Kate Gibson is a reporter for CBS MoneyWatch in New York.