Charlotte resident Hudson Hamrick pleaded guilty on Tuesday to wire fraud for running a return scheme on Amazon that defrauded the ecommerce giant of at least $290,000.
According to Court documents, the scam ran from 2016 to 2020 and involved 300 fraudulent transactions. The perpetrator has been sentenced to 20 years and a fine of at least $250,000.
How The Scammer Did It
Hamrick’s scheme is by no means new to Amazon (and to the third party sellers who often eat a lot of the losses over these scams).
According to the US Department of Justice, Hudson would order expensive items on Amazon, including electronics, guitars, tools, computers and other high-end consumer products and obtain fraudulent refunds for them through Amazon’s return system by returning items that were significantly cheaper or broken.
Hamrick’s plea documents also reveal that he would obtain replacement products for items which he claimed were “lost or damaged” and resell them online, thereby profiting both from the refunded amount and from the sale of replacement products.
Local news outlets have cited specific examples of how Hamrick (and a lot of other Amazon fraudsters, really) would execute their scheme.
For instance, Hamrick bought a professional coffee machine in 2019 for a little over $3,500. He then asked to return it about a week later and successfully obtained a refund. Instead of returning the coffee machine, Hamrick sent in a different machine worth significantly less and proceeded to resell the more expensive, unspoiled one online for a hefty profit. Worse, he was able to resell some of the equipment using his own Amazon account.
Other items specifically mentioned include an iMac and a Fuji Spray System. Hamrick also sold other new and expensive items he received on eBay.
Refund Scams Are Nothing New On Amazon
Amazon sellers face return scams on a routine basis, but the staggering amounts and the length of time that fraudsters are able to execute their schemes are quite alarming.
- Back in March, a Rhode Island man was sentenced to 30 months in federal prison for running a similar return scam and duping Amazon for more than $50,000.
- In 2020, a woman in Florida was arrested for a shipping and return scam involving 31 Amazon accounts (all of which belonged to her) and over $100,000 reimbursed to her name. Her scheme involved using prepaid shipping labels generated for canceled orders and applying those on other returns—this made it seem like she had paid for her own shipping costs on returns.
- Much earlier, in 2018, Engadget reported that return policy abusers were sentenced to nearly 6 years for defrauding Amazon out of more than $1.2 million.
Return scams even hit low-scale sellers. Just this week, a post in Amazon seller forums had someone losing about $3000 on a similar scam.
Amazon’s Customer-Centric Return Policy Often Hurts Sellers
Amazon’s focus as a retail company is to be customer-friendly, but it’s system is not exactly foolproof and could hurt third party sellers trying to make an honest living on the platform. Return fraud has been reported regarding the company’s 30-day return policy, chargeback period, and A-Z claim system, among others.
Earlier this year, Amazon implemented a ‘first scan’ refund procedure that instantly refunds customers as soon as a returned item’s prepaid label is scanned by the carrier (i.e. UPS). Amazon reserves the right to reverse the refund if the item is not the original item purchased, however often Amazon simply relies on the barcode on the product packaging matching the purchased item, meaning the item in the packaging can potentially be completely different from what should be inside and Amazon will recognize the return as being accurate.
While the millions of active users and hundreds of millions of products being bought and sold on Amazon means that not all customer scams on the platform get detected, Amazon has thousands of employees and a near endless capital, so return scams that blow up to a quarter of a million dollars is distressing for third party sellers. Sellers need to be vigilant and protect their brands to the T.
If you’re a seller and have been the victim of return fraud, please let us know in the comments section down below.
Multiple times. Alot more recently with increased sales. Stating it wasn’t delivered when it was. Stating open package so product fell out. Never arrived when it’s at post office waiting for pickup and has seller to mails blocked counterfeit products scam it goes on and on
You’re making it up.
How long did it take your little brain to muster up that post?
Awe
What thiefs stealing products.. Ugh so frustrating… I couldnt imagine doing scvh a thing.. so immora;
Dumb Amazon, discontinues such dumb policy.
And this fraud carry’s down to auction sites that purchase these returns at reduced rates. In the last three weeks I have purchased 2 what is advertised as Amazon returned Anycubic 3D Resin printers one was a Photo Mono 4K and a Photon Mono X. Once opened the product was not the 3D resin printers advertised or resemble the stickers on the box that the “printer” was returned in. They were instead the Anycubic Wash & Cure 2.0 which are significantly cheaper than the printers.
I would hazard a guess that the printers were purchased with the wash & cure. The wash & cure was then put into the printer box and returned. Keeping the printer. And getting there money back for it.
I have a question as a reseller on another platform and as a current Amazon buyer. I bought a TV on black Friday on sale. It came way earlier than anticipated and in a snowstorm. Hence, I missed the first 2 delivery attempts. Received on 3rd attempt. It’s a Thin Q and has a hairline crack. I notified 3rd party seller. They asked me to keep at a discount and go through LG to repair. I got the flu. Didn’t reply for two weeks. Then, went online and saw they provided an RMA and a label. Go through hassle of getting a neighbor to take me to UPS. Label was not prepaid. Again, contact seller. They offer me another discount. I said no. Then another. I don’t believe that LG is going to even cover this under warranty since it’s not a defect of the product. If I accept the sellers offer of partial refund and LG does not repair, what is my recourse?
is there any really any way or reason to target the small petty thief’s that only fraud return once or twice. I could imagine that the big thief’s do make a dent into drop shippers pockets but how about the accumulation of the massive amount of little guys that are only fraud returning one item of 600 dollars or the even smaller guys that is fraud returning 10 item worth 10-20 each?
I have a combination of problems all supported by Amazon’s policies. As a seller of a single product that I make myself, I have a problem with the Amazon “full refund at first scan”- I absolutely get returns that are just the box, not the product, or product boxes that they just slap the mailing label directly onto with a pound of packing tape, thereby completely ruining the packaging, as well as just dirty, damaged products…but they have already received their full discount and I’ve paid for the shipping each way. The second scam is the “undelivered” scam. I actually tracked one through, and had proof that the scammers had sold my item under a false listing on a fake Walmart site, (sold to my dad, the investigator in this scenario), then the order to his house came into Amazon, looking like it was placed by him. I shipped it out, to see what the whole scam was going to be, and sure enough, a few days later, someone posing as my dad contacted me on amazon messaging saying the package was undelivered and they wanted a full refund immediately. I sent a picture of the delivered item with the real customer- my dad- to Amazon and reported the whole train of events and submitted proof. They said I needed to send it to another department. After I did that, guess what? The second department said I needed to send it to another department…which happened to be the first department I had sent it to! Then the fake customer opened an A-Z claim, no doubt frustrated that their free money was taking so long. I responded with all the evidence again- and had to repeat this twice. Then Amazon said it was under review. 4 weeks later, Amazon said it had paid the people, but I wouldn’t be charged. So- they completely endorse, support and continue these scams. It must be millions of dollars for this type of scam alone.