The five allegedly exploited a “Fast-Track Returns” policy whereby they scanned a return label at a post office to get a gift card with the refund amount via email, but never actually mailed the merchandise back to the retailer. Instead, they traveled to brick-and-mortar stores across the country and returned the merchandise for a second, duplicate refund. The indictment alleges that through this scheme defendants defrauded the retailer of more than $1 million.
What I don’t understand here is how did the retailer not have a system in place that shows the order is already refunded?
It’s standard practice to require a receipt or order number to return something, especially when they’re getting a refund to their debit card. If they already refunded an order it should be marked as refunded and should immediately set off a red flag if someone tries to get another refund for it.
Since they are all from the Seattle area I’m curious as to whether they might all be current or former Amazon employees. Customer service there would be a good training ground for ‘creative’ returns from everything I have seen.
Apparently, V. C. (the unrevealed “Victim Company” retailer vaguely shielded in the indictment) having “…more than 700 stores throughout the United States and around the world…” didn’t provide enough income for the corporation’s decision-makers’ C-BA* calculations to consider such well-established & widely-practiced SOP’s for situations like this to be worthwhile.
Such short-sighted an overview - AND one that ISextremely-myopic, as Recorded History will reveal to any who care to conduct a deeper dive into the details to find the panoply of crash-and-burns which have gone before by tacking along the same course - has, quite demonstrably, increasingly become the norm ever since the graduates of the so-called “MBA Revolution” first began populating said corporate Powers That Be bodies, lo those many decades ago.
Sigh.
*
"C-BA = “Cost-Benefit Analysis” in ‘boardroom-speak’
Granted, this scam would’ve happened anyway if they didn’t refund twice, they would’ve just sold the goods elsewhere, but the store made it extra convenient and profitable for them by giving them a full refund directly to their debit card.
Many retailers will accept a return without a receipt but limit the payment method for the return to a gift card.The tracking in their system is by buyer name and proof of identity is required. Six sisters with different names will get away with this behavior longer.
Some merchants with enough clout have dealt with this problem in some different ways.
There are products which are made by name brands which have different UPC codes in different stores. Avery provides Staples, OfficeDepot and OfficeMax with the identical product with different UPCs. The UPCs for the other chains show a value of zero in the Staples system.
Well, ok, this makes sense then. The liberal return policy is because clothing is generally a low fraud category (not including wardrobing, which wouldn’t really apply to the stuff lulu sells). This is because selling stolen clothing is generally not worthwhile because unofficial sellers are usually selling fakes, and they’re priced as such. Allowing people to get multiple refunds for a single order is a pretty huge fail that enabled this fraud, as well as a whole bunch of other scams.
The executive who made this decision is probably making 7 figures+ too. They should share a cell with these 5.
I’m guessing they did not go to the same retailer; they went to another one that did not require receipts that maybe gave them store credit or the like.
It might be that the items NIP with tags but sans receipt weren’t actually scanned at the b&m store until they were reentered to inventory or sent back to central processing. The store basically might only process the refund while with the customer, not the return itself.
It could also be that the online retail and POS systems were not linked in real time but synced at intervals, and these updates were not frequent enough to catch the discrepancy within the few hours it took to manage the fraud. Therefore, technically the item was not already refunded.
Also, the indictment said that the sisters would travel around the region together, and the FTR refunds would appear via email within 2 hours after kiosk scan, so it might even be that the sisters didn’t wait for the online refund to process fully before returning the physical item. So again, technically the item was not already refunded.
And finally, it could be that the VC’s barcodes/labels are product-specific but not item-specific, so there was no way to tie a physical return to an online refund request, in the moment.
Well regardless of the reason, there’s some pretty serious holes in that system that shouldn’t be there, since the technology to do real time syncing certainly exists and there shouldn’t be any issues with it unless a store’s internet connection is completely down (in which case they likely wouldn’t be able to process a refund anyway).
My guess for the reason for traveling, is so the same store clerks don’t see them coming in 30 times a week returning stuff which would certainly arouse suspicion. A million bucks worth of tshirts and yoga pants is a lot of returns.
It may be not quite as bad a decision as it looks at first glance. A high-ranking exec may have concluded that it is better to let a public agency do some of the work for them. The taxpayers foot the bill for that, not the shareholders.
An exec in a growing company looks at the options:
A) Try to make the returns system absolutely bulletproof. This pits the company programmers vs the thieves. A 100% win ratio is not guaranteed.
What is guaranteed is that some honest customers will be inconvenienced, maybe even offended when some hapless clerk tell them that the computer thinks that they are thieves.
B) Make the returns as friendly as possible.
Concede a few million to thieves, maybe tens of millions. ( This, BTW, is not that much for a company that is capitalized at over two billion USD )
Invest a few hundred thousand in the political campaign of some US attorney who is trying to become a judge, with the back room understanding that they will initiate criminal prosecutions against the more egregious thieves.
I don’t know about that. The returns system doesn’t need to be bulletproof, just not have a wide gaping hole where you can “return” the same item twice. It’s like yeah, you don’t need to put bars over your windows and doors to prevent people from breaking in, but this is the equivalent of having no door at all, or leaving your car running with the door open in a bad neighborhood.
I don’t know either. We sellers are usually capitalized in the hundreds of thousands, maybe a few million at the upper end.
But these guys are 1000 times larger. The same sensibilities may not apply.
I’m looking at what I do, and trying to scale up about four orders of magnitude. I give my USPS carrier a holiday ‘gift’ of cash and gift cards. ( I’ve heard that there may be a limit here, something around 20 bucks, but I don’t know for sure. )
I am thus saved the expense of trips to the PO now and then. Everybody is happy,.
I’m diverting the functioning of a government employee. I’m not asking her to do anything contrary to her job description, just to make some choices within the domain of her work. Those choices happen to benefit me.
Now scale this up 10,000 fold.
You hire a guy whose sole qualifications are an MBA with mediocre grades and a former roommate who now works for the justice department.
POS systems can take negative inventory and they are by design to allow customer experience to overcome barriers to purchase/brand etc. - the adage make it as easy as possible for the customer to buy - additionally, to allow flexibility in store inventory - again to ease intracompany inventory movement.
Plus these are general SKU’s not unique serial numbers like electronics is my guess so there is no option for redundant authentication and being too strict on inventory count causes more problems then its worth.
The Junk Drawer