[NYT] Amazon Suit Claims International Ring Stole Millions in Fraudulent Refunds

The online retailer said that a shadowy organization bribed Amazon employees to help carry out fraudulent returns of expensive electronics, luxury goods and gold.

Dec 10 Emily Schmall NYT

Amazon has accused an international organization, including customers and several former employees, of conspiring to steal millions of dollars in online products through fraudulent refunds.

In a lawsuit filed Thursday in the U.S. District Court in Seattle, the online retailer accused the group, called REKK, of perpetrating the fraud between June 2022 and May 2023. The lawsuit includes more than 20 named defendants and 20 unnamed individuals.

According to the suit, REKK is a large player in an underground industry of fraudsters who “have created illegitimate ‘businesses’ offering fraudulent refunds to individuals around the world who are knowingly engaging with and participating in the fraud” to get expensive products free.

The 44-page complaint said that REKK marketed itself through social media channels like Reddit and the encrypted messaging app Telegram as a paid service that allowed users to buy products from online retailers and pretend to return them, keeping both the product and the refund.

In the suit, Amazon said that more than a dozen fraudulent refunds were issued from June 2022 to May 2023 for expensive items including laptops, gaming consoles and a 24-karat gold coin, and that at least seven former Amazon employees — described as “insiders” — accepted thousands of dollars in bribes to process reimbursements for products that were never returned.

REKK impersonated Amazon customers, used phishing messages to obtain credentials, manipulated systems through unauthorized access and bribed employees to grant refunds, according to the suit. The employees, Amazon said in the filing, gave more than $500,000 worth of fraudulent returns.

REKK did not immediately respond to a request for comment sent to the group’s Reddit page. As of Saturday, its Telegram channel had been shut down.

In the complaint, Amazon included screenshots that appeared to show REKK spelling out the fraud in advertisements on social media.

“To put it simply, refunding is when you buy a product and then trick the company into thinking you have returned the product,” a user explained on the REKK Refund Service subreddit, according to a screenshot in the complaint.

In another image showing parts of a text message exchange, REKK offered Janiyah Alford, a former Amazon employee named in the suit, $3,500 to scan items as received and sellable despite never being returned.

According to the suit, Ms. Alford approved product returns for 76 orders at REKK’s request, leading Amazon to refund more than $100,000 to REKK users.

Ms. Alford said in an interview that she had received text messages asking for help in carrying out the fraudulent returns, and that the messages included her home address and the home addresses of several relatives. She said she did not know who sent the messages, but she viewed them as threats. The messages were not mentioned in the complaint.

“I only did it for a day,” she said, adding that she was terminated by Amazon for her actions days later.

Ms. Alford said on Saturday that she had not known that she was named in the lawsuit.

The six other former Amazon employees identified in the lawsuit did not respond to requests for comment or could not be reached on Saturday.

A survey by the National Retail Federation, a trade association, and Appriss Retail, a company that fights retail fraud and theft, estimated that in 2022, about 10 percent of returned online purchases were deemed fraudulent. For every $100 in returned merchandise accepted, the survey found, retailers lost $10.40 to return fraud.

Amazon said in its complaint that it had spent $1.2 billion and employed more than 15,000 people and machine learning models to prevent theft, fraud and abuse.

The company detected unusual product return activity associated with REKK this year and exposed the scheme by having an investigator pose as a REKK user to purchase and then obtain a refund for an iPad without returning it.

After ordering the item, the investigator paid an upfront fee of several hundred dollars to a PayPal account, with the balance of the payment sent to REKK in Bitcoin after the fraud was complete.

REKK manipulated Amazon’s delivery information to show that the customer had refused delivery of the iPad, the company said in the lawsuit. Based on this information, Amazon initiated a refund, while the investigator kept both the item and the money.

It was not immediately clear whether a law enforcement investigation of REKK was underway. The U.S. attorney’s office in Seattle did not respond to a request for comment.

“This lawsuit serves as a clear and strong message to bad actors that Amazon will not stand for attempts to damage the integrity of our store,” Dharmesh Mehta, a vice president at Amazon, said in a statement.

The company said it had assisted law enforcement by providing evidence that contributed to indictments of other illegal refund groups.

In September, Sajed Al-Maarej of Dearborn, Mich., was indicted by the U.S. Attorney’s Office for the Western District of Washington for conspiracy and wire and mail fraud in a $3.9 million refund scheme that defrauded retailers including Amazon.

In October, an indictment in the Northern District of Oklahoma charged 10 men with conspiring to steal goods for themselves and others through refund fraud that amounted to millions of dollars of losses for Amazon, Wayfair and other online retailers.

In the REKK case, Amazon has asked for financial restitution and for the defendants to be barred from affiliation with the company, including via shopping on Amazon.


[mod edit: added article link]

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Yeah, hopefully they’re not buying this as a defense. “I got an anonymous threatening text messages and $3500 from someone I don’t know so I felt compelled to commit fraud for them instead of reporting it”

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What I learned from this is, don’t steal as a group or you will get caught. Stealing from sellers via renting their stuff and doing used swaps is safe at the individual level.

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What I learned from this is that Amazon has a MAJOR issue with employee inside access to manipulate data.

This case was caught. One wonders of all that are not.

In @ASV_Vites recent case in the review manipulation damaging his account, while duplicating many of his products, etc, he is basically threaten to not pursue it further.

What shenanigans lurk within the corrupt Amazon house?

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This goes with any large organization though. Once you reach a threshold where you cannot screen each and every employee, you will eventually get those employees that will do stuff like this. Unfortunately it is unavoidable unless the money is spent on employees prior to putting them in their positions. Amazon chooses like many retailers, to pay less in damages than more for prevention.

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When there’s a fraud being openly advertised as a fraud it kind of calls a lot of attention to it and it can no longer be ignored

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I mean the amount they stole was a measly $500k with that many people involved. Was it even worth it?

No standards.

I’m going to make the following assumption here:
The ringerleaders of this are located in a country where they won’t face any charges for this.

If that assumption is true, it’s absolutely worth it for them. The US Amazon employees dumb enough to sign on for this are the ones who will face jailtime for this. Amazon will want to make an example out of them, and they have the most easily prosecutable crime out of anyone involved in this. Customers are tough/not worthwhile to prosecute unless they’re serial offenders, and the ringleaders are outside the reach of the law.

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Good points.

The rupee exchange rate would make it make sense.

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It can always be ignored if the damage is cheaper than the cost of prevention. This article won’t sway consumer opinions or anything.

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:100: :bangbang: :bangbang:

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I am shocked I tell you shocked!

Added the link to the NYT article to the OP.


From LinkedIn:

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Man, I wish I could get just 5 mins of Dharmesh’s precious time.

According to the criminal complaint posted by Bleeping Computer here, the REKK users were located mainly in the US, but also England, Greece, Lithuania, and the Netherlands.

Not much is known about the REKK owners/operators, other than it is international organized crime.

While I’m not positive which country you had in mind, this smacks less of an Asia-based scheme and more of an Eastern European/Soviet-type situation.

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Yeah, the use of generative AI in such a policing function is working well (/sarc), as clearly evidenced by the “Customers say” blurb on this co-opted ASIN’s PDP:

https: //www.amazon.com/dp/B0CM3N4PB4

Mr. Mehta, yet again you got some `splainin’ to do…

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Everyone likes to blame China for everything everywhere. While a lot of it comes from there, I bet it’s not the majority and since apparently there are more Chinese sellers on Amazon than from anywhere else, there’s that…

I know where my most recent issue came from (China), but we have had lots of other issues in the past with “competitors” and they were all located right here in the USA…

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All of our products have a negative for “Effect on Skin”

Only problem, not a single review mentions skin and we don’t sell ish for skin.

Good Job!!!

Programmer = multiple personalities disorder
AI bot = they say

Ummm … it does pass the if / then line of logic …

:smirk:

I was strictly referring to the ringleaders, and I was thinking more along the lines of russia/africa, where these types of scams usually originate.

Prosecuting the users for this is tough unless the dollar amount is high and they’ve done it multiple times.

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