Refund fraud schemes promoted on TikTok, Telegram are costing Amazon and other retailers billions of dollars

Refund fraud groups, organized like businesses, are exploiting lenient refund policies, robbing retailers of billions of dollars, experts told CNBC.

Fraud groups are taking advantage of retailers’ lenient return policies, experts told CNBC, which often include unlimited free returns and sometimes even a preference that customers keep the items. It’s ballooned into a massive problem for retailers, costing them more than $101 billion last year, according to a survey by the National Retail Federation and Appriss Retail. The figure includes multiple forms of fraud, such as sending back clothing after it’s been worn, known as “wardrobing,” and returning shoplifted merchandise, the survey said.

CNBC viewed several active refund fraud services on encrypted messaging app Telegram, each with thousands of followers. Updates are posted almost daily of new stores on their services, or new retailers that have been successfully targeted. Amazon and Apple are frequently hit, along with Nike, eBay, Saks Fifth Avenue and Ralph Lauren. Some groups even offer their services for DoorDash and Uber Eats orders, claiming users can “eat for free.”

Mail-in fraud involves a user filling out a company’s return form, but instead of sending back the purchased product, users will mail an empty box or a package filled with junk. In the case of Simple Refunds, Al-Maarej, the man who allegedly operated the group, sent an unnamed retailer “an envelope filled with plastic toy frogs” instead of the tools he claimed he was returning, prosecutors said.