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A suit filed by Amazon in a US court for damages in an online refund scam worth millions of dollars has revealed that a case reported in Bengaluru in May was part of a global organised retail crime operation in which customers fraudulently obtained refunds for high-end goods that were never returned to the tech giant.
Amazon filed a lawsuit in a US district court for the western district of Washington in Seattle on December 7 against an organisation called REKK for allegedly “stealing millions of dollars of products from Amazon’s online stores through systematic refund abuse”. The lawsuit has also named several Amazon insiders and others who had allegedly facilitated the fraud.
In May, the north Bengaluru police registered a case on a complaint by officials of Amazon Transportation Services Private Limited over losses suffered on account of refunds made for expensive gadgets worth crores of rupees. The gadgets were falsely shown in back-end systems as having been returned by customers despite their being in the possession of the buyers.
The probe in the case revealed that a small group of engineering students in Bengaluru came across messages on the Telegram social media platform that advertised a fake refund service targeting Amazon, bought iPhones and other high-end goods worth over Rs 20 lakh and obtained refunds by falsely claiming to have returned them.
The company’s own investigation in Bengaluru showed that a customer, Chirag Gupta, an engineering student living in north Bengaluru, purchased four Apple iPhones in three days in May—an iPhone Pro 14 Max phone worth Rs 1.27 lakh on May 15, an iPhone 14 worth Rs 84,900 on May 16, and two iPhone 14s at Rs 90,999 and Rs 84,900, respectively, on May 17—using credit card and UPI transactions.
The company’s internal probe found that all the four devices were delivered to the customer from its delivery centre in Peenya in north Bengaluru and that subsequently the phones were shown as having been returned through the online customer application with refunds made, even though the phones were never returned to the Amazon Transportation Services unit.
Chirag Gupta told police that the iPhone purchases were done at the instance of a childhood friend from Madhya Pradesh who said that he had found a way to obtain refunds on Amazon while keeping devices that were bought online. The police found out that Gupta was offered commissions for buying the expensive gadgets by a suspect who communicated with him on the Telegram app.
“Based on the investigations of the arrested person and the data from Amazon, gadgets worth Rs 20.34 lakh including 16 iPhones, two MacBooks, one Airpod, one Vivo phone, one desktop, one gaming laptop, and Rs 2.5 lakh in cash have been seized,” the police said in a statement issued in August. The police have also frozen Rs 30 lakh in multiple bank accounts linked to the accused.
The probe found that the accused who had availed of the fake refund service paid a commission in cryptocurrency to the main perpetrator for facilitating the fraud. Although there is no direct reference to the Bengaluru case in the US lawsuit filed by Amazon, the modus operandi outlined in it is very much like the refund fraud case investigated by the police in the Karnataka capital in recent months.
“In this scheme, bad actors who want a free product (like an iPad) pay REKK a fee (such as 30% of the product’s cost) to obtain a fraudulent refund. REKK uses sophisticated methods to obtain the refund, including socially engineering Amazon customer service, phishing Amazon employees, manipulating Amazon’s systems through unauthorized access, and bribing Amazon insiders to grant refunds,” said the lawsuit filed by Amazon.
“The defendants’ scheme tricks Amazon into processing refunds for products that are never returned; instead of returning the products as promised, Defendants keep the product and the refund,” it further stated.
According to the lawsuit, REKK advertised itself through social media applications like Telegram to attract people keen to make easy money.
“REKK’s primary Telegram channel, “@refundingclub,” advertises its page as “REKK Refund Service” and had 35,644 subscribers as of December 5, 2023. The channel was created on November 14, 2019, and started advertising its services in January 2021,” said the Amazon lawsuit.
“Defendants’ scheme has caused Amazon to provide millions of dollars in refunds for products that are not returned. Amazon has also incurred significant customer support costs to process the fraudulent refunds in an amount to be determined and substantial expenses in excess of $75,000 to investigate Defendants’ fraudulent activities,” the lawsuit stated.
“Organized retail crime, such as refund fraud, negatively affects the entire retail industry, including our honest customers and selling partners, and we are working aggressively to bring an end to these crimes. 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 on LinkedIn after announcing the filing of the suit.
“In November alone Amazon supported law enforcement agencies across three continents to take action against multiple groups, resulting in multiple arrests and the disruption of crime syndicates responsible for millions of dollars in crimes related to retail fraud,” he added.
“Users of illicit refund services should know this is not a victimless crime and real consequences exist for this activity. Amazon remains steadfast in our commitment to pursue ORC bad actors to stop these schemes,” Jamie Wendell, an Amazon cybercrime attorney, said in a LinkedIn statement.
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