This article was produced in collaboration with Court Watch, an independent outlet that unearths overlooked court records.
The U.S. government has indicted alleged members of a criminal group that uses insiders at Walmart and other techniques to commit “refund fraud” on a massive scale, according to recently unsealed court records. In short, the scam involves someone ordering an item from, say, Amazon—which in this case says it lost $700,000—receiving the item, and then using one of various tricks to get their money back from the retailer. The person is then free to sell the item online, and the criminal group takes a fee.
The indictment as well as 404 Media’s own research into refund fraud reveals a professionalized ecosystem of sellers and people providing various services as part of the wide-reaching scam. As well as malicious insiders, refund scammers take advantage of customer service representatives and online retailers’ lax refund policies to get expensive items for free. This is not a crime whose only victims are giant retailers, who may garner little sympathy. Delivery drivers, who already have very difficult jobs, are often dinged for misdelivering or failing to deliver a package, which is something these types of scams often rely on.