Wayfair’s focus is on creating an exceptional experience for our customers. That’s why we take issues like fraud and abuse, which impact our customers as well as our company, very seriously. Unfortunately, over the pandemic, while consumers were spending more time at home and digital spending soared, online scammers took advantage of customer-friendly return policies, claiming issues with products that were delivered in an attempt to receive a refund. Dubbed return fraud by some and refund abuse by others, Wayfair has prioritized fighting back and winning against these scammers.
We’re certainly not alone in this fight. Over the pandemic, many online retailers invested heavily in customer experiences to attract the growing wave of consumers and turn one-time shoppers into long-term loyal brand advocates. But these businesses, like Wayfair, also caught the attention of those looking to take advantage.
According to an NRF study, for every $100 in returned merchandise accepted, retailers lose $10.30 to return fraud. Return fraud is just one form of deceit that bad actors utilize to receive scam refunds, while others abuse incident and damage policies. Those numbers can add up fast, which is why our scam prevention team is taking action. In doing so, our priority is to preserve the customer experience for our loyal Wayfair customers and maintain the excellent level of customer service that Wayfair is known for and our customers count on while also rooting out bad actors. The team has made significant progress over the past year and we have gone on the offensive pursuing these individuals both criminally and civilly.
Last month, we won our first civil case against a scammer who attempted to manipulate our returns policy and receive refunds without returning the original items. The scammer ordered six air purifiers. After receipt, they claimed all six were damaged and provided Wayfair with specific details on the condition of each unit. They then returned empty boxes to Wayfair and it was apparent the scammer had cut and retaped the bottoms after removing the units (and left the box tops stapled to make it appear they were unopened).
While Wayfair initially refunded the purchase, upon receiving the boxes, we realized what was happening and asked them to pay. The scammer then sued Wayfair, claiming that collections efforts to recoup the funds were improper. Wayfair countersued for fraud and the scammer ultimately agreed to pay $5,000 and drop his initial claims.
Over our history, Wayfair has established a reputation for delivering exceptional customer experiences, and we will not tolerate those who intend to abuse the system. This case demonstrates our commitment to pursuing anyone who engages in deceitful behavior, and we are far from done.
Over the past several months, we have strengthened our scam prevention strategy by adding new tools that will allow us to be more proactive in our fight against abuse. These include advanced detection models, an investigations team, and industry connections that we have forged to help identify new types of scam as well as the latest tactics. We have also filed additional civil and criminal cases.
In collaboration with a number of other retailers, Wayfair worked closely with the FBI to address the growing problem of professional refunding. This newly formed abuse trend is an organized effort where bad actors solicit ‘customers’ who have purchased a product(s) from a retailer. Utilizing their knowledge of companies’ policies the professional refunders will contact the retailer on customers’ behalf to obtain a refund on the item(s). The Refunder then charges ~15-25% of the item cost as a fee, allowing the ‘customer’ to obtain the item at this discounted rate, while the retailer would lose the entire cost.
As of November 9, 2023, the FBI task force charged 10 individuals for conspiracy to commit wire fraud as a part of an international conspiracy to defraud online retailers. This case is part of the FBI’s Operation Chargeback, an ongoing investigation into ARG and other refund fraud groups across the U.S. and internationally. This is the first of many more indictments to come as retailers and law enforcement continue to strengthen their collaboration to combat refund abuse industry wide.
For more details review the full press release here.
Wayfair is committed to continuing to fight back against this behavior to ensure that Wayfair’s focus remains squarely on delivering the best possible shopping experience for our customers.