The rise of e-commerce marketplaces has indeed made it easier for consumers to meet their shopping needs. With the click of a button, shoppers can have goods sent from Amazon warehouses to their homes quickly and conveniently.
It’s easy to see why since the COVID-19 pandemic began in March 2020, so many consumers from across the world made the shift from brick-and-mortar retail to e-commerce. However, while attracting shoppers, the global shift to e-commerce has also brought a less desirable element to Amazon, the world’s most-visited online marketplace.
For the past few years, Amazon has put up a solid fight against the prevalence of fraud on its platform. According to its own Brand Protection Report, the number of bad actor attempts to create new selling accounts on the marketplace decreased from 6 million attempts in 2020 to 2.5 million in 2021.
Amazon claims to have stopped 800,000 bad actor attempts to create new accounts in 2022. Still, despite Amazon’s efforts to fight fraud on its platform, the marketplace remains rife with criminal activity.
Amazon’s efforts to fight nefarious actors on its platform are commendable as they offer five programs with varying levels of protection for businesses selling on the platform: the Amazon Brand Registry, Transparency, Project Zero, Counterfeit Crimes Unit, and IP Accelerator.
However, as the world’s No. 1 e-commerce marketplace in both traffic and sales, Amazon will always be a target for cybercriminals as a platform to sell counterfeit goods and commit frauds such as parallel importing, triangulation fraud, product diversion, and more.
Here, GreyScout looks at some other prevalent scams on Amazon that brands operating on the marketplace should be aware of.
Phoney and Incentivized Reviews
According to Amazon, the platform spotted 200 million suspected fake reviews before they were ever seen by a customer in 2020. Still, millions of illegitimate reviews on Amazon product listings fall through the cracks. Customer reviews can be a powerful tool to help grow a brand and product on e-commerce platforms. Unfortunately, however, Amazon’s review infrastructure is abused in a variety of ways by fraudsters.
Although Amazon banned incentivized reviews in 2016, sellers continue to offer rewards for users who post positive reviews. They often do this through their own channels, such as a business card shipped with a product that offers a discount on future purchases with proof of posting a five-star review. In addition to incentivized reviews, illegitimate Amazon sellers will often flood their own product listings with a flurry of fraudulent positive reviews.
When it comes to their competitors, they will do the opposite as they flood competing listings with negative reviews.
The Buy and Return Scam
Anyone who has returned a product on Amazon knows that the platform’s return policies often favour the consumer. With such a lenient returns system, fraudsters have naturally jumped in to make a quick buck. While Amazon has implemented stringent measures to prevent these kinds of scams, new variations, and tactics are being used every day:
· Empty Box Scam: The fraudster buys a product, empties the content, seals the package, and sends it back to Amazon, claiming that the package was never opened, or that the product was defective. Amazon usually refunds the money, assuming the package wasn’t opened when it arrived. However, when the package is inspected, it is found to be empty, and the fraudster has kept the product and the money.
· Counterfeit Return Scam: The fraudster buys a genuine product from Amazon, replaces it with a fake one, and returns the fake product claiming that the product was damaged, defective, or not as described. This way, the fraudster earns a profit from selling the original product and keeping the fake.
· Wardrobing Scam: This is a practice where a customer buys a product, uses it, and then returns it to the seller. This is commonly seen with clothing and fashion accessories where the customer purchases a product, wears it for a special event, and then returns it claiming that it didn’t fit or is defective. As the returned product cannot be sold as new, Amazon must dispose of the product, and the fraudster gets away with the money.
Listing Hijacking
There has been a significant increase in the incidents of listing hijacking on Amazon, causing concern for both sellers and buyers. This fraudulent activity occurs when an unauthorised seller gains control of a legitimate seller’s listing and replaces their product information with their own, often inferior, product. They can also mess with competitors’ listings to tarnish their brand.
In one such case, a legitimate seller of a massage product found he was having his product listings frequently altered. At one point, his products, without his knowledge, were incorrectly being categorised as an “adult toy”, according to a report by NBC News.
Listing hijackers often use unethical tactics such as using Amazon’s automation systems to change the product title, altering the images or description, or creating a new variation.
They may also use fake reviews to boost the visibility of their products or undercut the legitimate sellers’ prices to drive sales. These actions not only affect the legitimate sellers’ profitability but also cause confusion and mistrust among customers.
Fake Claims Scams
Fake claims scams have become an alarming issue on Amazon, where dishonest sellers pose as legitimate ones and make false claims about their products to fool customers. These sellers use deceptive tactics, such as fake customer reviews, altered product photographs, and fake labels, to attract buyers and increase sales.
The scam typically involves a seller listing a cheap, low-quality product on Amazon that is misrepresented as something else entirely, such as a high-end brand or a product with superior features.
They use false advertising and fake reviews to create a positive and trustworthy image, luring people into buying the product. Once the unsuspecting buyer receives the product, they discover the reality and find that the product doesn’t perform as advertised.
The Bottom Line: Detecting and Preventing Amazon Marketplace Scams
With its rise to prominence in the e-commerce space, it’s not surprising that Amazon is often the No. 1 target for online criminals to run their scams. While Amazon provides a range of brand protection programs, sellers should take a proactive approach towards fighting online scams beyond these tools.
Brands selling on Amazon would be wise to utilise brand protection software that includes around-the-clock detection, monitoring, and enforcement.
With the right brand protection software, brands selling on Amazon can quickly identify phoney reviews, buy and return scams, hijacked listings, and other threats to take necessary action.
GreyScout online brand protection platform easily monitors online marketplaces helps detect, verify and enforce against the grey market and unauthorized 3P seller activity and helps you stay one step ahead of those looking to damage your brand reputation.
