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Amazon Suit Claims International Ring Stole Millions in Fraudulent Refunds

Amazon has accused an international organization, including customers and several former employees, of conspiring to steal millions of dollars in online products through fraudulent refunds.

In a lawsuit filed Thursday in the U.S. District Court in Seattle, the online retailer accused the group, called REKK, of perpetrating the fraud between June 2022 and May 2023. The lawsuit includes more than 20 named defendants and 20 unnamed individuals.

According to the suit, REKK is a large player in an underground industry of fraudsters who “have created illegitimate ‘businesses’ offering fraudulent refunds to individuals around the world who are knowingly engaging with and participating in the fraud” to get expensive products free.

The 44-page complaint said that REKK marketed itself through social media channels like Reddit and the encrypted messaging app Telegram as a paid service that allowed users to buy products from online retailers and pretend to return them, keeping both the product and the refund.

In the suit, Amazon said that more than a dozen fraudulent refunds were issued from June 2022 to May 2023 for expensive items including laptops, gaming consoles and a 24-karat gold coin, and that at least seven former Amazon employees — described as “insiders” — accepted thousands of dollars in bribes to process reimbursements for products that were never returned.

REKK impersonated Amazon customers, used phishing messages to obtain credentials, manipulated systems through unauthorized access and bribed employees to grant refunds, according to the suit. The employees, Amazon said in the filing, gave more than $500,000 worth of fraudulent returns.

REKK did not immediately respond to a request for comment sent to the group’s Reddit page. As of Saturday, its Telegram channel had been shut down.

In the complaint, Amazon included screenshots that appeared to show REKK spelling out the fraud in advertisements on social media.

“To put it simply, refunding is when you buy a product and then trick the company into thinking you have returned the product,” a user explained on the REKK Refund Service subreddit, according to a screenshot in the complaint.

In another image showing parts of a text message exchange, REKK offered Janiyah Alford, a former Amazon employee named in the suit, $3,500 to scan items as received and sellable despite never being returned.

According to the suit, Ms. Alford approved product returns for 76 orders at REKK’s request, leading Amazon to refund more than $100,000 to REKK users.

Ms. Alford said in an interview that she had received text messages asking for help in carrying out the fraudulent returns, and that the messages included her home address and the home addresses of several relatives. She said she did not know who sent the messages, but she viewed them as threats. The messages were not mentioned in the complaint.

“I only did it for a day,” she said, adding that she was terminated by Amazon for her actions days later.

Ms. Alford said on Saturday that she had not known that she was named in the lawsuit.

The six other former Amazon employees identified in the lawsuit did not respond to requests for comment or could not be reached on Saturday.

A survey by the National Retail Federation, a trade association, and Appriss Retail, a company that fights retail fraud and theft, estimated that in 2022, about 10 percent of returned online purchases were deemed fraudulent. For every $100 in returned merchandise accepted, the survey found, retailers lost $10.40 to return fraud.

Amazon said in its complaint that it had spent $1.2 billion and employed more than 15,000 people and machine learning models to prevent theft, fraud and abuse.

The company detected unusual product return activity associated with REKK this year and exposed the scheme by having an investigator pose as a REKK user to purchase and then obtain a refund for an iPad without returning it.

After ordering the item, the investigator paid an upfront fee of several hundred dollars to a PayPal account, with the balance of the payment sent to REKK in Bitcoin after the fraud was complete.

REKK manipulated Amazon’s delivery information to show that the customer had refused delivery of the iPad, the company said in the lawsuit. Based on this information, Amazon initiated a refund, while the investigator kept both the item and the money.

It was not immediately clear whether a law enforcement investigation of REKK was underway. The U.S. attorney’s office in Seattle did not respond to a request for comment.

“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 in a statement.

The company said it had assisted law enforcement by providing evidence that contributed to indictments of other illegal refund groups.

In September, Sajed Al-Maarej of Dearborn, Mich., was indicted by the U.S. Attorney’s Office for the Western District of Washington for conspiracy and wire and mail fraud in a $3.9 million refund scheme that defrauded retailers including Amazon.

In October, an indictment in the Northern District of Oklahoma charged 10 men with conspiring to steal goods for themselves and others through refund fraud that amounted to millions of dollars of losses for Amazon, Wayfair and other online retailers.

In the REKK case, Amazon has asked for financial restitution and for the defendants to be barred from affiliation with the company, including via shopping on Amazon.