Hope your weekend rocked. Mine Americana’d with the Turnpike Troubadours in Charlotte, NC.

Back to business. 

To start your week off right, I’ll show you some nasty stats and stories on customers who are awesome… at fraud. We’ll note ways large companies are trying to fight off these folks who abuse return policies (and the credit card chargeback system).

After that story, check out the Monday Marketing News section.

Bad Buyers

The Journal reported on this fast-growing trend that’s costing businesses billions.

More and more people are taking XL advantage of free returns of online goods. Why?

• Companies promote free returns like crazy so they can sell more (duh)

• People who view large corporations as “greedy” see nothing immoral about cheating these companies

• Full-blown fraudsters are openly giving fraud tutorials on platforms like Telegram and TikTok

One dude went beyond how-tos. He set up a “FaaS” (fraud as a service) - earning a commission on the returns he “achieved” for other people!

Small-time fraudsters might abuse your return policy just to get a little free merch. Crooks who mean business go all in, grabbing mountains of free stuff and reselling it. 

Two Seattle gentlemen partnered up in return schemes. One made off with 3.9 million dollars. The other, 6 million! Pretty smart but not super-criminals because they both landed in the pokey, according to the WSJ podcast.

Bad Buyer Stats

Not all returns involve fraud. Regardless, returns cause a ton of extra work for the business.

17% of all online sales were returned last year. In dollars? About $250 billion.

All those returns mean it’s nearly impossible for large retailers to sift through returned merchandise efficiently. But they have to refund buyer funds quickly or risk losing a shopper forever. 

This gives crooks the chance to return boxes packed with bricks, dirty shoes, and other nonsense. By time Amazon or Walmart gets to the return, the money is already back in the criminal’s bank account. 

An example from another retailer showed one crook using 20 different email addresses to buy 250 items in two months. She received about $24k in refunds and kept the merch. That’s a lot of activity NOT to be noticed by the company until it was too late.

Bad Buyers Use Fraud on Services Too

Don’t think it’s just products that fraudsters want. People are taking advantage of return policies on services also. 

If they can’t do it via a company return policy, they’ll do it with a credit card dispute (which overwhelmingly favors the buyer, not the business, from what I can tell).

Even if the business wins the dispute, they’ll have wasted time fighting the chargeback. And from my understanding, just the initiation of the credit card dispute hurts the company’s chargeback rating.

How Big Retailers are Battling Bad Buyers

#1 Some companies are starting to require a government ID during returns.

#2 Others are changing policies to make in-store returns free but charging a fee to ship items back to the retailer. 

#3 Another option is loyalty programs to gather more information on each customer so patterns are easier to spot. Good idea generally, and especially to stop return policy abusers.

#4 IP address identification and blocking shoppers who use VPNs to block their IP.

It’s a tough fight trying to appeal to customers who want a risk-free shopping experience, while deterring those looking for a “free lunch.”

Maybe technology’s the answer…

5 companies focused on preventing return abuse and fraud: 

1. Fraud.net 

2. Signifyd

3. Riskified 

4. Sift

5. ClearSale 

Good to have solutions, however…

Most security companies are vague about how they beat fraudsters. I’ve seen the same vague “seamless security tools” and “robust features” noted in countless payment processing companies’ copy. But maybe being vague is the only way to keep their security secrets away from criminals?

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Thanks for supporting our sponsors. Onward to Marketing News.

Thanks for reading and sharing Inbox Hacking. Want your favorite non-profit to get a shout-out in this newsletter? Hit reply & let me know. 

Shane McLendon - Copy Kingpin

Bonus: I’ll recommend this book again - The Art of Plain Talk - with the following tip inside it about being too creative with copy. “The trouble was the ads plugged the brand name Londonderry instead of telling people how they could make ice cream cheaper at home than buying it at the store.”