Rising returns fraud and new fees are pushing Amazon sellers to the brink — with some opting to leave the platform entirely.
Returns on Amazon may be easy for shoppers, but they’re becoming a serious burden for small businesses — the majority sellers on the e-commerce giant. As returns fraud surges, sellers report losses, reputational damage, and increasing costs that threaten their bottom lines.
In 2024, nearly 14% of U.S. retail returns were fraudulent, nearly triple from 2018, according to the National Retail Federation. Retailers lost an estimated $890 billion to returns last year, and Amazon sellers are feeling the pinch.
“It’s devastating,” said Rachelle Baron, owner of Beau and Belle Littles, who saw her business collapse after soiled swim diapers were mistakenly resold by Amazon. “Consumers don’t understand how their returns impact small businesses.”
New Fees and Higher Prices
In June 2024, Amazon introduced new FBA fees for sellers exceeding return rate thresholds. The result? 65% of sellers raised prices last year, per SmartScout. Even with tighter margins, fraud remains rampant.
“It’s really Amazon that’s accountable,” said Lorie Corlett, seller of Sterling Spectrum products. “We’re running at about 1% net profit on Amazon because of fraud.”
Amazon maintains it fights fraudulent returns with refund denials and identity verification. It also warns customers of “frequently returned items” to discourage abuse. However, sellers argue these efforts fall short.
Sellers Fight Back
Some sellers, like Mike Jelliff of GeekStands, have installed elaborate systems — including 40 surveillance cameras — to document and contest fraudulent returns. Jelliff, who operates across nine marketplaces, reports three times higher returns on Amazon compared to competitors like eBay.
Meanwhile, others are abandoning Amazon’s Fulfillment by Amazon (FBA) service. Lisa Myers, founder of Ceres Chill, pulled out after a customer received a used chiller with rotten breast milk — a reputational nightmare.
“We’ll never prioritize profit over customer safety,” Myers said.
A Growing Environmental Impact
Returns don’t just hurt businesses; they also harm the planet. In 2024, returns generated 29 million metric tons of carbon emissions and nearly 10 billion pounds of landfill waste, according to Optoro.
Amazon claims it’s working towards zero product disposal. It offers programs like Grade and Resell, FBA Liquidation, and FBA Donations, aiming to give second life to over 300 million items annually.
Also Read: Amazon to Invest A$20 Billion in Australian AI and Cloud Infrastructure by 2029
But as Kristin Langenfeld, founder of GoodBuy Gear, points out: “We need better products — not more waste.”
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of CoinBrief.io. Before making any investment decisions, you should always conduct your own research. Coin Brief is not responsible for any financial losses.
