Refund manipulation: How Amazon lost Rs 20 crore to fraud

Fraudsters privy to the inner workings of Amazon India used an ingenious refund scam to dupe the e-commerce major of about Rs 20 crore across India, police investigations show. 

In one such case, the Bengaluru police arrested an engineering student, who allegedly colluded with a gang to dupe Amazon India of Rs 3.88 lakh. 

Credit: DH Graphic

The student Chirag Gupta, a native of Madhya Pradesh, ordered an iPhone 14 Pro Max and three iPhones 14 Plus between May 15 and 17 this year and paid for them by credit card and UPI. Amazon sent the phones from its fulfilment centre in Peenya to Gupta’s PG — Maurya Paradise Inn, Mathikere. 

Days later, Amazon discovered that the student had returned all the orders and received the refund. But there was a problem. Amazon hadn’t received the products back. 

The company sent Raj Reddy, its security loss prevention manager, to the student’s address to conduct an inquiry. To Reddy’s questions, the student confessed that a friend from Madhya Pradesh had asked him to place the orders, make payments, and later cancel them. He was promised that the Amazon app would show that the products had been returned, initiating the refund process. This way, the student could keep the products. He only had to share a part of the original price. 

The discovery prompted Paramesh H C, South Zonal Manager at Amazon Transportation Services Pvt Ltd, to file a complaint at Yeshwantpur police station. Amazon’s India headquarters is located at World Trade Centre, near Yeshwantpur. 

Police arrested Gupta on May 26 and confiscated the iPhones, an officer privy to the investigation said. 

Police subsequently discovered that the scam was run on a Telegram channel by a gang that had access to Amazon’s confidential information. 

The gang members, reportedly based in the UK, the US, and Canada, had gained access to admin credentials in order to manipulate the Amazon app and display the products as returned.

Further investigations led the police to similar cases. They have so far confiscated Rs 20.34 lakh worth of products. These include 16 iPhones, two Macbooks, one desktop computer, one Vivo mobile phone, one gaming laptop, one Apple Airpods, and one Panasonic air-conditioner. They also seized Rs 2.5 lakh in cash and froze Rs 30 lakh in bank balance. 

Speaking to DH, Paramesh denied that the Amazon app had been hacked but didn’t rule out the involvement of current or former employees.

“This modus operandi is new. Laymen can’t do this. We are trying to find out if Amazon staff are involved. We have given all the necessary documents to the police,” he added. 

According to Paramesh, the company is estimated to have lost Rs 20 crore in similar cases but has filed a police complaint only in Bengaluru.

“We are still collating the damages and will file more police complaints,” he said. 

He suspected that gangs lured students and techies into the scam. 

A police officer said the gang members pocketed a 20 per cent commission from customers. “We suspect someone stole the user ID and password,” he added.