Is eBay UK buyer return fraud on the increase?

David-BrackinDavid Brackin is the co-founder of Stuff U Sell and has sold over 150,000 different items on eBay. He is also a regular contributor to Tamebay.

Pierre Omidyar, the founder of eBay, famously said:

“Most people are honest. And they mean well … But some people are dishonest. Or deceptive … It’s a fact of life. But here, those people can’t hide.”

We think he’s right — we’ve heard many stories of dishonesty published in the media, but overwhelmingly our experience of both buyers and sellers on eBay is that most people are honest and decent, and will go out of their way to make something right for another person.

However, over the past year, we’ve also seen a sharp increase in both the level and sophistication of buyer frauds. These aren’t the payments frauds of days gone by but are focused on returns. With the latest proposal to hold sellers to account for returns levels over 2%, for them, it is no longer about whether most buyers are honest, but nearly all.

Increasingly innovative fraud

In my business, the simplest fraud we’ve seen is simply to claim a warehouse mistake happened and the wrong item was sent out. In one particular instance the buyer said she received a £10 dress instead of a £400 Vivienne Westwood Jacket. Sadly she didn’t tell her Mum who answered the phone and confirmed that she had the jacket and confirmed the warehouse stock code on it.

However, eBay only considers communications via its Resolution Centre so the refund was made when the dress was sent back and the case is currently with the Greater Manchester Police.

Another a common fraud is “wear & return”, which retailers try to prevent by attaching large uncomfortable labels to garments. However, it only costs £15 to buy a tagging gun and enough tags to keep you in fresh clothes each weekend for a year.

We uncovered a particularly nasty case of this when a buyer put the tag back on a pair of high street jeans and returned them instead of the designer ones she had bought. Most of the time you at least get the same item back — even if it does have a bus ticket and an empty packet of cigarettes in the pocket.

The most convoluted fraud that we’ve come across is a “nearby address” fraud. In this, the buyer deliberately sends the return to a nearby address (for example unit 44 instead of 14,) where someone signs for the item and is bemused to find an old catalogue being sent Special Delivery.

The tracking shows it as properly delivered from the right Royal Mail sorting office to the right postcode and with a signature so eBay process the return. It’s very, very hard to investigate, although your Royal Mail account manager might be able to dig out the original till receipt if it was sent from a Post Office.

The solution isn’t simple

So why the increase in fraud? Maybe this is just part of Austerity Britain. Maybe it’s because eBay has had to focus on protecting buyers from bad sellers to fix its reputation.

Perhaps users are starting to think of eBay as a faceless system with rules to get around rather than Pierre’s vision of people trading with people.

We think that eBay needs to become a lot more flexible in the way in which it handles refunds and returns and put in the same level of personal service and attention to detail that the very best buyers and sellers do.

Simply engineering a one-size-fits-all solution is no longer good enough. The pain that sellers experience with returns fraud is much more than the financial loss: often it’s their good standing with the marketplace that is at risk and the time and trouble that they have to go to get customer services to understand and address the problem. Calls of up to an hour are not uncommon.

What do you think? Have you seen more returns fraud and cunning ruses to get round the rules? What should eBay be doing to make the marketplace safer?