Since the dot-com boom, internet companies have driven a shift away from brick-and-mortar businesses where actual, real people would inspect returns before accepting them. I just wanted to do a quick post about the lingering return fraud in today's e-commerce industry.
By default, these platforms are so large and handle so much transaction volume that they tend to shift this return handling liability over to third-party sellers, since combating return fraud does not scale at a large internet business where the transaction volume per human worker is so great. Third-party sellers have little maneuverability here, as having a zero-friction resolution process would ensure that said process would be taken advantage of by dishonest buyers, dishonest sellers, or both… introducing a significant financial liability for these large-scale “middlemen on commission.”
But, as middlemen, these platforms have to intervene when something goes wrong. Platform success is fueled primarily by honest consumers buying product, but complaints tend to be honored without recourse, even if they are invalid or fraudulent. — This Reddit post from 2019 (and the emotional responses from smaller sellers in its comments section) highlights the fact:
ULPT: Any eBay purchase can be returned without penalty (including full refund of shipping both ways) by just saying it's “missing parts.” — eBay doesn't handle goods, so they will always side with the buyer. Zero exceptions. It's fully automated, and the seller has no recourse even by phone.
… The major issue is that these problematic transactions tend to be infrequent or so small that they are difficult to address and handle effectively, fairly, and consistently. Platforms are fighting for customers and to retain marketshare, but they have to find a way to bear these costs and keep buyers happy, or they will have no sellers at all due to lack of buyer traffic. By shifting these troublesome transactions onto third-party sellers and treating them as liable by default, they've found a way to defer dealing with something very difficult and unappealing at scale, especially if the seller is given no recourse.
For larger sellers, return fraud is something they accept as an expense as a cost of participating in these platforms. Some buyers eventually get caught. For smaller sellers who just sell occasionally, it can really sting, especially on large ticket items or infrequent sales. The loss of the brick-and-mortar relationship and the ability to say “no” has left the door open to this faceless behavior, all to handle more transactions with less and less human involvement.