$19 million
How four brothers ripped off Amazon with 7000 toothbrushes
Almost everyone had such packages lying in front of their front door
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Four brothers cheated online retailer Amazon out of millions of dollars. To do this, they used a brazen scam: they flooded the group with thousands of products and invoiced them.
Amazon is the largest shopping platform in the western world – and thus the predestined target of many criminals. Now the case of four brothers from New York has come to light who defrauded Amazon of at least $19 million over the course of two years. The Justice Department released the indictment on Wednesday.
The US technology magazine “Wired” reported extensively on the case. Accordingly, the four brothers between the ages of 24 and 32 used the so-called “overshipping” for their scam. Put simply, the company is intentionally sent and billed for more goods than it ordered. In doing so, they took advantage of the way the retail giant was organized. At Amazon, each product is given a unique identifier, the so-called “Amazon Standard Identification Number” (ASIN). Sellers have the ability to customize Amazon catalog listings to ensure product descriptions are accurate. This is exactly what the brothers took advantage of.
Amazon was flooded with bills for expensive products
According to the indictment, the brothers exchanged ASINs of products that Amazon had ordered for large quantities of other products. In one instance, Amazon ordered approximately twelve canisters of spray sanitizer priced at $94.03. Instead, the defendants allegedly shipped 7,000 toothbrushes priced at $94.03 each using the sanitizer spray code and later billed Amazon for more than $650,000.
Even bolder: In one instance, Amazon ordered a single bottle of designer perfume for $289.78, prompting the brothers, according to the indictment, to charge 927 cheap beard trimmers for the same price. However, the ASIN of the perfume was entered.
Algorithms are tricked
Independent shops can offer their products on Amazon in various ways. One option is to sell the goods directly to Amazon customers. The four brothers, on the other hand, use a platform on which they act as wholesalers: Amazon buys the goods and then sells them on to customers at a premium. Amazon now offers millions of different products, from wine bottles to beach chairs – this makes it impossible for the group to control everything manually.
The company therefore relies on a mix of algorithms and manpower. Small providers in particular are partly supported completely automatically. These processes are often the target of criminals. Sometimes they sneak into millions in the Kindle Store with junk books, sometimes they fill returns with dirt in order to outwit the returns process.
According to prosecutors, the brothers are said to have regularly shipped several thousand units of a product to Amazon, even though the company had only ordered a fraction of them. As a result, it was to be expected that sooner or later the scam would be exposed and Amazon would block the accounts. But the defendants didn’t seem to get their fill and tried to create new accounts with fake names and new email addresses.
The accused are now accused of, among other things, wire transfer fraud and money laundering. Lawyers representing some of the brothers have not yet responded to the allegations.
Amazon has not yet publicly stated whether the case will make or have already made changes to the platform. However, that is to be expected. At the beginning of the year, the group set up its own department specializing in the detection and prosecution of counterfeiting offences. The group includes former investigators and federal prosecutors who use their expertise to track down scammers.
Source: Justice.gov, Wired
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