Amazon FBM refund scam

Learn how Amazon refund fraud leads to jail in Pakistan. Protect your FBM or dropshipping business from legal action, suspension, and heavy fines.

Introduction

In recent years, refund fraud linked to e-commerce platforms has become a serious legal issue. Many sellers, especially those operating under the FBM (Fulfilled by Merchant) and Dropshipping models, are unknowingly exposing themselves to severe legal consequences.

This article serves as a professional warning to overseas Pakistani entrepreneurs working on Amazon and other global marketplaces.

What Is Refund Fraud?

Refund fraud occurs when a seller (or someone working on their behalf) falsely claims that an item was not received in order to obtain a refund from a supplier — while the product has actually been delivered.

In many cases, sellers are unaware that their Virtual Assistants (VAs) are:

• Filing false “Item Not Received” claims
• Taking refunds from suppliers such as Amazon Business, Sam’s Club, Walmart, Vitacost, or other vendors
• Reusing the same tracking details to ship products to customers

Although the seller may not directly file the refund claim, the account owner remains legally responsible

Why Authorities Are Taking This Seriously

Major suppliers and marketplaces have significantly upgraded their monitoring systems.

Today, they can verify:

• GPS-based delivery confirmation
• Doorstep delivery photos
• Carrier tracking history
• Signature confirmations
• Product weight and dimensions
• Shipping origin comparisons

If tracking shows an item was delivered — but a refund is still claimed — the system flags it for investigation.

When the same product (same weight, same dimensions, same shipping address) is delivered to a customer while a refund is taken from the supplier, this creates strong evidence of organized refund fraud.

Legal Consequences

Refund fraud is not just an “account issue.” It is considered:

• Financial fraud
• Wire fraud
• Identity misuse
• Organized e-commerce fraud

Authorities in multiple countries, including Pakistan, are cooperating with international marketplaces to identify and prosecute individuals involved in such activities.

Consequences may include:

• Permanent Amazon account suspension
• Business Prime bans
• Freezing of funds
• Heavy financial penalties
• Criminal charges
• Arrest and imprisonment

In most cases, the account owner is held legally responsible — even if a VA committed the fraud.

Why Many Sellers Don’t Realize It’s Happening

Some sellers only notice refund amounts reflecting in their bank or card statements without understanding the source.

This often happens when:

• A VA uses supplier accounts to process refund claims
• The seller does not regularly audit supplier invoices
• There is no monitoring of refund activity
• The business lacks compliance policies

Ignorance does not protect against legal liability.

How to Protect Yourself

To operate safely and ethically:

1. Regularly audit all supplier accounts
2. Monitor refund activity weekly
3. Verify tracking numbers before any claim
4. Never allow false “Item Not Received” claims
5. Work only with trained, compliant VAs
6. Maintain proper documentation of all transactions

Ethical selling is the only sustainable long-term strategy.

Final Advice to Overseas Pakistani Sellers

Building a successful Amazon business takes time, patience, and compliance with marketplace policies. Shortcuts through refund manipulation may generate temporary profit — but they carry long-term legal risks that can destroy careers and reputations.

Operate clean. Monitor your team. Protect your identity.

Your Amazon account is a business asset — treat it responsibly.