Amazon Sues Known, Unknown Defendants Running Global Product Return Scheme

Amazon sued 27 individuals and unknown "John Does" 1-20 in a fraud case involving REKK, a global organization allegedly responsible for stealing “millions of dollars of products from Amazon’s online stores through systematic refund abuse,” said the complaint Thursday (docket 2:23-cv-01879) in U.S. District Court for Western Washington in Seattle.

Systematic refund fraud “undermines Amazon’s ability to efficiently serve customers and selling partners,” said the complaint. Sophisticated fraudsters who “exploit the refund process for their own financial gain” leave retailers and “honest consumers to bear the brunt of increased costs, decreased inventory, and poor return experiences,” it said.

REKK comprises individuals from around the world who offer fraudulent refunds to users, said the complaint. REKK operates a channel on the Telegram social media messaging app that has over 30,000 followers and that “brazenly” advertises refund services the operators fully admit are fraudulent, the complaint said. Its primary Telegram channel, “@refundingclub,” advertises its page as “REKK Refund Service” and had 35,644 subscribers as of Dec. 5, the complaint said. Bad actors who want a free product pay REKK a fee, such as 30% of the product cost, to obtain a refund, it said.

The methods REKK uses to obtain refunds include “socially engineering Amazon customer service, phishing Amazon employees, manipulating Amazon’s systems through unauthorized access, and bribing Amazon insiders to grant refunds,” the complaint said. REKK’s scheme “tricks Amazon into processing refunds for products that are never returned,” it said. Instead of returning products as promised, defendants “keep the product and the refund,” it said.

REKK boasts that it has fraudulently refunded over 100,000 orders from retailers, not just Amazon, said the complaint. Defendants in the case are REKK’s operators, “egregious REKK users” and “corrupt Amazon insiders,” ex-Amazon employees REKK “bribed to facilitate refunds,” it said.

Named defendants are Andrew Ling, Brandon Sukhram and Josh Davis of New York; Charalampos Gkatzoulas of Greece; Cosmin Sopca, Simone Antonio Figura and Jenny Tran of England; Dylan Hinz of Ohio; Eric Niezabytowski of Michigan; Graham Ferguson of South Dakota; Ivona Brazovskaja of Lithuania; James Garofalo of New Jersey; Johanes Kessel, Olaf Booij and Karcper Niepogoda of the Netherlands; Jorge Correa of Pennsylvania; Ryan Bates and Zoha Ahmed of Canada; Sai Charan Beeravelli of Texas; and Zachary Iguelmamene of California.

Amazon insider defendants are Oscar Pineda of Oregon; Janiyah Alford, Luke Colvin and Noah Page of Tennessee; Skylar Robinson of Kentucky; William Walsh of Maryland; and Alejandro Taveras of New Jersey.

Defendants Does 1-20 are individuals or entities working “in active concert with each other” to operate the fraud refund service. The identities of the REKK operator defendants are currently unknown to Amazon; they advertise their services on Telegram under such handles as "@refundingclub,” “@rekks,” “@rekksupport” and “@rekkvouches.” While operating under the name REKK, they have taken deliberate steps to conceal their true identities, the complaint alleged.

While legitimate refunds are a standard and expected part of the retail business, fraudsters “exploit the refund process for their own financial gain to the detriment of honest consumers and retailers,” the complaint said. Amazon has taken “considerable measures” to combat organized theft, fraud and abuse, spending $1.2 billion in 2022 alone and employing 15,000 people to fight abuse, it said. When it detects fraud, Amazon takes a variety of measures to stop the activity, including warning customers against “continued activity, closing accounts, and preventing customers who engaged in refund fraud from opening new accounts,” it said.

REKK “capitalizes on Amazon’s reputation and goodwill” by using the company’s trademarks “to help generate initial interest” in its refund fraud services, the complaint said. “Amazon customers may be drawn to REKK’s channels under the initial impression that REKK offers legitimate return services, which are detailed directly underneath Amazon’s logo,” it said.

REKK’s users begin by placing an order directly from a retailer, like Amazon, said the complaint. Once an order is placed, users are directed to complete a “service form” with username, store, whether users want to pay by Bitcoin or via PayPal, the total order amount, the customer’s name, email address, billing, and shipping address on the account used to place the order, the tracking number and carrier that delivered the order, and payment method, it said. REKK contacts users to arrange for 50% of the service fee to be paid in advance. It uses social engineering, Amazon systems manipulation, insider bribery and “materially different returns,” in the process, it said.

Amazon asserts claims of civil conspiracy; fraudulent and negligent misrepresentation; conversion; unjust enrichment; breach of contract; trademark infringement; and false designation of origin, sponsorship, approval, or association, and false advertising, the complaint said. It seeks orders enjoining defendants from making any statement of affiliation with Amazon; opening, acquiring and using any Amazon account to order a product or service and from claiming a refund from Amazon; from creating new Telegram or other private channel media platforms affiliated with the returns scheme; and using Amazon trademarks.

It also seeks orders requiring defendants to give Amazon a “full and complete accounting” of all gross and net amounts connected with the scheme alleged, to disgorge the full value of product refunds, and to hold in trust for Amazon their illegal profits gained. It asked that defendants be required to pay all general, special, actual and statutory damages, costs of legal action and restitution equal to their “unjust enrichment.”