Returns on Amazon are free and straightforward for buyers, however they’re dangerous and costly for the small companies that promote a majority of the products on the world’s greatest e-commerce website. Returns have pushed some sellers to exit the favored Achievement by Amazon program, whereas others advised CNBC they’d like to depart the platform altogether.
On the coronary heart of the issue is an enormous rise in returns fraud, which has led to prospects mistakenly receiving used merchandise after they ordered one thing new. In two significantly egregious examples involving child merchandise described to CNBC, Amazon despatched prospects used diapers and a chiller with another person’s rotten breastmilk inside.
“I actually do not suppose that customers perceive what number of small companies are on Amazon and the way their return habits have an effect on small companies and households like mine,” mentioned Rachelle Baron, proprietor of Beau and Belle Littles, which sells reusable swim diapers on Amazon.
Baron mentioned her enterprise tanked after a return incident with Amazon. The e-commerce platform shipped dirty swim diapers to prospects after the used child merchandise had been returned to Amazon, Baron mentioned.
“There was truly two diapers that have been despatched out that have been poopy,” she mentioned.
In 2024, almost 14% of all U.S. retail returns have been fraudulent, up from 5% in 2018, in accordance with a report by the Nationwide Retail Federation. In complete, the report discovered that returns price retailers $890 billion in 2024.
Amazon began charging sellers in its success program (FBA) a new fee in June 2024 for objects that exceed sure return price thresholds. Sellers who join FBA depend on Amazon for logistics, together with delivery, packing and returns.
In September, a pair months after the price went into impact, e-commerce group Helium 10 noticed return charges for U.S. Amazon sellers drop almost 5%.
“It is forcing the vendor to have larger high quality listings and better high quality merchandise,” mentioned Helium 10 Normal Supervisor Zoe Lu.
Amazon has additionally began including a warning label to some “frequently returned items,” which might be contributing to the dip.
Rising costs
Nevertheless, the brand new price may be resulting in rising costs.
One survey by e-commerce evaluation firm SmartScout discovered that 65% of sellers mentioned they raised costs in 2024 instantly due to Amazon price modifications. Different sellers advised CNBC returns fraud is the rationale they’ve raised costs.
In complete, CNBC talked to seven Amazon sellers to learn how they’re dealing with the rising price of returns.
“We’re working at about simply over 1% internet revenue on Amazon, completely resulting from fraud and return abuse,” mentioned Lorie Corlett, who sells Sterling Spectrum protecting instances for warm wheels. She mentioned her return price is 4% on Amazon and only one% on different marketplaces like Walmart. “It is actually Amazon that is accountable on the finish of the day. Individuals would cease doing it if Amazon held them accountable.”
Amazon advised CNBC it has no tolerance for fraudulent returns and that it takes motion towards some scammers. These measures embody denying refunds and requiring buyer id verification.
Mike Jelliff sells skilled music gear by his GeekStands model on Amazon and eight different marketplaces. He mentioned his return price on Amazon is thrice larger than the common he sees elsewhere.
“On eBay, we’re allowed to dam particular prospects out,” Jelliff mentioned. “However on Amazon, that buyer remains to be allowed to repurchase from us.”
Jelliff confirmed CNBC the system of about 40 cameras he is put in in his Tyler, Texas, warehouse to trace each outgoing merchandise, incoming return and unboxing. He makes use of the photographs when submitting appeals with Amazon, together with when prospects request refunds claiming they by no means obtain an merchandise. He retains a blacklist of repeat offenders who commit this type of fraud and people who return used and broken objects, which turn out to be a complete loss for him.
Amazon has made some enhancements to its returns course of, mentioned Jelliff, who would not depend on FBA. This consists of Amazon permitting small companies to make a number of appeals when preventing a fraudulent return. Amazon has additionally let Jelliff opt-out of automated return labels for objects above $100 beginning in 2023, and his return price has been dropping since.
Mike Jelliff at his GeekStands warehouse in Tyler, Texas, on June 6, 2025. Jelliff sees thrice extra returns of his skilled music gear on Amazon, in comparison with the common on different marketplaces like eBay and Walmart.
Jacob Schatz
Why returns are destroyed
Determining which returns are fraudulent and that are prepared for re-sale is labor-intensive and merchandise particular, consultants mentioned. That creates loads of room for error.
“As a result of it is such a big operation, issues are missed,” mentioned Lu of Helium 10. “I believe they’re in all probability missed on the margins, however these tales are very impactful as a result of it’s such a reckoning for the model.”
Ceres Chill founder Lisa Myers, who as soon as relied on Amazon to deal with returns for her enterprise as a part of FBA, has one among these tales.
In 2023, Amazon despatched one among Ceres Chill’s merchandise to a buyer with another person’s rotten breastmilk inside, mentioned Myers, including that the client wrote a overview saying, “she’s going to always remember that scent.”
“To have one thing, and I do not imply to be dramatic, however harmful, someone else’s bodily fluids in your kitchen rotting in one thing that you just had supposed to make use of to your little one is unacceptable,” Myers mentioned. “That is the second I broke down crying and simply sat down and thought, I do not know how this might have occurred.”
Myers mentioned she left FBA after the incident, forsaking advantages like having her merchandise labeled with Amazon’s Prime badge.
“It hurts our enterprise to not take part in Fulfilled by Amazon,” Myers mentioned. “It is simply we’re not keen to, we are going to by no means put revenue over the protection and, frankly, psychological well being of our prospects.”
As a substitute, Myers outsources all her returns to child resell specialist Goodbuy Gear, which is on observe to re-sell 200,000 returned child merchandise this yr.
Re-selling responsibly
Kristin Langenfeld began GoodBuy Gear when she was a brand new mother struggling to discover a good high quality, used jogging stroller.
“We have spent the final 9 years constructing out a database that has the entire merchandise and the variations, the frequent points, the recollects,” Langenfeld mentioned. “For a few of these, there’s 40 factors that we examine on the merchandise itself, and it is actually difficult.”
Langenfeld confirmed CNBC the method at her warehouse in Malvern, Pennsylvania, the place every merchandise is inspected for about quarter-hour and is often dealt with by not less than 4 staff. The useful resource intensive course of is paying off. She says 33 new sellers signed up in 2024, thrice greater than the earlier yr. And with enterprise rising 50% year-over-year, she’s upgrading to an even bigger warehouse in Columbus, Ohio.
She was impressed to deal with returns after visiting a serious retailer’s returns warehouse 5 years in the past.
“Taped on the ground have been indicators that mentioned ‘incinerate,’ ‘destroy,'” she mentioned.
Returns generated an estimated 29 million metric tons of carbon emissions in 2024, and 9.8 billion kilos of returns ended up in landfills, in accordance with reverse logistics software program supplier Optoro.
Amazon has confronted criticism for destroying millions of pounds of unused products. In 2022, Amazon advised CNBC it was “working in the direction of a purpose of zero product disposal,” however would not give a timeline for that ambition. Three years later, that purpose remains to be within the works, with Amazon telling CNBC in an announcement, “The overwhelming majority of returns are resold as new or used, returned to promoting companions, liquidated, or donated.”
In 2020, Amazon added two new choices for sellers to re-home returns. “Grade and Resell” permits all U.S. FBA sellers to have Amazon price the return and mark it as “used” earlier than re-selling it. FBA Liquidation permits sellers to recoup some losses by offloading palettes of products for re-sale on the secondary market by liquidation companions like Liquidity Providers.
There’s additionally an FBA Donations program that is been round since 2019, permitting sellers to robotically provide eligible overstock and returns to charity teams by the non-profit Good360. Amazon advised CNBC these vendor packages give a second life to more than 300 million items a year.
For buyers wanting to maintain returns from incineration or landfills, Amazon additionally has choices.
Amazon Resale has used and open-box items, Amazon Renewed sells refurbished objects and Amazon Outlet sells overstock. Every day deal website Woot!, purchased by Amazon for $110 million in 2010, additionally sells scratched and dented objects. Prospects may trade in sure electronics, like Amazon units, telephones and tablets, for Amazon reward playing cards or ship them to the corporate’s certified recycler.
“I hope the change that we’re capable of make as a rustic is that we cease making crap,” Langenfeld mentioned. “We must always make top quality merchandise which are meant for resale.”