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Hallie Ayres
Contributing Writer

Amazon has long been a target for retailer schemes and various types of consumer fraud. Four New York-based brothers recently took this to the next level and, on August 19, started facing the consequences. The Abraham brothers — Yoel, 28; Heshl, 32; Zishe, 30; and Shmuel, 24 — were arrested and charged with wire fraud, conspiracy to commit wire fraud and money laundering after law enforcement busted an alleged fraud ring that they were running out of their parents’ home in Monsey, NY.

A federal complaint alleges that the brothers attempted to defraud Amazon out of $32 million, though, at the time of their arrest, they had received $19 million, a sum they had been collecting since 2017. Over the past few years, the alleged fraudsters opened six different Amazon vendor accounts, each tied to different limited liability corporations registered in Rockland County, Orange County and Queens County, New York. Through these vendor accounts, the defendants manipulated invoices and engaged in overshipping, a scheme in which they agreed to sell Amazon certain products at specific prices, but then invoiced Amazon for entirely different products at inflated prices.

For example, the complaint against the men cites two cases in 2018:

They sold a case of disinfectant spray for $94, but billed Amazon for 7,000 toothbrushes, each priced at $94. The total invoice came out to $658,000.
The brothers sold a bottle of perfume for $290, but they reported shipping 927 units of a beard trimming tool for $290 each — a fraudulent sale that allowed them to collect nearly $270,000 in payments from Amazon.

After Amazon suspended the fraudulent vendor accounts due to their pattern of overshipping, the brothers opened new accounts under false names, different addresses and using virtual servers to elude detection.

In a statement, the Acting United States Attorney for the Southern District of New York, Audrey Strauss, made note of the imperative to secure e-commerce: “The indictment alleges that Yoel, Heshl, Zishe, and Shmuel Abraham came up with a new twist on an old trick, but the use of complex technology did not hide the simple fact that the defendants were bilking Amazon for goods they never provided. The more our economic life moves online, the more we must ensure the integrity of our digital markets.”

If declared guilty, the four men could face a maximum of 20 years for wire fraud and conspiracy to commit wire fraud, and another maximum 10 years for money laundering.

From Amazon’s side, the company has faced challenges in fighting the various forms of fraud that permeate its site, despite spending more than $500 million in 2019 to counteract these schemes. In early July, the retailer announced a new policy that, starting September 1, 2020, requires third-party vendors to disclose and publicly display their names and addresses, a policy that is already required in Mexico, Japan and Europe.

In another move toward vetting vendors, Amazon started setting up video meetings with vendors to verify identities and ensure that the person’s information matches their seller application. Though these meetings began in-person in early 2020, they’ve now moved online due to the coronavirus.

Amazon also uses a machine learning program that analyzes vendor applications to spot any potential discrepancies in their applications and to flag any connections to accounts that have previously been suspended by Amazon. These initiatives attempt to diminish the number of fraudulent products sold on the site by preventing scam vendors from listing their products in the first place.

Another tool Amazon has implemented in order to cut down on fraud is the one-tap rating system, which the company debuted in late 2019. This tool, which is available only to verified buyers, allows customers to rate a product without having to write a longer review. Amazon hopes that more customers will be inclined to leave a rating so that verified ratings will drown out fraudulent reviews from scammers. While reviews may become less descriptive on the whole, the tool aims to serve as a form of harm reduction in the face of rampant retailer fraud.

Amazon likely has even more tools and technology to fight fraudulent vendors that we aren’t aware of, so it’s especially noteworthy when scammers are able to bypass those controls in the shockingly big way these four brothers from New York have done.

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