A California man admitted to defrauding Amazon out of more than $1.3 million for selling nonexistent products including furniture and home decor. He pleaded guilty to a federal fraud charge on March 21.
Tim Hong Yeung, 41, acted as a third-party seller on Amazon and advertised, sold and communicated with customers, according to court documents. He also admitted to costing Amazon about $1,302,954 in total losses, prosecutors said.
In 2021, The Federal Trade Commission received reports totaling $5.8 million in losses from fraud and online scams. More than 2.8 million consumers reported being victims of fraud, with most consumers reporting imposter scams followed by online shopping scams.
Using names like "Speedy Checkout," "Special SaleS" and "California Red Trading Inc.," Yeung listed expensive home decor and furniture on Amazon at low prices, the U.S. Attorney's Office in the Central District of California said in a press release.
Amazon disburses proceeds from the seller's sales into an internal account every two weeks if the seller can provide proof of purchase, including tracking numbers.
According to prosecutors, Yeung provided "bogus" tracking numbers. When customers complained about never receiving their shipment, Yeung then allegedly delayed the refund requests until after Amazon disbursed the funds into his accounts.
Yeung collected payment for items that were never shipped–nor existed–and relied on Amazon's "A-to-Z Guarantee" to refund his customers.
According to court documents, customers sometimes received "cheap crystal ornaments" instead of the product they purchased to generate a tracking number.
He also allegedly assured customers that their orders were on their way through Amazon's messaging service.
Yeung was also accused of using fraudulent credit cards to make purchases on Amazon. Once the products were delivered to his customers, he allegedly told Amazon the product was "different from what was ordered"
Yeung then requested refunds for the products and often returned a less expensive item than what he ordered, allowing him to receive both the refund and proceeds from the sale to his customer.
He currently faces a statutory maximum penalty of 20 years in federal prison for wire fraud.
During a search of his residence last month, investigators seized gold and silver bars which would help go toward the restitution he agreed to pay, according to a news release. Yeung is next due in United States District Court on April 12.
A spokesperson for Amazon told Newsweek that they are grateful to law enforcement for thoroughly investigating the case.
"Amazon has systems in place to detect suspicious behavior, and teams in place to investigate and stop fraudulent activity," the spokesperson said. "There is no place for fraud at Amazon. We will continue to investigate fraud to protect our customers and selling partners and hold bad actors accountable."
To avoid a scam, experts recommend being wary about deals that feel "too good to be true" such as a low price.
People are also advised to use a credit card rather than a debit card when online shopping. This is because a credit card is not directly tied to a bank account which makes it more difficult to steal information.
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