The Fraud Examiner

Return to Scammer: A Look at Online Purchasing Fraud
 

Mason Wilder, CFE                       
Research Specialist, Association of Certified Fraud Examiners



The ease with which consumers can order and return products through online retail outlets allowed three Indianans to develop a system that made them more than $1 million before they got caught. One married couple, Leah and Erin Finan, exploited lax return policies to carry out an online retail fraud scam over two years at the expense of Amazon, the largest online retailer in the world. On June 4, 2018, Erin and Leah received federal prison sentences of 71 and 68 months, respectively, while waiving their right to appeal as they pleaded guilty to federal mail fraud and money laundering charges. A third accomplice pleaded guilty to money laundering in connection with the scheme and received a sentence of 24 months in federal prison. A judge ordered the three fraudsters to repay Amazon the full amount they scammed the company out of, in addition to their prison sentences.

The scam

Leah and Erin Finan created accounts with Amazon using fake online identities to order more than 2,700 valuable electronics items. The Finans instructed Amazon to ship the items to retail shipping stores, such as UPS or FedEx stores (authorities did not specify the stores in their press releases), then falsely claimed the items were damaged or unusable, requesting replacement items be sent out. Using multiple accounts and identities to carry out the scheme reportedly prevented Amazon from catching on. The Finans then sold the fraudulently obtained items to an unnamed retailer in New York with the help of an accomplice, who split the proceeds with the couple and then laundered the money through a clothing company he owns. Ironically, the New York retailer who purchased the fenced items below market value turned around and sold many of the items via Amazon. There were no reports of charges filed against the New York retailer.


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