eBay Requesting We Return Stolen Merchandise to Thief - Legal?

[Alan2000]

Jurisdiction

California

I noticed several listings on eBay for products we manufacture at prices too low to be legit. Also found listings for other products on our website listed too low. I ordered several of the products from the suspicious eBay sellers as part of our fraud investigation. (At first we thought maybe an employee was stealing our merchandise and listing it on eBay.) I received the items but all were shipped to me from the eBay seller(s) using stolen credit cards. Here is how the scam worked:

1) eBay seller lists an item he does not own or even possesses at a low price.
2) Unsuspecting eBay buyer buys the item and pays eBay for the sale.
3) eBay deposits into the seller's account the funds.
4) eBay seller goes to our website and places an order using the name and address of the eBay buyer and uses a compromised credit card to pay for the order.
5) eBay buyer gets the item they ordered shipped directly from us and thinks all is fine.
6) We have no idea eBay was even involved in order and eventually get charge backs for those orders.

We identified over 70 eBay seller accounts doing this scam and provided eBay with our findings. eBay terminated all those accounts. But when it came time to get a refund, eBay started to act stupid. They said for us to get a refund we had to ship the items back to the sellers. Keep in mind they were fake accounts with fake names and addresses AND the seller(s) never shipped anything; the seller only placed online orders using stolen credit cards. On what planet does it makes sense to further enrich the criminal to send them merchandise they never had?!

I would expect that it is illegal illegal to send what is technically stolen merchandise to the scammer. Would appreciate if someone could articulate an argument why legally we did not have to return the merchandise to the scammers to get a refund from eBay.

In our investigation we also received a few items that the scammers ordered from another website. We contacted those merchants and alerted them to the fact they were also getting scammed by these eBay sellers, and we shipped the items back to the retailers that shipped the items to us. We're also having problems with eBay refunding those orders despite eBay knowing the eBay transactions were fraudulent.

I'm 90% sure we could take eBay to Small Claims Court and win, but hoping someone here can assist with legal argument to make to eBay to hopefully make them refund the fraudulent orders without having to waste time in Small Claims Court. (BTW, we also filed a police report with our local PD regarding this scam.) Thanks!!!

 

[adjusterjack]

You have the products in your possession. You aren't entitled to a refund. Resell the products to recover your money.

 

[PayrollHRGuy]

The first thing you need to do is stop sending orders to addresses other than the billing address of the person ordering.

You should then check out the FBI Cyber Crime site.

Internet Crime Complaint Center(IC3) | Home Page

 

[zddoodah]

I'm 90% sure we could take eBay to Small Claims Court and win

I'm 100% sure you're wrong. However, small claims court in California is inexpensive and simple, so you would have little to lose besides the filing fee and time.

we also filed a police report with our local PD

You might also consider contacting the FBI since this falls into the "cyber crime" category.

The first thing you need to do is stop sending orders to addresses other than the billing address of the person ordering.

LOL...what? I've placed probably over 1,000 online orders over the past 25 years, and I can't recall ever not having the option to ship to an address other than my billing address. For example, I routinely have birthday and Christmas gifts for my family members sent to my work address.

 

[Red Kayak]

LOL...what? I've placed probably over 1,000 online orders over the past 25 years, and I can't recall ever not having the option to ship to an address other than my billing address. For example, I routinely have birthday and Christmas gifts for my family members sent to my work address.

Heck, I have them shipped directly to whoever I'm gifting. Different surnames, out of state no less.

Ironically, the only time I've gotten cc alerts/freezes have been when I've ordered items online to be delivered to me at my billing address.

 

[army judge]

Ironically, the only time I've gotten cc alerts/freezes have been when I've ordered items online to be delivered to me at my billing address.

Thanks for the chuckle, go figure.

Their efforts to stop thieves USUALLY impacts the innocent. LOL

 

[PayrollHRGuy]

LOL...what? I've placed probably over 1,000 online orders over the past 25 years, and I can't recall ever not having the option to ship to an address other than my billing address. For example, I routinely have birthday and Christmas gifts for my family members sent to my work address.

Clearly, the companies you are ordering from aren't being ripped off enough to be a problem.

 

[Alan2000]

@adjusterjack - No we do not have the items. We shipped the items back to the merchants from where they were stolen. We are not in the business of selling stolen merchandise, even if in the end it results in a loss to us. eBay did refund a couple, but a few other exact same transactions they did not without any reason why. Perhaps depends who at their foreign service centers reviewed the matter and if they had the intelligence to know it makes zero sense to ship merchandise to a scammer that never owned the merchandise operating under a fake name and address who paid for the items with a stolen credit card.

@PayrollHRGuy - A large percentage of e-commerce business are orders shipped to an address different from the billing address. (Gifts, 2nd homes, etc...) No sane internet business would give up such common sales.

The ring or scammer was rather sophisticated and skilled at defeating common security measures. The merchants were loosing quite a bit and were not aware of the losses until we reached out to them. We got lucky and discovered the scam very quickly by chance. Normally the merchant would not find out for several weeks until the chargebacks started to come in. As @army judge said, the efforts to stop thieves usually impact the innocent is true. For example, if you turn on every possible fraud prevention feature, then legitimate orders start getting blocked. You need to balance out customer service with protection protocols. Although more and more the credit card companies seem to not care that much about fraud and simply pass the costs along to the consumers. Police don't care either.

 

[PayrollHRGuy]

A large percentage of e-commerce business are orders shipped to an address different from the billing address. (Gifts, 2nd homes, etc...) No sane internet business would give up such common sales.

Then you are going to have to live with the losses associated with it.

 

[Alan2000]

We've made changes to prevent it in the future. But it would be helpful to stick with the original topic/question to not clutter the thread.

 

[PayrollHRGuy]

We've made changes to prevent it in the future. But it would be helpful to stick with the original topic/question to not clutter the thread.

Glad to hear it, but you didn't actually ask a question in the OP.

 

[Alan2000]

"Would appreciate if someone could articulate an argument why legally we did not have to return the merchandise to the scammers to get a refund from eBay."

 

[adjusterjack]

@adjusterjack - No we do not have the items.

You wrote this at the beginning:

I received the items but all were shipped to me from the eBay seller(s)

"Would appreciate if someone could articulate an argument why legally we did not have to return the merchandise to the scammers to get a refund from eBay."

You have a contract (terms of service) with eBay. I'm guessing that the answer to that question is in there.

 

[Alan2000]

A TOS would be void or voidable if in violation of the law. That is what I'm trying to figure out here.

Let's say I went to ABC Loan Sharks for a loan of $10,000 and agreed I'd pay them 25% interest on the money. We sign a contract with those terms. Later that day Joe who works there brings me $10,000. I find out later that month that Joe robbed a bank for $10,000 and that was the cash they gave me. I contact ABC and tell them I'm returning the stolen money to the bank. ABC says to return the cash to Joe or else I'll still be liable for the payments.

Would you return the money to Joe since you had a contract with ABC, or would you report Joe and ABC to the police and return the cash to the bank?

I believe eBay is acting as an accessory to a crime in demanding that the merch be returned to the criminal (who they have terminated the accounts once we reported the scam they were doing.) Note that eBay has a financial motivation to transfer the burden of the fraud to someone else, such as the innocent merchants or credit card companies, while eBay reaps their commissions and avoids payouts under their Buyer Protection guarantees.

 

[Zigner]

A TOS would be void or voidable if in violation of the law. That is what I'm trying to figure out here.

Let's say I went to ABC Loan Sharks for a loan of $10,000 and agreed I'd pay them 25% interest on the money. We sign a contract with those terms. Later that day Joe who works there brings me $10,000. I find out later that month that Joe robbed a bank for $10,000 and that was the cash they gave me. I contact ABC and tell them I'm returning the stolen money to the bank. ABC says to return the cash to Joe or else I'll still be liable for the payments.

Would you return the money to Joe since you had a contract with ABC, or would you report Joe and ABC to the police and return the cash to the bank?

I believe eBay is acting as an accessory to a crime in demanding that the merch be returned to the criminal (who they have terminated the accounts once we reported the scam they were doing.) Note that eBay has a financial motivation to transfer the burden of the fraud to someone else, such as the innocent merchants or credit card companies, while eBay reaps their commissions and avoids payouts under their Buyer Protection guarantees.

Who cares? You returned the items. This is all moot.

 

[retic]

A large percentage of e-commerce business are orders shipped to an address different from the billing address. (Gifts, 2nd homes, etc...) No sane internet business would give up such common sales.

Well... yes and no. I've found when talking to other online retailers in my industry that small, expensive, high-demand, untraceable, easily-flipped items are targets of these scams. Think jewelry, watches, optics, night vision, high-end camera gear, etc. So, they set up their shopping cart systems to set aside orders for additional screening should one be placed for a product typically targeted by fraudsters when the credit card billing and shipping addresses don't match.

 

[Alan2000]

@Zigner - We returned the items to their rightful owners. However, eBay has not reimbursed us for the stolen items we received and returned.

@retic - True. After trying many intermediate steps, and watching the scammers adapt to each step, it came down to having to implement additional manual verification steps to be able to stop them.