i will be back Amazon It’s free and easy for shoppers, but it’s risky and expensive for small businesses that sell most of their products on the world’s largest e-commerce website. Return has driven some sellers to withdraw popular fulfillment by Amazon, while others have told CNBC they want to leave the platform for good.
At the heart of the problem was a huge increase in fraudulent returns, leading to customers accidentally receiving second-hand products when they ordered something new. In two particularly awful examples, including baby products listed on CNBC, Amazon used customers internally to customers who used diapers and chillers along with other people’s rotten breast milk.
“I don’t think consumers understand how many small businesses on Amazon and how their return habits will affect small businesses and families like me,” said Rachelle Baron, owner of Beau and Belle Littles, who sell reusable swimming diapers on Amazon.
Baron said her business fought after the incident on his way back with Amazon. The e-commerce platform shipped dirty swimming diapers to customers after the used baby products were returned to Amazon, Baron said.
“In reality, we were sent two diapers that were poop,” she said.
According to a report by the National Retail Federation, nearly 14% of US retail returns were fraudulent in 2024, up from 5% in 2018. In total, the report found that cost retailers spent $890 billion in 2024.
Amazon began billing sellers through its Fulfillment Program (FBA) in June 2024 for items exceeding certain return fee thresholds. Sellers signing up for the FBA rely on Amazon for logistics, such as shipping, packaging, and returns.
In September, months after the fees went into effect, e-commerce group Helium 10 reduced return charges for US Amazon sellers by nearly 5%.
“We are forcing sellers to force high quality listings and high quality products,” said Zoe Lu, General Manager of Helium 10.
Amazon has also started adding warning labels to some “frequently returned items.” This could contribute to the dip.
Price rise
However, new rates could also lead to higher prices.
One survey by e-commerce analytics firm SmartScout found that 65% of sellers said they had raised their prices directly in 2024 due to changes in Amazon fees. Other sellers said CNBC returns were the reason the scam caused prices to go up.
In total, CNBC spoke with seven Amazon sellers to find out how it handles the rising costs of profits.
“We are running on Amazon with a net profit of over 1% due to the return of fraud and abuse,” said Rory Collet, who sells Hot Wheels Sterling Spectrum Protective Cases. She said her return rate is only 4% on Amazon and 1% in other markets like that. Walmart. “It’s really Amazon that’s accountable at the end of the day. When Amazon takes accountability, people will stop it.”
Amazon told CNBC it has no tolerance for fraudulent returns and will take action against some scammers. These measures require a refusal of refunds and a customer’s identity verification.
Mike Jelliff sells professional music gear in Amazon’s Geekstands brand and eight other markets. He said his return rate on Amazon is three times higher than the average he sees elsewhere.
“On top eBayyou are allowed to block certain customers. “But Amazon still allows that customer to buy back from us.”
Jelliff showed that CNBC installed a system of about 40 cameras in a warehouse in Tyler, Texas, tracking all outgoing items and unboxing. He uses images when submitting an appeal to Amazon, including when a customer requests a refund that claims they will not receive the item. He maintains a blacklist of repeat criminals who have committed this type of fraud and those who have returned the items used to damage, resulting in a complete loss for him.
Amazon has improved its return process, says Jelliff, who is not dependent on the FBA. This includes Amazon, allowing small businesses to make multiple claims when fighting fraudulent returns. Amazon has also opted out of Jelliff, an automatic return label for items over $100 since 2023, and his return rate has since declined.
Mike Jelliff of Geekstands Warehouse in Tyler, Texas, June 6, 2025. Jelliff is seeing three times the return of professional music gear on Amazon compared to averages in other markets such as eBay and Walmart.
Jacob Schatz
Why returns are destroyed
Knowing which returns are fraudulent and ready to be resold is labor-intensive and specific to the item, experts said. There will be enough space for the error.
“It’s such a huge operation, so things are overlooked,” said Lou, who has a helium 10.
Lisa Myers, founder of Ceres Chill, who once relied on Amazon to handle the returns of his business as part of the FBA, has one of these stories.
In 2023, Amazon sent one of Ceres Chill’s products to customers, sending other people’s rotten breast milk internally to customers, adding that the customer wrote a review saying, “She’s going to never forget the smell.”
“It’s not that having something and I meant that it’s dramatic but dangerous, it’s unacceptable that someone else’s fluids in your kitchen will rot from what you were going to use on your child,” Myers said. “It was the moment when I sat crying and broken and thought I had no idea how this happened.”
Myers said he left the FBA after the incident and left merits such as labeling the product with major Amazon badges.
“Not participating in Amazon’s fulfillment is hurting our business,” Myers said. “It’s just that we’re not happy about, and we’re never going to benefit our customers’ mental health, safety and frankly.”
Instead, Myers outsources all returns to Baby Resell’s specialist Goodbye Gear.
Responsible resale
Christine Langenfeld started Goodbye Gear when she was a new mom struggling to find a high-quality jogging stroller.
“For the past nine years, we’ve created a database with all our products and variations, common issues and recalls,” Langenfeld said. “For some of these, there’s 40 points to look into the items themselves, and that’s really complicated.”
Langenfeld shows the process to CNBC in her warehouse in Malvern, Pennsylvania, where each item is inspected for about 15 minutes and is usually processed by at least four employees. The resource-intensive process is rewarding. She says 33 new sellers signed up in 2024, three times more than the previous year. And with her business increasing 50% year-on-year, she is upgrading to a larger warehouse in Columbus, Ohio.
She was inspired to process returns after visiting the Returns warehouse of major retailers five years ago.
“The recording on the floor is “destroying” the signs that they said “incineration,” she said.
Returns generated an estimated 29 million tonnes of carbon emissions in 2024, with £9.8 billion in revenues being landfilled, according to Optoro, a software provider of Reverse Logistics.
Amazon is facing criticism for destroying millions of pounds of unused products. In 2022, Amazon told CNBC that it was “working towards its product processing goals,” but it wouldn’t give it a timeline of its ambitions. Three years later, the goal is still in work, with Amazon telling CNBC that “a majority of the returns have been new or used, returned to the retail partner, liquidated or donated.”
In 2020, Amazon added two new options for sellers to register their returns again. “Grade and Resell” allows all US FBA sellers to rate Amazon as return and mark it as “used” before reselling. FBA liquidation allows sellers to recoup some losses by offloading pallets of goods for reselling in the secondary market, through liquidation partners such as liquidity services.
There is also an FBA donation program that has been around since 2019. This allows sellers to automatically provide eligible overstocks and return to charities through the non-profit Good360. Amazon told CNBC that these seller programs give them a second lifespan of over 300 million items a year.
Amazon also has options for shoppers who want to maintain returns from incineration or landfills.
Amazon Resale uses used and open box products, Amazon Renewed sells refurbished items, and Amazon Outlet sells Overstock. Woot is the daily deal site that Amazon bought for $110 million in 2010! also sells items with scratches and dents. Customers can also trade Amazon gift cards on certain electronic devices such as Amazon devices, phones, tablets, and other devices, or send them to the company’s certified recyclers.
“I hope that the change we can make as a country is for us to stop making crap,” Langenfeld said. “We need to create quality products for resale.”
