LOS ANGELES (CN) — A Southern California man pleaded guilty to one felony count of wire fraud, admitting to conducting a string of scams over the course of seven years and defrauding Amazon of $1.3 million in refunds, the U.S. Justice Department announced on Monday.
Between 2013 and 2020, Ting Hong Yeung, 41, of Hacienda Heights in southeast LA County, ran a series of Amazon third-party seller accounts, with names like "Special SaleS," "Speedy Checkout, Inc." and "Expeditious Enterprise, Inc." Yeung would operate the accounts in good faith for some time, and then, according to the plea agreement, he "began listing high-priced items, such as furniture or home decor, on one of his Amazon seller accounts at prices far below those offered by competitors. This generally caused a spike in sales."
Yeung would confirm the orders and send Amazon made-up tracking numbers, which would then trigger Amazon to pay Yeung since the online retail giant acts as a middle-man between customer and third-party sellers. Yeung would then employ various "delay tactics," such as messaging customers telling them that the order was about to be shipped, or "shipping low-value crystal ornaments."
In February 2020, one customer messaged Yuan through Amazon: "Hello, I've received a crystal ornament and a note saying that my couch will arrive March 6th-18th. Please advise why the product I ordered has been labeled as "Delivered" when I have yet to receive the item that I have purchased. This feels like a scam. Thank you."
Yeung replied: "HI How we are scam? Your order ship is Mon, Mar 2, 2020 to Fri, Mar 6, 2020... May I know do you want full refund?"
Eventually, customers would request a refund. Amazon, having already paid out Yeung — they typically pay sellers every 14 days — was left holding the bag and had to pay for the refunds. The company then removed Yeung's third-party seller from its platform, but no matter — he simply created a new one.
At other times, Yeung purchased items on Amazon and then resold them. He would then request a refund for the items he purchased, get the cash back from his order, and send back another item of lesser value "such as damaged goods," according to the plea agreement, "receiving the benefit of the refund as well as the proceeds of the sale of the originally ordered product to the customer."
According to the Justice Department, Amazon paid out roughly $1,142,360 to Yeung's customers, and $160,594 to Yeung on his fraudulent refund claims.
Yeung has agreed to pay Amazon restitution, some which "will be paid with gold and silver bars that investigators seized during a search of his residence last month," the Justice Department said. His offense carries a statutory maximum 20 years in federal prison.
Yeung's lawyer has not yet returned a phone call requesting comment. In a written statement, an Amazon spokesman said: "Amazon is grateful to law enforcement for their thorough pursuit of this case. Amazon has systems in place to detect suspicious behavior, and teams in place to investigate and stop fraudulent activity. There is no place for fraud at Amazon."