Item Not Received (INR)

Introduction

“Item Not Received” fraud is one of the top strategies scammers use to commit friendly fraud. As many as 32% of friendly fraud cases are cited as “order not received.” This type of fraud can be difficult for businesses to detect.

What is ‘Item Not Received’ Fraud?

‘Item not received’ (INR) fraud, also known as “refund abuse” or “return abuse” fraud, is a type of fraudulent activity where a buyer claims that they did not receive the item they ordered online, with the intention of obtaining a refund or replacement while actually receiving the item. This type of fraud exploits the trust-based nature of ecommerce transactions and can result in financial loss for merchants.

Here’s how the scam typically works:

1. A fraudster makes a legitimate purchase from a merchant (intending to claim “item not received”).
2. The merchant ships the item to the fraudster using a trackable shipping method, providing a tracking number as proof of shipment.
3. The fraudster receives the item, but dishonestly claims they did not receive it or received an empty package.
4. The fraudster then contacts the merchant’s support team or opens a dispute, alleging that the item was not received or not as described.
5. In response, the merchant may issue a refund or be forced to provide a refund, based on the “customer’s” claim.

‘Item Not Received’ Fraud Consequences to Merchants

‘Item not received’ fraud affects merchants negatively in two ways:

A) They can end up providing refunds for items that were actually delivered and they end up losing the delivered products.

B) Fraudsters may exploit the process to get products for free or to falsely claim that an item was not received in order to receive a refund while keeping the item so that they can resell it.