Refund Manipulation (Refund Fraud) Defense
Experienced Federal Defense Lawyers for Retail Fraud Cases Involving Refund Manipulation and Other Offenses
Contact NickRefund manipulation and other forms of refund fraud have caught federal authorities’ attention in recent months. We have seen cases of the U.S. Department of Justice (DOJ) aggressively prosecuting individuals for allegedly exploiting flaws in companies’ refund processes to obtain fraudulent refunds and store credits.
If you are under investigation by the Federal Bureau of Investigation (FBI) or Homeland Security Investigations (HSI)—or if you are facing prosecution by the DOJ for submitting fraudulent refund requests or using other methods to obtain fraudulent refunds—it is important that you engage experienced federal defense counsel right away. Our federal defense lawyers provide experienced legal representation for individuals accused of refund fraud and return fraud, and we can provide representation on an emergency basis when necessary.
Return Fraud: Illegal Schemes that Can Lead to Federal Criminal Charges
We represent individuals in federal cases involving allegations of all types of return fraud and refund fraud. This includes submitting fraudulent returns and engaging in other suspicious transactions that are designed to take advantage of system flaws and that are deemed fraudulent under federal law. Representative examples of the types of cases we handle include:
Debit Card Scams that Exploit Flaws in Return Processes
In one recent case, the DOJ accused five individuals of engaging in a “split-tender” debit card scheme to obtain millions of dollars in fraudulent refunds. This scheme involved delaying the transmission of transaction data in order to obtain multiple refunds for a single high-value item. According to the DOJ, the defendants in that case repeated this fraudulent activity in cities across the country, relying on advanced technology to trick retailers into issuing refunds multiple times.
By identifying suspicious patterns, HSI and the DOJ were able to locate the individuals suspected of generating excessive returns. Based on the allegations involved, the DOJ filed charges for wire fraud and money laundering—both of which carry substantial fines and decades behind bars.
Chargeback Fraud Schemes
Chargeback fraud involves disputing a legitimate transaction and then keeping the items purchased, resulting in a fraudulent refund. While chargeback fraud is a common tactic for obtaining fraudulent refunds from online refunds, individuals can (and do) execute chargeback schemes in stores as well. When customers purchase items and then falsely claim that they didn’t in order to obtain a full refund, this is a form of theft that can lead to various charges under state or federal law.
Refund Fraud Schemes Involving Identity Theft
Identity theft is a common fraud tactic used to obtain refunds from retailers while posing as a legitimate customer. In these cases, not only will misrepresenting someone’s identity violate most retailers’ refund policies, but it can lead to federal criminal charges as well. Under the federal aggravated identity theft statute, individuals who pose as genuine customers in order to obtain fraudulent refunds under false pretenses can face fines and prison time. Accusations of using third parties’ identities to submit fraudulent return requests and obtain fraudulent refunds can lead to various other federal charges as well.
Empty Box Refund Fraud Schemes
Empty box refund fraud schemes involve falsely claiming to have received an empty box and requesting a refund for the purchase price. They are closely related to chargeback schemes in that they involve obtaining a refund while also keeping the item a customer buys. To target suspected empty box fraud schemes, federal authorities seek to identify patterns including frequent empty box returns, returns following special events (i.e., Black Friday sales), multiple empty box claims from the same customer, and suspicious empty box claims involving higher priced items like electronics and luxury goods.
Employee Fraud Schemes
Employee fraud schemes involve working with one or more of a retailer’s workers to perpetrate return and refund fraud. These schemes can be used to perpetrate several forms of refund fraud—including all of the forms listed above. In these cases, all individuals involved can face serious federal charges.
Other Refund Scams Intended to Evade Fraud Detection and Fraud Prevention Schemes
Along with the refund fraud schemes listed above, our federal defense lawyers represent individuals who are under investigation and facing charges for a wide range of other refund fraud schemes as well. These include (but are not limited to):
- Altered receipts (receipt fraud)
- Obtaining refunds under false pretenses
- Returning stolen goods
- Price switching (using another item’s price to obtain a higher refund for returned merchandise)
- Price arbitrage (buying an item at a lower price and then obtaining a refund for a higher price)
Again, these are just examples. If you are under investigation by the FBI or HSI—or if you are facing federal charges related to any alleged refund fraud scheme—we strongly encourage you to schedule a free and confidential consultation with one of the senior federal defense lawyers at Oberheiden P.C.
Potential Federal Charges in Refund Fraud and Refund Abuse Cases
In all cases, allegations of refund fraud and refund abuse can lead to a wide range of serious federal charges. Along with aggravated identity theft, some examples of potential charges in these cases include:
Bank Fraud
In cases involving “split-tender” debit card schemes, credit card schemes, and other refund schemes that take advantage of financial institutions, defendants can face charges under the federal bank fraud statute that carry up to a $1 million fine and 30 years of federal imprisonment.
Wire Fraud
The DOJ can pursue wire fraud charges in cases involving refund fraud perpetrated through debit card and credit card purchases. In most cases, wire fraud carries up to a $250,000 fine and 20 years of federal imprisonment; however, in some cases, wire fraud can carry up to a $1 million fine and 30 years behind bars.
Money Laundering
Cases involving illicit financial transactions can lead to federal money laundering charges as well. These charges carry a fine of up to $500,000 or twice the value of the property involved in the transaction, whichever is greater, plus up to 20 years of federal imprisonment.
Filing Fraudulent Returns (and Tax Refund Fraud)
Individuals who fail to report illicit refunds on their federal tax returns can face a variety of tax fraud charges as well. Similar to the other charges discussed here, these charges carry significant fines and the potential for long-term federal incarceration.
Conspiracy and Attempt
Conspiracy and attempt charges are common in federal refund fraud cases as well. Under the federal conspiracy and attempt statutes, all individuals involved in refund fraud schemes can face prosecution by the DOJ, and even unsuccessful attempts to obtain fraudulent refunds can lead to fines and federal prison time.
FAQs: Defending Against Allegations of Refund Fraud and Return Fraud
Is Violating a Company’s Return Policy a Federal Crime?
While violating a company’s return policy is not itself a federal crime, fraudulently obtaining refunds from retailers can lead to serious federal charges. The DOJ, FBI, and HSI have all been targeting individuals in suspected refund fraud cases in recent months.
Is Evading a Company’s Efforts to Prevent Refund Fraud a Federal Crime?
Evading a company’s efforts to prevent refund fraud can lead to charges for wire fraud, money laundering, and other serious federal crimes. As a result, if you are facing allegations of refund fraud from federal agents or federal prosecutors, it is critical that you engage experienced defense counsel right away.
How Are the Federal Government’s Fraud Experts Using Machine Learning to Detect Refund Fraud?
Federal law enforcement authorities like the FBI and HSI are increasingly relying on machine learning algorithms to detect patterns that shed light on possible refund fraud schemes. This is especially true in cases involving debit and credit card transactions and high volumes of fraudulent returns and refunds. As machine learning algorithms get better at detecting patterns that are indicative of refund fraud, we expect to see even more of these cases being prosecuted in federal court.
What Are the Penalties for Refund Fraud in Federal Cases?
The penalties you could be facing in a federal refund fraud case depend on the specific charges the DOJ chooses to pursue against you. Generally speaking, however, if you are facing federal charges in relation to an alleged refund fraud scheme, you are almost certainly facing six- or seven-figure fines and decades of federal prison time.
Federal authorities are coordinating with retailers and financial institutions to detect refund fraud and return fraud through machine learning and various other technological fraud detection means. By collaborating with the retail industry to identify instances of suspected fraud and identify the individuals involved, federal authorities have been able to pursue serious charges in many cases.
Speak with a Senior Federal Defense Attorney at Oberheiden P.C. in Confidence Today
Are you under federal investigation or facing federal charges for refund fraud? If so, we can help protect you, but it is important that you contact us promptly. To discuss your case with a senior federal defense attorney at Oberheiden P.C. in confidence as soon as possible, call 888-680-1745 or tell us how we can reach you online today.
