Malaysia is currently booming in the e-commerce market. We’ve seen many e-commerce platforms emerging and competition is fierce. Prices of products are always as low as it can be – so the battle is now in the e-commerce platform’s services instead – specifically, the return policy. To provide a return policy in itself is already a risk and people are abusing it.

Such cases aren’t happening in Malaysia only. It’s happening around the world and companies are trying to mitigate such issues.

It’s happening to every online shopping platform, but we’re focusing on Lazada now. The information we have here are from anonymous sources with rough figures only. We are not accusing anyone and are merely pointing out the multiple ways/methods to exploit the system.

Return policy – what are they?

Before we begin, we have to make one thing clear – return policy is not warranty. Return policy is similar to having a one-to-one refund or exchange within a certain amount of days after the purchase.

Lazada themselves have a FAQ page where it answers all of your questions about the return process and its policy. There’s a 7 calendar days under 100% Buyer Protection and 14 calendar days for items with Lazada’s Satisfaction Guaranteed If your item is defective during these calendar days, then you’re eligible for a return.

For the case of Lazada Guarantee, the products that are eligible are:

  • Authentic/original
  • At least 6 months away from expiry at the time of shipping
  • Delivered in perfect condition (no tear, leak, dent, etc.)

If your item is in bad condition/ damaged or expired, you don’t have to return the physical item. Just fill in the returns form and contact their customer service and they’ll process the refund request.

Item return statistics

For every situation, we need to look at the statistics to see how significant the issue is. While we do not have the figures for the returned item statistics, we do know that in the US, there is an estimated USD $70 billion dollars worth of items returned after Christmas, according to CNBC.

In Malaysia, I’ve heard similar stories from local online retailers too where item return rates surged after a festive season. This is not even the season of giving or receiving – just to celebrate festivities like Chinese New Year or Hari Raya.

From our anonymous source, we’ve heard that e-commerce platforms have some sort of an estimated return rate after festive seasons.

How can it be abused?

While I admit I’m not entirely an expert when it comes to these fine prints, I do know one thing – people are abusing it. Things aren’t always as clear cut as stated in the FAQ, and that’s where grey area and loopholes appear.

Customers are essentially “lying” or cheating the system to make sure the items are eligible to be returned. For example, laundry detergent bottles are automatically eligible to be returned if it is broken or leaking upon receive. There’s an anti-tamper seal on the cap too. However, users are claiming that when they received the bottle of laundry detergent, only half of the bottle of chemical remains. Where did the other half go?

Some people exploited the system even further. A few days before their 10-day travel, they bought a camera and used it for their travel photo shoot. Once they’re done with the travel, they returned the camera as if it’s defective to get a full refund. There’s easily a few hundred shutter counts on that camera already!

Our partner also uncovered how people disguise processor IHS by having a sticker on top. In other cases, some people actually bought two different Intel processors, delid them, and swap the IHS, then file a return for the cheaper processor.

Customers or specific item being targeted

But what about items like phones? Well, here’s a funny case. Take a look at this case from Tan Yong Jun. His case is totally eligible for the return policy.

Long story short, he bought an iPhone 8 Plus with 64GB in gold color. Everything looks like an iPhone right down to its box and the accessories. Upon inspection of the phone, it truly looks like an iPhone. There is no 3.5mm audio jack too!

However, once it’s booted up, it has Google Play Store. Everything has just been skinned to look like an iPhone but it’s actually an Android phone.

Obviously, Tan filed a complaint and went for a return. Upon receiving the item again, he opened it – and got the same iPhone clone. It’s his second time experiencing this misfortune – and twice in a row! A police report was also made.

That’s when the Facebook post above got published and went viral. Lazada handled the case gracefully after the same thing happened the second time. They hand-delivered the phone to Tan, recorded him unbox the phone on the spot and went through some verification process to ensure its authenticity. Then, Lazada collected back those counterfeit/clone units.

We’re not accusing anyone of for abusing or cheating the return policy, but there is a possibility.

Might be the logistics causing problem

E-commerce isn’t a direct end-to-end sale. The supply chain has a few more steps after receiving the payment and before reaching the customer. That’s where warehouse and logistics come in. When humans are involved, there is bound to be thievery and smuggling cases happening all around.

In Tan’s case, I’m not surprised to find out if the logistics company is the one that made a swap before delivering it to the customer.

Another possibility is that Lazada themselves have received counterfeit stocks from the beginning. That means that particular batch of stock is already swapped out with Chinese knockoffs. Maybe it was swapped by the warehouse workers.

Any countermeasures?

There should be some countermeasure. Given how well lenient return policies have worked for bigger markets in the US, I’m sure there are many people trying to exploit it as well. Local e-commerce platforms can learn a thing or two from the big boys like Amazon or B&H.

E-commerce platforms need to verify the integrity of the product before accepting the returned item.

Perhaps recording the IMEI of the phone itself before shipping it out with the IMEI of the returned phone. Other than that, some sort of anti-tampering mechanism will need to be implemented.

To mitigate these sort of issues means trust is involved. It’s not something that’s clear cut or simple that can be solved overnight.

P/S: E-Cart Services Sdn. Bhd. is Lazada themselves. It’s not a scam.