A blogger claims that he can make two to three thousand yuan a day by taking advantage of freight insurance. "Taking advantage of freight insurance" has become an industrial chain. How should e-commerce platforms respond?
2024-08-10
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"At the beginning it was just one or two orders, but then it gradually evolved into dozens or even hundreds of orders." Li Le (pseudonym), an e-commerce seller from Inner Mongolia, recently encountered a "freight insurance wool-pulling party." He tried to complain and report this wool-pulling behavior, but faced with hundreds of malicious orders, he felt that this way of handling it was time-consuming and laborious.
Freight insurance was originally intended to reduce the risks and conflicts caused by returns for merchants and consumers, but now it is being used by "black and gray industries". Many merchants complain that they have been harmed by "freight insurance wool parties". How should e-commerce platforms and other parties deal with this problem?
“We get hundreds of orders every day, and it’s always been stable.”
"As long as you have freight insurance, you can earn two yuan by returning goods" and "Little tricks to make money with freight insurance that you don't know" On social platforms, some people posted articles to teach people how to "take advantage of freight insurance." Some of the account IDs that posted these "teaching posts" were shown as "express delivery stations" and some were shown as e-commerce teaching bloggers.
A "teaching post" said that it is not difficult to get the benefits of freight insurance. As long as you place an order on major e-commerce platforms and click return after receiving the goods, the freight insurance will pay. If the freight insurance pays 10 yuan and the freight is only 5 yuan, you can make a steady profit of 5 yuan. The premise is to negotiate a good price with the courier company. Generally, merchants in neighboring provinces and cities and small commodities with low unit prices are selected. The self-paid freight is low and the profit is higher.
However, an employee of an e-commerce platform said that they can monitor accounts that frequently return goods, and if the number of returns exceeds a certain limit, it will be considered "malicious" and will trigger the insurance company's risk control mechanism. Subsequently, the account will be restricted from using freight insurance for online shopping.
Faced with detection by e-commerce platforms, the methods of taking advantage of freight insurance have become increasingly covert, with the development of fully automatic software, cloud warehouses, and tokens to form an industrial chain.
"We can get hundreds of orders every day, and it's been stable." said a blogger who gets free shipping insurance. Recently, the reporter consulted the blogger as a "consumer" and he recommended a software to the reporter. According to him, this software is rented from a courier company, and can generate a virtual number to place orders to avoid monitoring by e-commerce platforms. Calculated at 2 or 3 yuan per order, you can get 2,000 to 3,000 yuan a day.
Another blogger recommended several small programs for express delivery. The blogger said that the freight rate for express delivery through these small programs starts at 5 yuan within the province and outside the province. The freight price is low and you can get freight insurance. "The good ones can get tens of thousands of orders a day." The blogger said.
According to Beijing Youth Daily, some people rent warehouses to do the business of "taking advantage of freight insurance". This business is operated on a large scale, with 10,000 orders a day, earning 4 yuan of freight insurance difference for each order, making a profit of 40,000 yuan a day, 1.2 million yuan a month, and more than 10 million yuan a year, which is equal to the annual profit of a medium-sized enterprise.
The more returns, the higher the insurance premium the merchant bears
Li Le is miserable because of the "freight insurance freeloaders". Li Le runs a food e-commerce business in Inner Mongolia. He revealed that his products were rarely returned before, but since last year, his return rate has been increasing, and the freight insurance premium has also gradually increased. He then realized that he had encountered the "freight insurance freeloaders".
"At the beginning it was just one or two orders, but then it gradually evolved into dozens or even hundreds of orders." According to Li Le, these "buyers" are systematic and organized. Through automated software or plug-ins, they can quickly identify low-priced goods, place orders with one click, and then return the goods in a unified manner.
A Zhejiang merchant said that in July this year, his store also encountered people who took advantage of the freight insurance. For about half a month, the number of orders increased sharply, but most of the goods were returned immediately after arrival. A large part of these orders came from Yiwu, Zhejiang. After communicating with colleagues, he found that they also had similar experiences.
"For those who 'take advantage of the situation', if the shipping fee is 5 yuan and the shipping insurance compensation is 12 yuan, they can make a profit of 7 yuan for each return. And for us merchants, for some commodities, the shipping insurance premium for a single item may be as high as 3 yuan. If there are 1,000 returns in a month, the premium can reach 3,000 yuan. This is also a huge expense for us, which increases our operating costs for maintaining the store. If this continues, I will want to close the store." said the merchant.
The merchant said that for some categories with very low return rates, the freight insurance is less than 1 yuan, but for categories with frequent returns, the freight insurance is an average of 3 yuan. The more returns, the higher the premium. The store giving away freight insurance is equivalent to raising costs.
"Although purchasing freight insurance for consumers can help sales, if you encounter a malicious team that seeks to take advantage of customers, the operating costs that the store needs to bear will also increase," said the merchant.
Stop the "wool party"
Li Le once tried to stop the development of this problem by reporting it, but handling such orders that take advantage of freight insurance was somewhat difficult.
"Every time we handle an order like this, we need to file a complaint with the courier company and provide detailed evidence. We even need to obtain the buyer's order address, ID card and other personal information for further processing." Li Le admitted that although he had successfully stopped some "fleecing" behaviors through such a complicated procedure, faced with hundreds of malicious orders, this method of handling is time-consuming and laborious.
Li Le pointed out that those who use software or mini-programs to "take advantage of the shipping insurance" usually issue shopping instructions automatically, and often ignore the shipping details when purchasing products. In view of this characteristic, he adjusted the backend shipping template of his own online store, and set a rule that single orders of more than 20 yuan are free shipping, and less than 20 yuan require a shipping fee of 10 yuan for areas where suspected "shipping insurance" frequently appear, such as Yiwu, Zhejiang, Guangzhou, Guangdong, and Xingtai, Hebei.
Li Le explained that he mainly deals in food, and a single order of 20 yuan or more will cover the cost price, and there is no loss in free shipping. Generally, orders of 20 yuan or more are also normal orders. By setting the above shipping rules, some losses caused by order returns can be avoided.
"People who place orders manually to get free shipping insurance will generally not place an order when they see this setting. People who place orders through machines to get free shipping insurance can still make up for their losses even if they buy and then return them. However, such settings may have some impact on the return rate. As the return rate increases, the premium will also increase accordingly." said Li Le.
Li Le also revealed the changes in the e-commerce platform's freight insurance subsidy policy. For the goods in his store, the freight insurance premium for a single order was originally around 1 to 2 yuan, of which he paid 10% and the rest was shared by the platform. However, in recent years, the platform's protection of users has improved, and the freight insurance premiums that merchants need to bear have also increased accordingly. For example, the freight insurance is still 2 yuan, and merchants need to bear 80% to 90%.
Li Le said that as the number of "freight insurance freeloaders" increased, merchants began to complain and protest. Although the platform later launched a series of subsidy measures to control the merchants' burden on freight insurance to half of the total freight insurance price, compared with the previous method of bearing less than 10%, merchants still felt the burden increased.
Judicial and e-commerce platforms take action to govern
In fact, the practice of taking advantage of freight insurance has existed for many years and has become more rampant in recent years.
On December 22, 2014, the first "Internet insurance" fraud case in China was sentenced by the Wuxing District People's Court of Huzhou City, Zhejiang Province. The defendant defrauded Huatai Property Insurance of more than 200,000 yuan in insurance compensation by registering an online store on Taobao.com, using false shopping and freight insurance, and fabricating false logistics information. In the end, the "professional insurance fraudster" was sentenced to 6 years and 6 months in prison for insurance fraud and fined.
In April this year, the Xintian County Public Security Bureau of Yongzhou City, Hunan Province received a report from an e-commerce platform that someone had defrauded freight insurance by falsely returning goods for shopping. When the Xintian County Public Security Bureau arrested the criminal gang, it seized 14 computers and printers, more than 300 mobile phones, more than 400 mobile phone cards, and more than 90 business licenses for registering online stores without sources of goods. Since the second half of 2023, this gang has divided the work and cooperated to defraud more than 700,000 yuan in freight insurance by placing false orders online and refusing to accept goods with freight insurance after purchasing them.
Yan Xiaoling, chief lawyer at Beijing Shengcai Law Firm, said that intentionally fabricating transaction facts, creating the illusion of return, and using the difference between the return freight insurance compensation amount and the actual freight to defraud insurance premiums for profit are acts of insurance fraud under Article 198 of the Criminal Law. This kind of insurance fraud needs to be investigated for legal responsibility based on the amount involved. Generally, if the amount involved by an individual reaches 10,000 yuan and the amount involved by a gang reaches 50,000 yuan, it reaches the standard for filing a case with a large amount and will be subject to criminal liability. This kind of freight insurance fraud uses the freight insurance loopholes of e-commerce platforms to make improper profits, which may damage the interests of merchants, insurance companies, and e-commerce platforms, and also undermine fair competition in the e-commerce market.
It is reported that Taobao and Tmall have held multiple rounds of consultations with their partners on the issue of freight insurance, and some policies are expected to be put into trial operation in September this year. After this round of strategic adjustments, Taobao and Tmall merchants are expected to receive more subsidies related to freight insurance.
Taobao insiders revealed that Taobao Tmall had previously teamed up with its partners and the police to focus on cracking down on gangs committing insurance fraud in other regions such as Maoming, Guangdong and Pingxiang, Jiangxi. The suspect in the Jiangxi case has already been arrested and a case has been filed in Guangdong.
Wang Guojun, professor at the School of Insurance at the University of International Business and Economics, said that the only correct way to solve the problem of "black and gray industries" related to freight insurance fraud is to use technology.
Wang Guojun suggested that, first, risk assessment and pricing should be conducted based on richer and more accurate data, and the pricing model should be optimized. For high-quality consumers with lower return rates, lower premium discounts can be provided, while for consumers with higher return risks, premiums should be appropriately increased. Second, an anti-fraud monitoring system should be established, and insurance companies should share data with e-commerce platforms; third, reasonable claim conditions and amounts should be set to avoid imbalance of interests caused by excessive compensation. For consumers who frequently return goods, the number of claims should be limited or the amount of claims should be reduced within a certain period of time; fourth, a variety of freight insurance products should be developed, and freight insurance products for specific commodity categories or specific time periods should be launched.
Source: China Economic Net
