In today's booming electrical platforms, easy online shopping has become almost “just needed” by most people. The return freight cost insurance (hereinafter referred to as “freight insurance”) was originally designed to ease the transportation disputes that arise in connection with net purchases and to enhance consumer shopping experience, but was targeted and exploited by some outlaws as a “law of fortune”。
In recent days, journalists have observed that not only have the words “freight insurance has become a business”, but there have also been numerous cases of fraud in the administration of freight insurance, in which suspects have been sentenced in accordance with the law. Why would freight risk get caught by someone else? How can this insurance instrument, which safeguards the interests of consumers and businesses, be given its due role? The financial times journalist investigated the incident。
“business” for professional refunders
"recently, i found some irregularities in the store." ms. Lee, an electrician in shandong, told the financial times reporter that a buyer had bought a sunscreen mask of five colours in five singles, and i sent a message asking for no response. Immediately upon arrival, the other party applied to return the goods, all of which were sent back on a separate order, and apparently not even the package was opened. I felt a problem at the time, and then i looked and found that each shipment risk would cost him $11 and 5 would cost him $55. In some areas, however, couriers may cost $1 or $2, and this buy-off nets the difference of several dozen dollars。
It was found in the interview that ms. Lee's experience was not an example and that many vendors had recently complained about their experiences with freight charges for malicious return. A large number of unusual refunds have led to the drop in the turnover of small-profit shops。
Many people were surprised and puzzled when they first heard that they earned their living on freight insurance. “we send a single package for $8 or $10, and we don’t have a lot of insurance on freight. Why would anyone do so much for this?” consumer questions。
In fact, while targeting this price differential to justify the immorality of wool and the time and effort it takes, in reality, there are not a few who are trying, and they tend to struggle with scale and chainwork。
First of all, it is necessary to work with a familiar courier company. Journalists have found that there are a number of strategies on some web platforms to teach people how to “freight their wool”. For example, a private logistics company operator wrote in his poster: "there's a way to get freight back! If the goods you buy are subject to freight risk, and you don't want the return of the “take-in-the-door” on the commodity page, the right thing is to choose “take-back” and then order from us. If the freight cost is $15, we'll only have $4 for the delivery, and the remaining $11 is all earned! With the collaboration of the express delivery company and the wool party, the “business” that defrauds freight risk has largely become a reality. Of course, the delivery company is divided. According to a logistics company owner, the higher the freight risk, the higher the fees charged to buyers and the greater the difference that can be earned by both sides。
Second, in order to make more money in order to be able to scale up operations, some “professional refunders” even rented warehouses. Following previous reports that the two merchants were outraged by the risk of being fraudulently transported, they came to the door by address and found that the outlaws had rented a whole warehouse to store goods awaiting shipment. If they buy 10,000 a day, they can earn 40,000 a day, up to 1. 2 million a month, or millions a year, equivalent to the annual profits of a medium-sized enterprise, at a cost of $4. 0 million per day。
Why was the freight risk drilled
Refusal cost insurance is the insurance premium paid to the insurer by the buyer or seller in a network shopping and the insurer is contractually liable for the one-way return of the shipment in the event of its return. The insurance was initially introduced by cwai in 2010 and has since been followed by a number of insurance companies, such as the insurance policy, the national life insurance policy and the public security online. According to the annual report 2023, in 2023, the company's refund cost insurance service revenue was $6,468 million, an increase of over 30 per cent over 2022。
For businesses, freight insurance should have been optional. In june this year, however, the founder of a female brand published an article directly pointing to the fact that, in an effort to attract consumers, an electric power platform gradually made refunds mandatory, boosting the return rate, creating a large number of invalid orders and significantly increasing the business pressure。
Many vendors informed journalists that, in the past, the platform had undertaken intensive activities and was free to choose whether to provide freight insurance. However, as services become more “rolled”, some of the electrician platforms begin to impose a vendor-afflicted freight risk, a threshold that can be applied to day-to-day activities, in addition to the traditional surge。
The founders of the above-mentioned women's brand made a rough accounting to the financial times journalists: a return order in the garment industry, at a cost of about $15 without any income, is equivalent to the commercial's advertising fees, and the packaging materials, couriers, and the inputs of the express delivery fees are directly floating. If the return was conservatively calculated at 40 per cent of the value of $10 million in sales and $200 per passenger unit, the cost of the loss would be over $300,000 and the associated cost would be over $1 million per month。
In terms of premiums, journalists are aware that the return of goods is linked to the premiums paid by the merchants. According to information from the internet-based insurance agent platform antsnet, the insurance premiums required to purchase freight insurance are based on transactions and refunds within three months of the date of purchase. In other words, the higher the return rate, the higher the premium to be paid by the merchant. It has been suggested by traders that the cost of freight insurance has risen from 30 or 40 cents per unit in the past to more than $1 as a result of the increase in false returns。
Is there a loophole in product design with focus on freight risk and in the management model of the electrician platform, which allows the safety person to take advantage of it
“there are indeed certain deficiencies in the design of retrofit-cost insurance products.” the vice-president of the institute of agricultural insurance of the capital university of economics and trade, jean li, told the financial times journalist that the return of freight charges was a property insurance product and that the principle of compensation for loss should theoretically be followed, and the insured should not receive a higher amount than the actual loss. In practice, however, in order to be simple to operate, refunds of freight costs are often designed as a simple flat-rate insurance product, which provides an opportunity for “sweety wool” for people with bad intentions。
The assistant royal army, professor and dean of the institute of insurance of the university of foreign economics and trade, considers that the authenticity of the return transactions is not strictly checked by some electric power stations and insurance companies or that there is insufficient monitoring of key indicators such as the frequency of the return. Their technical means of protection against insurance fraud are far from keeping pace with information technology, and their failure to effectively identify and deter wrongdoing at the outset of a transaction results in irreparable damage to businesses。
“i have also complained to the platform before on the grounds of malicious refunds and fraudulent freight insurance, and the probability of 80 % and 90 % can be established, and, while it is impossible to avoid a rise in freight insurance premiums, it can save the first return rate.” ms. Lee told the press。
It was indicated that the platform would base its determination on data such as the number of sellers returning goods, the rate of return, etc., and that the determination of irregularities would limit its authority and would be seriously sealed. These measures, however, do not solve the fundamental problem, the cost of registering a new user is very low, and the wool parties continue to register new electric bank accounts using wholesale numbers, continuing to cover freight costs。
Criminal liability for fraud
As a result of increased freight fraud, many businesses have begun to take up legal weapons to defend their rights and interests, deterring the outlaws。
In recent days, a case of insurance fraud handled by the investigation brigade of the public security department of the nueva yu city, jiangxi province, has been tried in the people's court. The case shows that, at the end of 2021, the head of a shopping platform found an abnormal rate of freight risk and came to the squad to report it。
At the end of 2020, the suspect, liao tsiao, was found, through the qqq group, to have been able to register a shivering shop to open freight insurance, fabricate trade and logistics orders and cheat freight insurance. Between august and november 2021, the suspect, liao, purchased over 20 registered shivering shops around the site, insured against the freight costs of an insurance company, and then purchased over 100 mobile phone-number registered shivering bill accounts, creating a large number of insurance accidents through fraudulent transactions and bulk operations of refunds, resulting in the insurance company receiving over $300,000 in refunds. At present, the suspect, liao chiu, has been sentenced by law to imprisonment and a fine。
There are numerous cases of freight insurance fraud similar to those mentioned above. In mid-april this year, the public security department of yanta county, yongzhou, hunan province, received a call from an electrician platform claiming that freight charges had been fraudulently taken by way of fraudulent purchases to return goods. Three members of criminal gangs, jiang yi, ray and others, were arrested by the shinda county public security bureau. At the scene of the arrest, 14 computers and printers, more than 300 mobile phones, more than 400 mobile card cards, and more than 90 licences for registration of non-source network stores were seized. Since the second half of 2023, some of the suspects in chiang have been working together in order to obtain more than $700,000 in freight charges by means of false online issuances and refusals to receive goods on freight risk。
According to yon mona, a member of the commissary for consumer defence of the city of fatty and a lawyer at anhui university, some buyers specialize in the purchase of products with freight risk, apply for return of goods upon receipt, negotiate prices in advance with familiar courier companies, and earn a difference in the payment of freight far below the amount paid for freight risk. Such actions run counter to the original intent of the electrical platform to provide freight insurance and are not only immoral but also suspected of violating the law。
“in terms of civil liability, under the insurance law of the people's republic of china, the insurer has the right to terminate an insurance contract without liability for compensation or payment of insurance premiums, if the insurance accident has been caused intentionally. Thus, the buyer's deliberate purchase and return of the goods for the purpose of earning the difference in freight costs is the deliberate creation of an insurance accident and the insurance company has the right to refuse to pay compensation.” yoon mona's analysis notes。
In terms of criminal liability, the act is also suspected of insurance fraud and falls under the fourth of the offences of insurance fraud provided for in the criminal code of the people's republic of china. The buyer not only directly involved is liable, but if the express delivery company, knowing that the buyer is engaged in such an act, continues to work in depth with such a buyer and to provide a discount on the delivery fee, and earns a freight risk difference, the courier company is also liable for insurance fraud and joint offences with the buyer。
Technological empowerment mechanisms are more rational
In addition to legal weapons being one of the effective means of punishing those who profit from illegal activities, consideration needs to be given to balancing the interests of merchants and consumers and preventing the root causes of freight-forward fraud。
Freight insurance was so strongly objected to by the merchants because compulsory insurance had led to a high rate of return, which affected their operating profits. But does that mean that freight insurance should not be encouraged to insure? In the absence of freight insurance, how can the majority of consumers' internet purchases be guaranteed
In reality, despite the losses suffered by merchants suffering from freight costs, consumers are equally vulnerable at the other end of the scale. Internet shopping, with no physical means for buyers, is based on photos or videos. As a result, customers often ask questions: if it wasn't for the usual trader, who'd have spent the rest of the day trying to get the goods back. In the area of sales of women's clothing, where contradictions are particularly acute, the problem of the mismatch between this type of buyer and seller is even more evident. Some consumers can't help but say, "buy it, buy it, and never get the one on the anchor."
How do we balance the two ends of the scale? In the view of industry experts, freight risk insurance was introduced with a view to reducing frictions in return transactions and improving consumer shopping experience, and should be a “plus-subsidiary” of web-based purchasing services. The central issue that needs to be addressed now is how to improve the mechanism for the reimbursement of freight costs and how to strengthen the management of the platform so that freight costs can function effectively。
According to li, improvements can be made in two ways in order to reduce the risk of fraud and reduce the burden on businesses。
First, to adjust the terms of the simple flat-rate reimbursement of the refunded freight cost insurance and to establish the standard of payment by region. In keeping with the change in rules, the actual monitoring of the movement of the express freight market with artificial intelligence and large data technology has resulted in an amount of compensation substantially equivalent to the actual freight costs。
Second, the merchant provides the buyer with a list of co-operative courier companies in advance of the provision of free return services, receives the returned goods in the form of freight payments, while the return of freight charges is insured by the merchant as the insured person and no longer as the insured person. In such a way as to complement the tariff dynamic adjustment mechanism, buyers would no longer have the incentive to use freight to hedge wool. In addition, if the buyer maliciously returns the goods through an insurance claim and is suspected of having deliberately caused an insurance accident, the electrician platform should strengthen its monitoring of such acts and establish a communication mechanism with insurance companies to combat them。
“the breakthrough in solving the problem of deception lies in technological upgrading.” the royal army has indicated that cooperation between insurance companies and electrician platforms should be strengthened, anti-fraud monitoring systems should be established, risk assessment models should be optimized, large data and artificial intelligence techniques should be used to assess more accurately the level of risk per transaction, including the buyer's historical trading behaviour, frequency of refunds, etc. At the same time, the process of settlement of claims is optimized, allowing for an appropriate increase in the input of manual review and in-depth verification of suspicious claims。
With regard to the design of freight insurance products, the royal army recommends that more reasonable compensation conditions and levels be established to avoid the imbalance of interests resulting from overcompensation, and that consumers who return goods frequently be limited in their number or reduced in their amount for a limited period of time. In addition, diversified freight risk products could be developed, such as products that are targeted at specific commodity categories or specific internet buy time periods。
“the financial supervision authorities are also required to cooperate with the relevant authorities to clearly define the violations associated with freight insurance and the corresponding penalties, and to intensify the investigation and prosecution of violations in the area of freight insurance in order to deter them.” according to the royal army。
In the case of freight insurance fraud, insurance companies have explored targeted measures。
The financial times reporter learned from a financial insurance company that it had built a systematic risk control system for “business transaction data dimension + buyer transaction dimension + order time dimension + delivery city” based on the operational characteristics of freight insurance, developed a multi-dimensional data analysis model for trade orders, was able to identify unusual orders with precision and in a timely manner, conducted comprehensive data analysis in science and built a risk barrier for internet insurance。
The relevant director of the company informed the journalist that “if the company's backwind control system discovers data on abnormal settlements, emergency plans will be activated immediately, close communication with the electrician platform will be maintained, critical information will be obtained quickly, operational data will be collated in conjunction with the platform and reported to the public security authorities as soon as necessary”
