That’s the problem with warranty abuse. It doesn’t show up as something obvious like a stolen card or a hacked account.
Instead, it slips through as everyday claims: a product marked “defective,” a receipt that looks fine, or a return that seems normal until you look closer.
As Benjamin Franklin said, “Beware of little expenses; a small leak will sink a great ship.”
Maybe that sounds like an exaggeration in the context of warranties. But look at the numbers, and the leak is real and massive.
And you may ask,
Well, yes! The stakes are high. Not long ago, one mid-sized DTC brand selling wireless earbuds thought that its warranty process was airtight with detailed SOPs and clear assigned responsibilities. Customers sent in receipts, filled out claim forms, and replacements went out without much friction.
Then an internal review flagged inconsistencies. About 15% of the claims didn’t match any real order. The same serial numbers kept showing up across multiple accounts. A few repeat customers managed to squeeze out several replacements from a single order ID. And those Amazon receipts? Just screenshots, lightly edited to pass as proof.
Individually, each case was worth about $80–$100. But in one quarter alone, the losses topped $40,000, not counting the hours support wasted chasing bad claims.
What looked like routine warranty requests was, in reality, a costly pattern of abuse hiding in plain sight.
Even they aren’t immune. A giant global manufacturer uncovered $11 million in fraudulent claims in just nine months, proof that fraud can slip through even the most controlled systems.
The company responded by embedding structured fraud detection into its operations. Over the following five years, those measures prevented false claims and delivered more than $67 million in savings.
And if companies with humongous resources and controls still uncover millions in losses, it shows how easily fraud can slip by in any business.
Warranty fraud isn’t only about lost revenue. It ties up support teams, slows down real claims, and weakens the trust that makes customers choose protection in the first place.
So, the real risk isn’t whether fraud exists. It’s- how easily it blends into business as usual. The challenge for merchants is spotting those hidden edge cases and knowing how to fight back.
Let’s take a clear look at it,
What it is:
A shopper buys once, but files multiple claims under the same order or serial number, squeezing out replacement after replacement.
Let's say
A shopper buys a coffee machine, claims it “stopped working,” and gets a new one. A month later, they file again with some other story.
By the third or fourth round, you realize they’re not unlucky, they’re gaming the system. And those extra machines? They don’t stay in the kitchen. They end up flipped online.
How to spot it:
Some warranty claims are genuine mishaps. Others are damages that look like accidents but happen a little too neatly to be chance.
Let’s say:
A customer sends in a warranty claim for a blender with a cracked jar, saying it “fell while cleaning.” Weeks later, another claim arrives, this time their air fryer was “dropped while moving it.”
When the same buyer keeps reporting clumsy slips across different products, that’s when you have to stop and think about what’s really going on.
How to spot it:
Fraudsters submit claims with fake receipts, doctored packing slips, or order numbers that never existed.
And you know, some fraud-as-a-service outfits even run on a subscription model, giving buyers access to realistic receipt templates for major retailers for as little as €16.99 a month. That makes fake paperwork both cheap and scalable.
Let’s say:
A warranty claim lands in your inbox with a polished receipt attached. The logo, the taxes, even the timestamps look fine. Support approves it, a replacement goes out but when finance checks, that order ID never existed. The whole thing was built on paper smoke.
How to spot it:
What it is:
Some warranty claims describe small or surface-level issues as if the product no longer works. Industry research shows that overstating damage is a common tactic, leading to unnecessary replacements or refunds even when the product is still functional.
To be clearer-
A customer submits a claim for a treadmill, reporting the console as “damaged and unusable.” On review, the issue is only a crack in the plastic casing. The treadmill still runs properly, but by overstating the problem, the claim gets treated as a full product failure.
How to spot it:
Some warranty claims require the product to be shipped back before a replacement goes out. On paper everything looks normal; the return ID is valid, the package scans into your system but when it arrives, the box is empty or filled with random junk.
On the Amazon Seller Central forum, a UK seller mentioned that he approved a return for an item worth £680. The package came back on time with the right return ID, but inside were nothing but water bottles.
Cases like this highlight how easy it is for empty-box scams to slip through when systems focus on tracking, not contents.
How to spot it:
What it is:
Liquidation stock often includes returned, open-box, or excess goods. Some resellers don’t just flip these items on marketplaces, they use the serial numbers to file warranty claims as if the products were brand new.
This tactic is common in electronics and appliances, where serial numbers remain active in OEM systems.
Did you know?
A regional electronics brand started seeing a spike in warranty claims for its 55-inch smart TVs. On the surface, everything checked out; valid serials, standard receipts. But finance flagged something odd: half the claims came from ZIP codes where they hadn’t sold a single unit directly.
A closer look revealed the TVs were traced back to liquidation auctions from big-box returns. Fraudsters scooped them up at $120 a piece, filed claims as “defective,” and pocketed brand-new replacements worth $600+.
How to spot it:
What it is:
Not every bad claim comes from shoppers. Sometimes the leak is inside the system like dealers, repair shops, or service centers padding the bill. They’ll report repairs that never happened, swap cheap parts while billing for premium ones, or even collude with customers to split the payout.
The Charlotte case
Back in North Carolina, a repair business ran a scheme that looked squeaky clean on the surface. Work orders were filed, warranty claims logged, parts listed as “replaced.” But in reality? Many of those repairs never took place.
Over a couple of years, the company quietly submitted hundreds of fraudulent claims to a major electronics brand. Each one slipped through as routine until the costs piled too high. When investigators pulled the thread, they uncovered $576,000 in false warranty work.
How to spot it:
Fitbit’s account breach
A few years back, Fitbit users started reporting something strange: warranty claims were being filed under their accounts but not by them. Fraudsters had gotten hold of stolen logins (often through password dumps) and used them to request replacement devices.
The playbook was simple:
Fitbit ended up sending out thousands of devices before flagging the abuse. For the brand, it wasn’t just the lost inventory it was the hit to trust, as genuine customers suddenly discovered their accounts were compromised and tied to fraudulent claims.
How to spot it:
Merchants don’t have to build fraud defenses from scratch anymore. The tools already exist the key is using them in layers, so each one closes a different gap.
So finally,
Here’s the tension every merchant feels: warranties are both a magnet for abuse and one of the most reliable levers for growth.
On one side, fraud is real, and no industry is immune.
But the other side is just as true: customers buy more when they know their purchase is backed. Clear coverage for accidents, breakdowns, or even shipping issues gives them the confidence to click “buy” and come back again. That trust lifts order value, conversion, and loyalty.
The balance looks like this:
It’s not a contradiction. It’s two sides of the same play: cut out the leaks, then use warranties to grow.
That’s how we at SureBright help you. An AI-powered platform that makes it simple to offer extended coverage, accidental damage plans, and shipping insurance, giving shoppers' peace of mind and merchants a new stream of high-margin revenue.
👉 See how SureBright turns warranties into growth, reach out now.
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