Retailers across the U.S. are taking a stand against Fake Tracking ID (FTID) fraud, a growing form of return fraud that has already cost businesses millions. The recent indictment of Matthew Frederic Bergwall in Tampa, Florida, highlights the scale and sophistication of these operations, as fraudsters use manipulated tracking data to deceive retailers into issuing refunds without ever receiving returned merchandise.
With losses mounting, companies are increasingly turning to AI fraud prevention tools to detect fraudulent return patterns before refunds are processed. As Bergwall’s case demonstrates, fraud networks have refined their methods, requiring businesses to adopt advanced fraud detection strategies to stay ahead.
The Case of Matthew Bergwall and FTID Fraud
On April 23, 2024, United States Attorney Roger B. Handberg announced the unsealing of an indictment against Matthew Frederic Bergwall (21, Coral Gables), also known as “MXB.” Bergwall was charged with conspiracy to commit computer and mail fraud, as well as substantive mail fraud. If convicted, he faces a maximum sentence of 45 years in federal prison.
According to the indictment, between December 2021 and April 2022, Bergwall and his co-conspirators gained unauthorized access to internal employee accounts at a multi-national shipping and supply chain management company (referred to as the Victim Company). Using these compromised accounts, they entered fraudulent tracking information for merchandise shipped by the Victim Company, allowing them to claim full refunds from retailers while keeping the products.
The fraud scheme targeted high-end electronics, luxury goods, and designer fashion, causing nearly 10,000 fraudulent returns and resulting in at least $3.5 million in losses to victim-retailers. Some of the fraudulent transactions orchestrated by Bergwall included:
- $41,000 Rolex President Day-Date watch
- $600 TeamGee H2O Electric Skateboard
- $350 Samsung 43-inch Smart UHD TV
- $80 Reebok shoes
The Growing Problem of FTID Fraud
FTID fraud has rapidly evolved from isolated cases to an organized crime industry, with fraudsters selling their refunding services online. These schemes exploit loopholes in retailers’ automated return systems, making it difficult for companies to differentiate legitimate refunds from fraudulent ones.
How FTID Fraud Works:
- Fraudsters purchase high-value merchandise from online retailers.
- They alter tracking information so that return shipments falsely show as “delivered.”
- Retailers process refunds automatically based on the tracking data, believing the items have been returned.
- The fraudsters retain the products, often reselling them for profit.
This case highlights how criminal groups use insider access, stolen credentials, and advanced tracking manipulationto exploit retailers at scale.
How Retailers Are Fighting Back with AI Fraud Prevention
In response to the increasing threat of FTID fraud, major retailers are turning to AI-driven fraud detection tools that can identify suspicious refund requests and fraudulent tracking data before refunds are issued.
1. AI-Powered Return Fraud Detection
Companies are integrating AI fraud prevention tools like 914AI, which analyze:
- Return behavior anomalies (e.g., excessive refund requests from the same customer or location).
- Shipping inconsistencies by cross-checking carrier tracking with warehouse records.
- Machine learning algorithms to detect fraudulent return trends in real time.
2. Enhanced Verification Protocols
- Physical inspections for high-value returns before issuing refunds.
- Two-factor authentication for return requests on expensive items.
- Improved coordination between warehouses and online refund teams to validate received shipments.
3. Stronger Cybersecurity Measures
- Retailers are securing their internal tracking systems to prevent unauthorized access like Bergwall’s scheme.
- Companies are monitoring dark web forums and Telegram groups, where refund fraud tactics are openly shared.
Law Enforcement Crackdown on Refund Fraud
The Bergwall indictment is part of a larger crackdown on refund fraud rings. This case was investigated by Homeland Security Investigations (HSI) Tampa, with support from HSI Miami. Assistant U.S. Attorney Carlton C. Gammons is leading the prosecution.
Legal Consequences of FTID Fraud:
- Federal prison sentences for convicted fraudsters.
- Asset forfeitures equal to the proceeds of fraudulent activities.
- Increased retailer collaboration with law enforcement to track down organized fraud groups.
Conclusion
The indictment of Matthew Bergwall serves as a wake-up call for retailers—FTID fraud is not just an isolated crime, but a large-scale organized operation. With fraudsters refining their methods, AI fraud prevention is no longer optional—it’s a necessity.
By integrating AI-driven fraud detection, enhancing verification protocols, and working closely with law enforcement, businesses can effectively combat refund fraud while maintaining customer trust.
As retailers adopt more advanced fraud prevention strategies, they will be better equipped to detect, prevent, and shut down refund scams before they cause financial devastation.
By Jason Mitchell
Published: April 23, 2024
