Online shopping

Mass Theft: Online Shopping Fraud and the Role of Social Media

From the Better Business Bureau of Central Virginia:

A shift to online shopping during COVID-19, a global supply chain crisis and a booming economy have all created a recipe for a frantic holiday shopping season – a season where online shopping fraud line poses a huge risk to consumers. Online shopping scams have exploded during the pandemic and social media ads are playing a key role in the growing problem, a new Better Business Bureau® (BBB ®) study finds.

The in-depth study – Mass Theft: Online Shopping Fraud and the Role of Social Media – finds that the pandemic, along with lax social commerce shopping platforms, has opened the door for scammers in China to steal from desperate online shoppers. Read the full study.

Online shopping fraud has been on the rise for several years, but according to BBB research, it has increased significantly during the pandemic as more and more people have shopped online. A BBB survey found that 29% of people were shopping online before COVID-19, and that figure rose to 37% by the end of 2020. In turn, BBB Scam Tracker reports that online shopping scams have nearly doubled from 2019 to 2020, and the BBB Institute for Marketplace Trust named online shopping scams the riskiest scam of 2020, releasing special reports on this growing fraud in 2020 and 2021. Complaints to the Federal Trade Commission (FTC) online shopping more than doubled in 2020 and continues to grow throughout 2021. , online shopping has more BBB “F” rated businesses than any other type of business .

Most of the online fraud reports reviewed involve responding to online advertisements on Facebook and Instagram. After placing an order, victims report receiving nothing or receiving counterfeit or less than advertised items. Scammers often take product photos or a landing page of legitimate businesses, post them to Facebook and Instagram, and take online orders on the websites they create. This leads to complaints against legitimate businesses, as victims often don’t realize they lost their money to a scammer rather than the business the scammer was describing.

Counterfeit and pirated products, which are being investigated by the BBB in 2019, are commonplace in online shopping scams. Other reports of online fraud include sites selling nonexistent pets, vehicle shipping programs, and misleading free trial offers.

A large number of online shopping complaints registered with BBB and reported to BBB Scam Tracker can be traced to Facebook and its subsidiary, Instagram.

BBB found that it was common for people who were not actively researching a product, but losing money in the transaction, to start with Facebook or Instagram 70% of the time. Fraudsters understand how Facebook targets buyers and have developed strategies to reach those who may be interested in purchasing their fake products. Many victims and legitimate businesses believe that Facebook and Instagram should do more to prevent this widespread fraud. A recent federal class action lawsuit against Facebook alleges that it is complicit in fraudulent sales and fails to follow its own policies to deal with them.

Although credit cards are still the most common method of payment in online scams, online scammers are increasingly asking for payment through PayPal. Credit cards and PayPal offer a degree of buyer protection by allowing buyers to dispute charges, although scam victims have reported difficulty obtaining refunds through PayPal. Additionally, scammers employ various tactics to circumvent the dispute process, including exorbitant shipping charges to return items for a refund, providing false shipping tracking numbers, and delaying the process in order to run out of time to a claim.

Online shopping scams come from a variety of actors. Counterfeit product operations and those selling products online that don’t deliver, or send items significantly different than what was described, have been traced to China-based companies or organized gangs. While China has blocked its people from using Facebook’s social media platform in China, some companies located in the country are trafficking counterfeit products and spending billions to advertise on the site. Many pet scams are mainly operated by gangs from Cameroon. The vehicle scams have been traced to gangs from Romania and the free trial offer scams have been found to be primarily carried out by people in the United States and Canada.

Law enforcement actions have been mostly limited to scammers and their accomplices operating in the United States and Canada. In 2020, US Customs seized $1.3 billion in counterfeit goods, arrested 203 people and secured 98 convictions.

The BBB study makes the following consumer protection recommendations:

  • Facebook should do more to enforce its policies for third-party sellers.
  • BBB is urging credit card payment processors to step up their efforts to crack down on those who provide merchant accounts to sellers who engage in fraud.
  • US consumers would benefit from a program to help victims of counterfeiting with chargebacks like the one implemented in Canada by the Canadian Anti-Fraud Center (CAFC). Such a program can help identify rogue credit card merchant accounts, fake websites, and counterfeit product origin points.
  • Greater regulatory scrutiny is needed over companies that use websites to market products from China but deliver counterfeit products, items that don’t match the advertisement, or nothing at all.

Tips to avoid online shopping scams:

  • Check the website before making a purchase:
    • To verify BBB.org to check a company’s rating and BBB accreditation status. Some scammers may copy the BBB seal. If it is real, clicking on the seal will lead to the company’s BBB profile.
    • Scamadviser.com can often tell you how long a website has been in business. Scammers regularly create and shut down websites, so a site that has only worked for a short time could set off red flags.
    • Do an Internet search with the name of the company and the word “scam”. This can locate other complaints about the site.
  • Careful examinations: Scammers frequently post positive reviews on their websites, either copied from honest sites or created by scammers. A trusted resource for verifying reviews is at BBB.org. Be aware, sSome review websites claim to be independent but are funded by scammers. Look at the bad reviews first. These are more likely to be real and can help identify scams.
  • Find contact information: Be careful if the site doesn’t have a US or Canadian phone number, or uses a Gmail or Yahoo work email address.
  • Keep track of what you ordered: Note the website where you ordered goods. Take a screenshot of the item ordered, in case the website goes down or you receive a different item than advertised.
  • Pay by credit card: Credit cards often offer better protection against fraud than other payment methods.

Report online shopping fraud to:

  • Better Business Bureau – lodge a complaint with BBB.org or report a scam to BBB.org/scamtracker.
  • Federal Trade Commission (FTC) – lodge a complaint with reportfraud.ftc.gov or call 877-FTC-Help.
  • National Intellectual Property Rights Coordination Center – report infringements of intellectual property and counterfeiting iprcenter.gov/referral/view.
  • Internet Crime Complaint Entry (IC3) – lodge a complaint with ic3.gov/complaint.
  • Facebook – report ads that violate Facebook policies by clicking the *** next to an ad to access it facebook.com/business/help.
  • instagram – report copyright infringement or other policy violations to help.instagram.com.
  • Amazon – report suspicious activity and web pages to amazon.com.
  • google – report scams to google.com.
  • PayPal – call (888) 221-1161 to speak with a live person instead of using their automated system if you receive an item that is not as advertised.
  • Your credit card company – Call the phone number on the back of the credit card to report fraud and request your money.

About the BBB serving Central Virginia:

BBB serving Central Virginia serves Richmond, the Tri-Cities, Charlottesville and Fredericksburg, as well as 42 surrounding counties from Fauquier to Mecklenburg and Northumberland to Amherst. The non-profit organization was established in 1954 to promote responsible, honest and ethical business practices and to promote customer confidence through corporate self-regulation. BBB’s core services include business profiles, dispute resolution, truthful advertising, scam warnings, consumer and business education, and charity review.