Over the course of one year, the Federal Trade Commission (FTC) received 4.7 million reports of online shopping scams, or around 12,876 scam reports a day. These scams cost consumers around $246 million, and though not everyone who reported the scams lost money, over a third (34%) did.
Online shopping scams have become a popular method of defrauding consumers. The good news is, once you understand what they are and how they work, you can avoid them by looking out for red flags.
Online shopping scams involve a thief setting up a fake website or ad to trick someone into paying for a supposed product. In this way, they pretend to be a legitimate online seller, gaining the confidence of buyers, but then never delivering anything in return for their money.
To execute an online shopping scam, the scammer first sets up a website that looks at least somewhat authentic. They can do this quickly using free or inexpensive templates you can buy online.
To make the site look as real as possible, they may steal logos and other branding material and choose a name for their site that looks or sounds like that of a real retailer.
The scammer will then find images of products they want to “sell.” Sometimes, the thief will opt for luxury items, such as jewelry, high-end clothing, watches, or other items that typically come with a premium price tag.
The success rate of online shopping scams has been on the rise. The percentage of people who actually lost money to online scammers rose over 47% between 2019 and 2020.
To entice their victims into making quick purchases, the scammer may offer the items for a significant discount in the hopes that a buyer won’t be able to resist such a good deal.
The scammer’s site may only be up for a short period of time and then disappear. In some cases, they may set up a fake social media site, scam some unsuspecting users, and then take it down soon after.
The ultimate goal of online scammers is to steal people’s money, and to ensure they don’t get caught in the process, they tend to only accept certain kinds of payments.
For payment, the scammer may ask victims to pay using:
By only accepting these forms of payment, it is harder for the target to get their money back or for authorities to track down the scammer.
In many cases, it’s relatively easy to spot online shopping scams, particularly if you know what to look out for.
If you see a product offered at a price that seems too good to be true, or if it features incredible benefits or specs, it may be a scam. Also, lookout for spelling and grammatical errors in the listing, this is one of the easiest red flags to spot.
In some cases, the site you're looking to buy goods from will have little to no information about how they will deliver the product. It'll also lack a return or refund policy on its websites which can point to a fake website or a scam.
Anytime an online seller requests immediate payment through a wire service, transfer of funds, or gift cards, you should be on the lookout.
If the product looks like it could be a fake, try downloading the photos and then use Google’s reverse image search to see if the pictures are from another site. It’s a warning sign if a third-party seller doesn't include real photos of the actual item being sold.
Be weary of sellers who refuse or can't meet you in person to either show you the product or make the transaction physically. Typically, these are red flags that you may be getting scammed.
Typically, counterfeit items come from international locations such as China which makes shipping times extremely long. This is a telltale sign of a fake product when dealing with U.S. retailers.
There are a number of ways scammers can trick online shoppers into giving them their money, so it’s always a good idea to be extra cautious when doing any financial transactions online. However, these are some of the most common ways scammers can trick you online.
When shopping online, it’s natural to want to look for discount or promo codes to decrease your total. In these scenarios, you’ll see a site offering a discount code that is hidden until you fill out a survey.
This type of online shopping scam involves scammers using fake promotions offering free or discounted gift cards. Often, they’ll say they require your banking information in order to receive the gift card or more personal information that is necessary to secure a gift card.
Oftentimes, scammers will offer luxury items with too-good-to-be-true prices or at the same price as legitimate retailers. But they’ll only accept certain forms of payment and then, once the buyer receives the item, they’ll notice it’s a fake. Or they’ll never get the item at all.
This type of online scam involves a scammer creating a fake social media account. They then set up a store on that social media platform, stealing pictures of products online. When the buyer expresses interest in a product, the seller demands payment through a wire transfer, prepaid card, or money order.
After stealing the money, the seller may pretend there are issues with shipping the item, blaming any delays on a shipping company or their fulfillment process. Once they’ve scammed enough people, they shut down the site.
The brands sold will vary, but they often include high-end or luxury items that people may have a hard time finding at a good price, such as computers, jewelry, sneakers, shoes, and clothing brands.
At times, the scammer will offer seasonal items that buyers may want to grab quickly before a season or holiday ends. These may include brands of Christmas, Halloween, Thanksgiving, or Valentine’s Day gifts.
To beat scams online, there are a few precautions and measures you can take before and after purchasing any items online:
First, if you have an issue when shopping online, try contacting the retailer or seller directly. They may have a legitimate reason for the problem.
If that doesn’t work and you think you’ve fallen victim a scam, you should immediately report it to the FTC. You should also file a report with your state’s attorney general, as well as the consumer protection agency.
These types of scams may also result in identity theft because scammers can try to steal your contact information, credit card info, or other personal data. Change your passwords immediately, especially if you use your login credentials for many sites.
Lastly, monitor your credit card and banking accounts in case of any fraudulent purchases in the coming months. The scammers may wait to make any major purchases until things have blown over.
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