Online Shopping In Depth

United States Online Shopping Scam Statistics 2020


$246 million lost
352k fraud reports

70% of total losses

Source: 2019-20 Consumer Sentinel Report

Sections on this page
  1. What Are Online Shopping Scams?
  2. How Do Online Shopping Scams Work?
  3. What Kinds of Payment Do Online Scammers Typically Accept?
  4. Red Flags of Online Shopping Scams
  5. Most Common Online Shopping Scams
  6. Which Brands Do Social Media Shopping Scammers Tend to Sell?
  7. How to Beat Online Shopping Scams
  8. Fallen Victim to Online Shopping Scams?

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.

What Are Online Shopping Scams?

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.

How Do Online Shopping Scams Work?

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.

Scammers Are Getting Smarter

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.

What Kinds of Payment Do Online Scammers Typically Accept?

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.

Red Flags of Online Shopping Scams

In many cases, it’s relatively easy to spot online shopping scams, particularly if you know what to look out for. 

Too-Good-To-Be-True Pricing

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. 

online shopping
Look for poor spelling, grammatical errors or incorrect logos and branding when buying products online.

Lack of Shipping Information

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.

Only Accepting Specific Payment Methods

Anytime an online seller requests immediate payment through a wire service, transfer of funds, or gift cards, you should be on the lookout.

online shopping
The seller requesting payment via gift cards is a major red flag. (Source: ABC11)

Use of Stock Images

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.

Refusal to Meet in Person

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.

online shopping
Sellers who can't meet you in person and will only communicate via email are likely scammers. (Source: eBay Community)

Long Shipping Times

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.

Most Common Online Shopping Scams

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.

Fake Coupons

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.

Discounted Gift Cards

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.

Fake Products

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.

Fake Social Media Sites

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.

Which Brands Do Social Media Shopping Scammers Tend to Sell?

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.

How to Beat Online Shopping Scams

To beat scams online, there are a few precautions and measures you can take before and after purchasing any items online:

  • Only purchases items from legitimate, reputable, and secure websites
  • Verify the website’s return or refund policy
  • Never click on suspicious links on pop-ups
  • Only pay for items using secured payment services that being with "https://" in the URL
  • Never share your sensitive financial information with anyone online
  • Use strong passwords with a mix of numbers, letters and symbols and two-factor authentication (2FA)
  • Avoid paying for goods with money orders, wire transfers, gift cards or any other up-front payment method
  • Avoid deals that seem too-good-to-be-true
  • Monitor your credit card activity regularly
  • Request alerts for credit card purchases over a certain amount
  • Keep records of each transaction in case something goes wrong, including:
    • Company name and website
    • The seller’s return policy
    • All communications
    • What you ordered and when
    • Payment date
    • The type of payment method you used

Fallen Victim to Online Shopping Scams?

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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