Scams related to online purchases, already on the rise in 2019, spiked further following the start of the COVID-19 pandemic, according to new research by the Better Business Bureau (BBB). A staggering 80.5 percent of consumers reporting online purchase scams in 2020 lost money. That figure has been creeping up from 71.2 percent in 2015 when BBB began collecting data.
Online purchase scams ranked among the top three riskiest scams for the last three years, according to the 2019 BBB Scam Tracker Risk Report that was published in March 2020. Shortly after the report was released, COVID-19 shut down businesses, forcing people to socially distance and increase their online presence.
The organization measures fraud using the BBB Risk Index, a multidimensional approach to evaluating scam risk that considers three elements: exposure (prevalence of a scam type), susceptibility (the likelihood of losing money when exposed to a scam type), and monetary loss (the median dollar loss reported for a particular scam type).
With the coronavirus pandemic expected to continue for the foreseeable future and more people potentially being targeted by online scams, BBB launched a new study to better understand how online purchase scams happen, who is targeted, the overall impact of them, and how BBB can help people avoid losing money while shopping online.
“This was something we had to examine more closely,” said Melissa Lanning Trumpower, executive director of BBB Institute for Marketplace Trust, which produced the report. “People will continue to actively shop online in order to reduce their exposure and keep their families safe. As this virus continues and circumstances change, scammers will try to take advantage.”
The 2020 Online Purchase Scams Report examines findings from an August 2020 survey of 1,549 U.S. and Canadian consumers reporting online purchase scams to BBB Scam Tracker. The top reason people lost money to this type of scam was the enticement of a sales price. Scammers offered high demand products at a significantly reduced dollar amount, which then increased the desire to purchase the item.
Following the coronavirus outbreak, the second biggest motivating factor to search and purchase items online was availability. Early in the pandemic, supplies such as hand sanitizer, toilet paper, cleaning products, and masks were in short supply. According to the survey, more than half (53 percent) of the respondents said they weren’t aware they were a target of a scam until they didn’t receive the product they ordered.
Consumers who lost money to online purchase scams reported the following platforms as the place where they saw the product: Facebook, Google, a direct merchant website, Instagram, or pop up ads on social media when they were actively shopping. According to survey respondents, out of the 57 percent who did not research the website or business via an independent source before making a purchase, more than four out of five lost money.
The report highlights those who are most at risk for online purchase scams. Individuals ages 35-44 were more susceptible and likely to be victimized, while younger consumers are more susceptible than older adults. However, older adults tend to lose more money than younger adults for online purchase scams. This falls in line with findings across all scam types. In addition, service members, military spouses, and veterans were more likely to fall victim than non-military consumers and reported losing significantly more money to online purchase scams.
“These critical findings can help guide our scam prevention outreach to those most vulnerable to these scam types,” Trumpower said. “Online purchase scams don’t just affect those who lose money. For every victim who lost money, that meant less income to buy groceries, pay the utility bill, and for some the loss of personal information that could lead to identity theft.”
Survey results reinforced that consumer education in relation to online shopping is a critical component of fighting back against these scammers. Those who were aware of online purchase scams prior to being targeted were less likely to lose money (77 percent) than those who were not aware (82 percent).
For tips on how to avoid online shopping scams, visit BBB.org/OnlinePurchaseScams.
About the BBB Institute for Marketplace Trust
The BBB Institute for Marketplace Trust (BBB Institute) is the educational foundation of the Better Business Bureau. Our mission is to educate and protect consumers, promote best practices for businesses, and solve complex marketplace problems. Our consumer educational programs, which include a wide array of resources on fraud prevention and education, are delivered digitally and in person by BBBs serving communities across North America. You can find more information about BBB Institute and its programs at BBBMarketplaceTrust.org.