With the holiday season approaching, Better Business Bureau® (BBB®) warns online shoppers searching for gifts and other merchandise to arm themselves with research and use credit cards to dodge scammers. Online shopping scam reports to BBB Scam Tracker remain just under all-time highs reached in 2021 when BBB issued an in-depth study, Theft on a Massive Scale: Online Shopping Fraud and the Role of Social Media, last December.
Since the pandemic, shoppers remain susceptible to online retail fraud that entices shoppers with hard-to-find items, promises of low prices and easy delivery, according to reports by consumers to BBB. Emotional purchases, like wedding dresses or pets, can cause consumers to ignore red flags. Some common warning signs:
- Prices that are too good to be true.
- Websites that look legitimate but credibility falls apart with scrutiny.
- Credit card payment failure leads the seller to ask for payment over cash-sharing apps like Zelle and Venmo or with gift cards.
Federal Trade Commission (FTC) Consumer Sentinel Network and Canadian Anti-Fraud Centre (CAFC) data mirror BBB’s findings, and if trends continue, financial losses across North America may reach more than $380 million. In 2022, online retail scams remain one of the most reported frauds to these groups.
FTC’s Consumer Sentinel
|Year||Scam Tracker reports||Losses||Complaints||Losses||Cases*||Losses
*CAFC reports “Merchandise” scams as they do not have a subcategory for online retail scams.
Though monetary losses to scams appear down overall, they remain high compared to pre-pandemic years. Nearly 36% of all online retail fraud reports to BBB Scam Tracker originated through a fake website. Scammers used social media and email to initiate about 40% of reported scams.
While some consumers reported online shopping scams through Scam Tracker, others filed complaints with BBB about established and suspect online retail businesses. Complaints about online retailers peaked in 2020 at 115,159 before falling 16% the following year. Figures for 2022 appear on pace to equal or exceed last year’s numbers.
Fraudsters found the shift to online shopping to be lucrative and convenient, molding their efforts into various forms meant to trick shoppers. Items consumers receive may be completely different or worthless when compared to those advertised. Some scammers impersonate a legitimate company to convince shoppers to send money before they realize they are dealing with a fraud. Or they may target companies themselves, infecting businesses’ website payment portals with e-skimmers that collect credit card information.
Christian Beckner, vice president of retail technology and cybersecurity with the National Retail Federation, said they see scammers pretend to offer deals through social media to big box store customers, collect credit card information, then instruct the shopper to pick up the item curbside at the store. The scammer may never actually order the item, as they were really after the shopper’s credit card information. That lets fraudsters act as scam “middlemen.”
“The methods that people are using have shifted in some respects,” Beckner said. “With all of the different ways that we are changing the way that we shop, there are different places for bad actors to insert themselves into the buying process.”
Scammers target three key moments in the shopping process, according to BBB Scam Tracker reports:
- Before the purchase, consumers may encounter advertisements for scams on social media.
- While shopping, shoppers may be enticed by artificially low prices or fake websites.
- After the purchase, fraudsters send fake tracking information and request more money for safe delivery.
According to an October BBB Institute for Marketplace Trust report, scams being perpetrated online have risen 87 percent since BBB Scam Tracker launched in 2015. Online shopping scams make up nearly a quarter of more than 300,000 Scam Tracker reports received by BBB in that time. Of those reports, a vast majority of consumers lost money, making online shopping fraud one of the most dangerous and successful, according to the BBB Institute’s research. Individual losses tend to be lower for these types of scams, with consumers reporting an average loss of about $100. Young people between 18-24 years old should be especially wary, as the Institute found them to have the highest loss figures and to be one of the most susceptible groups to this type of scam.
Online auto sale scams continue to come with high losses for consumers. A sampling of 100 BBB Scam Tracker reports found an average loss of more than $5,000. According to the BBB Institute, fake pet scams are some of the most common, at 18% of all online retail scams in 2022. These figures likely represent just a fraction of the problem. One study using FTC data determined that only 4.8% of victims of mass market fraud ever complain to BBB or a government entity.
The constant evolution of online shopping scams and their perpetrators’ tactics makes it difficult for consumers to keep up. Consumers tell BBB that scammers impersonate known businesses or pretend to be legitimate businesses that send out ads on social media and whose names can show up in search engines. To avoid fraud, online shoppers should consider either buying from a known source or researching the business before making a purchase.
Fraudsters use a variety of methods to collect money, including credit cards, money transfer services (Venmo, Zelle, PayPal) and gift cards. PayPal offers some protections for consumers, though reports to BBB show mixed success in obtaining refunds. These types of scams appear to have moved away from money order payments, which were popular some years ago. To avoid chargebacks, fraudsters will provide fake tracking numbers and other information. They hope consumers will not notice the grift until it is too late to dispute the charge. Still, BBB recommends consumers pay with a credit card when possible, as those companies have strong procedures in place for disputing fraudulent transactions.
Scammers are especially good at targeting emotional buying situations, such as purchasing tickets for a limited event. A woman in New York City lost more than $2,700 when she attempted to get U.S. Women’s Open golf tournament tickets from Ticketmaster. After having a problem with her payment, she searched the internet for a helpline. The fake number she found led her to a person who persuaded her to buy Target gift cards for them to ensure the purchase would go through. She received a convincing but fake purchase confirmation email from them. However, when the impostor began to ask for more money, she became suspicious.
Sometimes fraudsters will leverage very personal situations, like weddings. Several BBB Scam Tracker reports describe outright fake or falsely advertised wedding dresses being sold on social media sites like Instagram. A woman in Louisiana paid $580 for a wedding dress that still hadn’t arrived a year later, despite promises from the seller. In another case, someone lost $5,000. With a post-pandemic wedding boom underway, BBB urges caution for these types of purchases.
Prosecuting scammers remains difficult, but in March, the U.S. Department of Justice extradited and arrested two men from Lithuania for their alleged roles in a $3.5 million online vehicle sale scam. BBB urges more law enforcement action against online scams and additional protection for consumers using cash-sharing apps.
BBB recommendations for researching online retail sellers:
- Check BBB.org for BBB Business Profiles and consumer reviews.
- Search for online reviews.
- Look at Scamadviser.com to learn how long a website has been in operation. A recently created website may be a red flag.
- Review the website’s URL for misspellings or other errors.
- Examine the URL with Google’s Transparency Report tool.
- Use a map app to verify the business’s address.
- Remember the adage: If a price is too good to be true, it probably is.
- Make sure you can pay by credit card, which offers the most protection against loss.
- Treat a social media or email ad with suspicion until you have investigated the company behind it.
Who to contact if you are the victim of an online purchase scam:
- Better Business Bureau – BBB Scam Tracker to report a scam online.
- Federal Trade Commission (FTC) – reportfraud.ftc.gov to file a complaint online or call 877-FTC-Help.
- Canadian Antifraud Centre – Online or call 1-888-495-8501 for scams involving Canada.
- Your credit card issuer – Report the incident if you shared your credit card number, even if the transaction was not completed. Monitor your statements and if you suspect fraud, ask for a chargeback. It isn’t guaranteed, but many credit card companies will grant one.