Online Shopping Fraud

While it can be the most wonderful time of the year, it’s also rampant for fraudsters — especially with the escalation of online shopping scams. reminds us that scams have long been a fundamental element of the internet. Last year, it reports that the FBI’s Internet Crime Complaint Center received 467,361 complaints, with losses exceeding $3.5 billion.

E-commerce (online shopping) scams have become particularly troublesome: In 2015, just 13% of scams reported to the Better Business Bureau Scam Tracker were online purchase cons — they make up 64% this year. And according to the Federal Trade Commission, online shopping scams are the number one fraud in every age group.

Beware of Social Media Newsfeed “Deals” recently conducted a 6,000-respondent study on consumer shopping habits. It found that about two-thirds of shoppers use social media as part of their shopping strategy. While many sellers that advertise on social channels are legitimate, fraud is escalating, which hurts not only the consumer but also the valid local businesses.

According to, the Federal Trade Commission also reports that the number of complaints about scams starting on social media has more than tripled, with losses adding up to $117 million in just the first six months of 2020. That’s a lot of money at stake and potential loss by the consumer.

How online shopping fraud occurs:

Scams often involve fraudsters pretending to be legitimate online sellers. They set up bogus websites, fake online stores, or generate phony ads for your social feed. The forged websites look authentic, often using stolen logos and stolen pictures. (Images are commonly stolen from Etsy vendors and others, even large name brands.) They may be selling everyday needs (furniture or household items) or extravagances (designer clothing, jewelry, or high-end electronics) at rock-bottom prices.

Making it seem more legitimate, the victim can often pay for the purchase through PayPal, only to learn the item was a counterfeit of little to no value — if it arrives at all. Not surprisingly, after the transaction, the vendor disappears from the internet or asks the buyer to return the item to China, an expensive solution, usually costing more than the original transaction.

Take care this holiday season:

With Christmas approaching, fraudsters will be on the prowl, targeting seasonal shoppers with sham holiday gifts. notes that last year, leading up to Halloween, an ad for a singing pumpkin duped many across the country. “Now, Christmas-related products are filling social feeds, and the ECommerce foundation notes that these online scams increase by 40% during the holiday season.”

Unfortunately, these cons are not the work of individual crooks. “Many of them appear to be part of systematic, well-oiled global operations, designed to take advantage of the lack of oversight on social media marketplaces and the influx of novice online shoppers brought by pandemic quarantines, and the shutdown of brick-and-mortar stores,” reports “And the spoils of one of the largest known shopping scam networks may be benefiting a major Chinese company: the publicly traded TIZA Information Industry Corporation INC., whose 2019 revenue was $549 million.” adds that many of these sites use the online shopping platform Shopify. Jorij Abraham, the general manager of the ECommerce Foundation, says that because Shopify allows you to set up a shop for 14 days with no credit card required, scammers will simply set up shops, shut them down after two weeks, and start another one.

As a savvy consumer, there are steps you can take to protect yourself.

The best advice is to be aware; don’t click and buy in a hurry. Know the vendor you are buying from and do a bit of homework before paying. Consider this information from

Signs it may be a scam:

  • A product is advertised at an unbelievably low price or advertised to have amazing benefits or features that sound too good to be true.
  • The other party insists on immediate payment or payment by electronic funds transfer or a wire service. They may insist that you pay up-front for vouchers before you can access a cheap deal or a giveaway.
  • The social media-based store is very new and selling products at very low prices. The store may have limited information about delivery and other policies.
  • An online retailer does not provide adequate information about privacy, terms and conditions of use, dispute resolution, or contact details. The seller may be based overseas, or the seller does not allow payment through a secure payment service such as PayPal or a credit card transaction.

Protect yourself:

  • Check if the website or social media page has a refund or returns policy and that their policies sound fair. The better online shopping and auction sites have detailed complaint or dispute handling processes in case something goes wrong.
  • When using retail websites, find out exactly who you are dealing with. Research the retailer and know if you are dealing with a domestic or foreign entity and if the items you are ordering will be shipped from overseas.
  • When making online payments, only pay for items using a secure payment service — look for a URL starting with “https” and a closed padlock symbol, or a payment provider such as PayPal. Think twice before using virtual currencies such as bitcoin — they do not have the same protections as other transaction methods, so you can’t get your money back once you send it.
  • Avoid any arrangement with a stranger that asks for up-front payment via money order, wire transfer, international funds transfer, pre-loaded card or electronic currency, like Bitcoin. It is rare to recover money sent this way. Never send money or give credit card or online account details to anyone you don’t know or trust.


Stay Smart:

Be careful when clicking on ads in your social media newsfeeds. Some are bots or institutional scams, bait and switch offers, or low-quality merchandise. Remember, social media sites will typically not back these vendors or be an arbiter for you. Instead of clicking on an ad, search for the vendor independently — find its own (and hopefully legitimate) website. Also, check with the Better Business Bureau or the FTC for potential claims. If all checks out, make your purchase directly from the website.

As a result, online communities have formed and are dedicated to reporting these scam ads. These communities include Facebook Ad Scambusters and Scam Alert Global. Unfortunately, their complaints are often ignored or overruled.

Bottom line?

Before doing business with any company, research and verify that it’s a reputable business and the website is secure:

  • Shop on secure websites only; look for https:// in front of the URL.
  • Inquire with the Better Business Bureau or FTC.
  • If you suspect you’ve been a victim of fraud, contact us.
  • Visit to stay abreast of current scams.

More tips:

  • If a deal sounds too good to be true, it probably is.
  • If something seems suspicious at any point, end the transaction.

Remember, the best fraud prevention is avoiding it. Be careful with your money, and don’t be tempted by deals that sound too good to be true.