BBB Study:Online shopping fraud and the role of social media
According to a new Better Business Bureau study, a shift toward online shopping during COVID-19, global supply chain crisis and a resurging economy have all created a recipe for a breakneck holiday shopping season – one where online shopping fraud poses a tremendous risk to consumers. Online purchase scams have skyrocketed during the pandemic, and social media ads play a key role in the mushrooming problem.
The in-depth investigative study – Theft on a massive scale: Online shopping fraud and the role of social media – finds the pandemic, along with lax social commerce shopping platforms, has opened the door for scammers in China to steal from desperate online shoppers.
Online shopping fraud has been growing for several years, but according to BBB research, it dramatically increased during the pandemic as more people shopped online. A BBB survey found 29% of people shopped online before COVID, which increased to 37% by the end of 2020. In turn, BBB Scam Tracker reports about online shopping scams nearly doubled from 2019 to 2020, and the BBB Institute for Marketplace Trust named online shopping scams as the riskiest scam of 2020, publishing special reports on this growing fraud in 2020 and 2021. Complaints to the Federal Trade Commission (FTC) about online purchases more than doubled in 2020 and continue to increase throughout 2021. Also, online shopping has more BBB “F”-rated companies than any other type of business.
Most online fraud reports examined involve a response to online ads on Facebook and Instagram. After placing an order, victims report receiving nothing or receiving items that were counterfeit or inferior to what the ads promised. Scammers often take product photos or a landing page from legitimate businesses, post them on Facebook and Instagram and take online orders at websites they create. This leads to complaints against legitimate businesses, as victims often do not realize they have lost their money to a scammer rather than the business the scammer was portraying.
BBB found it was common that people who were not actively looking for a product, but lost money in the transaction, began with Facebook or Instagram 70% of the time. Fraudsters understand how Facebook targets shoppers and have developed strategies to reach those interested in buying their bogus products. Many victims and legitimate businesses believe that Facebook and Instagram should do more to prevent this widespread fraud. A recent federal class-action lawsuit against Facebook contends that it is complicit in fraudulent sales and fails to abide by its own policies in addressing them.
BBB’s study makes the following consumer protection recommendations:
Facebook should do more to enforce its policies for third-party sellers.
BBB urges credit card payment processors to put more effort into combating those who provide merchant accounts to sellers who engage in fraud.
U.S. consumers would benefit from a program to help counterfeit victims with chargebacks like one operated in Canada by the Canadian Anti-fraud Centre (CAFC). Such a program may help identify crooked credit card merchant accounts, bogus websites, and points of origin for counterfeit goods.
More regulatory oversight is needed regarding companies that use websites to market products from China but deliver counterfeit goods, items not as advertised, or nothing at all.
Tips for avoiding online purchase scams:
Check out the website before making a purchase:
Check BBB.org to check a business’s rating and BBB accreditation status. Some crooks may copy the BBB seal. If it is real, clicking on the seal will lead to the company’s BBB profile.
Scamadvisor.com can often tell you how long a website has been in operation. Scammers create and close websites regularly, so a site that has only been operating for a short time could raise red flags.
Do an internet search with the company name and the word “scam.” This may locate other complaints about the site.
Scrutinize reviews: Scammers frequently post positive reviews on their websites, either copied from legitimate sites or created by scammers. One resource to check reviews is at BBB.org; some review websites claim to be independent but are funded by scammers. Look at the bad reviews first. These are more likely to be real and can help identify scams.
Search for contact information: Use caution if the site does not have a U.S. phone number or uses a Gmail or Yahoo business email address.
Keep a record of what you ordered: Make a note of the website where you ordered goods. Take a screenshot of the item ordered in case the website disappears, or you receive an item that differs from what was advertised.
Pay by credit card: Credit cards often provide more protection against fraud than other payment methods.
Report online shopping fraud to
Better Business Bureau – file a complaint at BBB.org or report a scam at BBB.org/scamtracker
Federal Trade Commission (FTC) – file a complaint at reportfraud.ftc.gov or call 877-FTC-Help.