Theft on a Large Scale: Online Shopping Scams and the Role of Social Media

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From the Central Virginia Better Business Bureau:

A shift to online shopping during COVID-19, a global supply chain crisis, and a rebounding economy have all created a recipe for a breakneck Christmas shopping season – one where online shopping fraud poses a huge risk to consumers. Online purchase fraud has skyrocketed during the pandemic, and social media advertising is playing a key role in the fungal problem, a new one Better business office® (BBB ®) Study finds.

The in-depth investigative study – Theft on a Large Scale: Online Shopping Scams and the Role of Social Media – Notes that the pandemic, along with lax social commerce shopping platforms, has opened the door for scammers in China to steal from desperate online shoppers. Read the full study.

Online shopping fraud has been increasing for several years, but according to BBB research, it has increased dramatically during the pandemic as more people have shopped online. A BBB survey found that 29% of people shopped online before COVID-19, and that number rose to 37% by the end of 2020. BBB scam tracker Online shopping fraud reports nearly doubled from 2019 to 2020, and the BBB Institute for Marketplace Trust has ranked online shopping fraud as the Riskiest Scam of 2020 and published special reports on this growing fraud 2020 and 2021. Complaints to the Federal Trade Commission (FTC) about online purchases more than doubled in 2020 and continue to grow through 2021. Also, there are more BBB “F” companies in online shopping than in any other type of business.

Most of the online fraud reports examined relate to a response to online advertising on Facebook and Instagram. After placing an order, victims report that they have not received anything or have received items that were counterfeit or of substandard quality than what the ads promised. Scammers often take product photos or a landing page of legitimate companies, post them on Facebook and Instagram, and take online orders on websites they create. This leads to complaints against legitimate companies as the victims often fail to realize that they lost their money to a scammer and not to the business that the scammer portrayed.

Counterfeit and Counterfeit goods, the subject of a BBB 2019 Investigative study, scams are widespread in online shopping. Other online fraud reports involve websites Sell ​​non-existent pets, Vehicle shipping programs and fraudulent free trials.

A large number of online shopping complaints registered with BBB and reports to BBB Scam Tracker can be traced back to Facebook and its subsidiary Instagram.

BBB found that people who didn’t actively search for a product but lost money in the transaction started with Facebook or Instagram 70% of the time. Scammers understand how Facebook engages buyers and have developed strategies to reach those likely to be interested in buying their counterfeit products. Many victims and legitimate companies believe that Facebook and Instagram should do more to prevent this widespread scam. A recent federal class action lawsuit against Facebook alleges that Facebook is involved in fraudulent sales and is not adhering to its own guidelines to combat them.

While credit cards are still the number one payment method for online fraud, online fraudsters are increasingly demanding payment through PayPal. Credit cards and PayPal offer some buyer protection by allowing shoppers to dispute fees, although scammers have reported difficulties getting refunds through PayPal. In addition, scammers use various tactics to bypass the dispute settlement process, including exorbitant shipping costs for returning items for a refund, providing fake tracking numbers, and delaying the process to reduce the time it takes to resolve a dispute.

Online purchase fraud stems from a wide variety of actors. Businesses in counterfeit goods and those selling goods online that are not delivered or shipping items significantly different from those described have been persecuted to companies or organized gangs based in China. While China has banned its people from using Facebook’s social media platform in China, some companies based in the country trade counterfeit goods and spend billions to advertise on the site. Most of the pet scams are carried out by gangs from Cameroon. Vehicle fraud has been traced back to gangs from Romania and free trial scams have been found to be mostly operated by people in the US and Canada.

Law enforcement activities are mostly limited to fraudsters and their accomplices operating in the US and Canada. In 2020, US Customs seized $ 1.3 billion worth of counterfeit goods, arrested 203 people and resulted in 98 convictions.

The BBB study gives the following recommendations for consumer protection:

  • Facebook should do more to enforce its third party policies.
  • BBB urges credit card processors to put more effort into addressing those who provide merchant accounts for fraudulent sellers.
  • US consumers would benefit from a program to help counterfeit victims with chargebacks, like the one run in Canada by the Canadian Anti-Fraud Center (CAFC). Such a program can help identify corrupt credit card merchant accounts, fake websites, and places of origin for counterfeit goods.
  • More regulatory oversight is needed for companies using websites to market products made in China but delivering counterfeit goods, items that do not match advertising, or nothing at all.

Tips to Avoid Online Purchase Fraud:

  • Check out the website before buying:
    • Check BBB.org to check a company’s rating and BBB accreditation status. Some crooks may copy the BBB seal. If it’s real, clicking the seal will bring you to the company’s BBB profile.
    • Scamadviser.com can often tell you how long a website has been up and running. Scammers regularly create and shut down websites so a website that has only recently been up could set off red flags.
    • Do an internet search on the company name and the word “scam”. This can find other complaints about the site.
  • Check Reviews: Scammers often post positive reviews on their websites that are either copied from honest websites or created by scammers. A trusted source for checking reviews is below BBB.org. Be aware soSome review websites claim to be independent but are funded by scammers. Check out the bad reviews first. These are more likely to be real and can help spot fraud.
  • Find contact information: Use caution if the site doesn’t have a US or Canadian phone number, or uses a business email address from Gmail or Yahoo!
  • Keep your order: Make a note of the website you ordered goods from. Take a screenshot of the item you ordered in case the website disappears or you receive an item that is different from the one advertised.
  • Pay by credit card: Credit cards often offer more fraud protection than other payment methods.

Report online shopping scam to:

  • Better business office – submit a complaint to BBB.org or report a scam BBB.org/scamtracker.
  • Federal Trade Commission (FTC) – submit a complaint to reportfraud.ftc.gov or call 877-FTC Help.
  • National Coordination Office for Intellectual Property Rights – Report intellectual property violations and counterfeiting iprcenter.gov/referral/view.
  • Enter cybercrime complaint (IC3) – submit a complaint to ic3.gov/beschwerde.
  • Facebook – Report ads that violate Facebook’s policies by clicking the *** next to an ad to go to facebook.com/business/help.
  • Instagram – Report copyright or other policy violations help.instagram.com.
  • Amazon – Report suspicious activity and websites under amazon.com.
  • Google – Report fraud under google.com.
  • PayPal – Call (888) 221-1161 to speak to a live person instead of using the automated system if you receive an item that is not as advertised.
  • Your credit card company – Call the phone number on the back of the credit card to report the fraud and claim your money back.

About the BBB, which serves Central Virginia:

BBB, which serves Central Virginia, serves Richmond, the Tri-Cities, Charlottesville and Fredericksburg, and 42 surrounding counties from Fauquier to Mecklenburg and Northumberland to Amherst. The non-profit organization was founded in 1954 to promote responsible, honest, and ethical business practices and to build customer trust through business self-regulation. BBB’s core services include business profiling, dispute resolution, truth solicitation, fraud alerts, consumer and business education, and charity screening.



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