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When Anne moved to a new apartment in April 2020, she had a hard time shopping for furniture due to Covid-19 closures. So she clicked on a Facebook advertisement for home decor items in the hopes of filling her home with something in the meantime.
“I might be sitting on the floor, but I can have this cute serving tray,” recalled Anne, who lives in Maryland and is in her late 30s. She asked us not to use her last name for privacy reasons.
She waited to receive the tray and a small lamp by mail, but the package never came. She was out $65.
Anne emailed the home decor company, Modernly Decor, three times to ask about her order.
“Eventually I was looking at the contact information on their website and noticed the domain of the email address was slightly different than the name of the store,” Anne says. Soon, she discovered reviews on the Better Business Bureau website saying the online store was a scam.
She’s just one of many online shoppers who were lured in by an attractive social media post only to be duped into placing an order with a store that doesn’t exist. This type of fraud has increased in recent years, especially during the pandemic, according to the Federal Trade Commission (FTC).
Last year, the FTC received 43,000 complaints about online shopping scams that started on social media. Compare that to 24,000 complaints in that category in 2020, and just 7,000 in 2019.
Consumers lost $770 million to scams originating on social media in 2021, a January FTC report states. The data comes from people who reported getting scammed and losing money.
People who got pilfered in these types of schemes ended up being separated from a modest amount of money ($115) compared to those victimized in romance or investment scams. But online shopping fraud occurs far more often, featuring in nearly half of social media fraud complaints.
And the pattern is pretty consistent.
In 70% of these reports, the consumer saw an ad on a social media platform (usually Facebook or Instagram), placed an order but never got the merchandise. Some reports documented ads appearing to be from legitimate brands that took shoppers to websites that were mere imitations of the real company.
Why We Get Scammed Online
- 1 Why We Get Scammed Online
- 2 How To Avoid Getting Scammed
- 3 1. Study the Seller’s Website
- 4 2. Look for Authorized Resellers
- 5 3. Research Beyond the Storefront
- 6 4. Use a Protected Payment Method
- 7 What to Do If You Get Scammed
- 8 1. Contact Your Payment Company
- 9 2. File an FTC Report
- 10 3. Warn Others About the Scam
- 11 Learn more about scams to protect yourself:
Online shopping has become more and more popular over time as consumers embraced the convenience of buying whatever they desired with a few clicks. Then the pandemic dramatically increased consumer reliance on online shopping for everything, from groceries to pick-me-ups when we couldn’t leave home.
“We’re comfortable with shopping online, and doing so is relatively safe,” says Ari Lightman, a professor of digital media and marketing at the Heinz College at Carnegie Mellon University.
But as retailers continually add ways to shop and pay online, criminals find new ways to pinch hundreds off their marks.
“The near-constant evolution of how we purchase via digital methods means there are continually new challenges to making those purchases safely,” Lightman says.
And it’s not just one demographic of people who falls prey to these fake ads. Young people were more likely to tell the FTC about social media scams than older Americans, according to the Commission’s 2021 report, but overall, most people who get scammed don’t report it at all. That means government agencies that investigate fraud, such as the FTC, can’t review the details or compare to other reports.
Even the professionals can get tricked.
Sarah Rutherford, senior director of portfolio marketing, global, fraud and compliance at FICO, fell victim to an online shopping scam last summer. She’s based in the United Kingdom, but this type of scam works the same way just about everywhere.
Rutherford was dealing with foot pain and didn’t want to shop in a physical store due to Covid concerns. But she kept seeing social media ads for comfortable-looking shoes.
“I was less wary than I should have been,” she says.
She admits the combination of the regularity of the ads, the professional appearance of the brand’s website, and her desire for new, comfortable footwear, “overrode my normal instinct to check for reviews and look in more detail at the website.”
She bought two pairs of shoes for a total of about £57 GBP (about $77 USD), but didn’t receive them. When her email to the store went unanswered, “the realization it was a scam was quite slow,” she admits.
When she returned to the website where she placed the order, the store was gone, replaced by an advertisement for web hosting services.
It’s easy to say social media platforms should clamp down on fake retailers, Rutherford says. But it’s more complicated than that. She explains fake businesses fool payment processors and social media platforms, which lends legitimacy to their scam.
Meta (the parent company of Facebook and Instagram) offers purchase protection for users who complete transactions on its platforms, but users who complete a purchase on a third-party website or app can’t file a claim.
A spokesperson from Meta said the social media platform group monitors businesses for misrepresented product details and negative customer feedback. Meta can disable advertisements or remove access to commerce tools for bad actors.
But fighting fraudsters can seem like a cruel carnival game for platforms and consumers alike, with new ones popping up as soon as older ones are finally quashed.
How To Avoid Getting Scammed
To prevent scammers from taking advantage of you, do these things before you shop from a retailer that’s new to you.
1. Study the Seller’s Website
Rebecca Taylor, incident command knowledge lead at cybersecurity company Secureworks, shared a few red flags to look for when you shop online.
- What does the item cost? Is the price for the product too good to be true, compared to similar items you’ve seen? For example, seeing a designer pair of sunglasses at a steep discount is a red flag if you’re not seeing a similar price cut anywhere else.
- How old is the brand’s website? A very new website may indicate a new scam has recently been set up. This article shares a variety of ways to check how old a website or online store is.
- Is the website secure? Look for the padlock symbol in the address bar of your web browser when you visit a brand’s website, along with https:// at the front of the web address (rather than the old standard, http://). “It means the website uses encryption to protect your data as it crosses the internet,” Taylor explains, like your payment and contact information. “But it does not mean the website itself is legitimate or safe.” This is one item to check every single time you prepare to make a purchase online—not just when you suspect a scam.
- Does the brand offer any contact methods, like a phone number, address or email address? These can be faked, but the absence of any contact information at all should send off alarm bells.
2. Look for Authorized Resellers
Verify whether you’re buying from a reseller or the company that makes the product, says Lewis Huynh, chief security officer of unified IT operations software company NinjaOne.
If you’re shopping from a reseller, look to see whether it’s authorized to sell the brand’s products. For example, if you want to buy the latest Nintendo Switch console, you can check Nintendo’s list of online retailers to check if the online listing or advertisement you saw is from a retailer on that list.
Many resellers are legitimate and sell genuine products, regardless of whether you’re shopping used or used (which could alternately be labeled as refurbished or open box). Review reseller practices and cross-check them for the red flags.
3. Research Beyond the Storefront
Online stores often highlight glowing customer reviews. But for a better look at a company’s reputation, seek out reviews elsewhere.
A few ways to verify a brand via outside sources:
- Do an online search for “brand x + reviews”
- Search “brand x + scam” or “brand x + fraud”
- Search the Better Business Bureau website for the brand or retailer. A company does not have to be accredited by the Better Business Bureau to be listed in its directory, so use what you find as part of your overall research.
Anne, the Maryland resident who never got her serving tray, said the store she ordered from still has a Facebook page and recent negative reviews on the Better Business Bureau website.
“I’m not sure if anything is being done even though this has been going on for at least two years,” she says.
4. Use a Protected Payment Method
If you’ve done your research and feel confident buying from a newly discovered retailer, choosing your payment method wisely can help prevent headaches later.
Using a credit card or a payment platform like PayPal gives you added defense if your order never arrives. Credit cards typically offer full protection for the amount you spent in the event of fraud, but your debit card may not.
Read more: What Is $0 Fraud Liability And Do All Credit Cards Have It?
What to Do If You Get Scammed
If your online shopping purchase was a scam, here’s how to take action:
1. Contact Your Payment Company
Contact your credit card company or payment platform to report suspected fraud—you may be able to get your money back. You can usually dispute a charge if you didn’t receive the product you ordered, although you’re not guaranteed to receive a refund.
Anne was able to complete a chargeback request with her credit card company and got a refund for the home decor that never arrived.
Read More: What Is A Credit Card Chargeback?
2. File an FTC Report
If you ordered something from an online store and didn’t receive it after a reasonable period of time, report it to the FTC. The agency requires retailers to ship merchandise within 30 days of receiving your order, or offer you a refund. (If your order is delayed due to a problem like supply chain backups, the merchant must keep you updated on the status of your order and give you the option to cancel.)
The FTC doesn’t investigate individual fraud cases, but information you share about the scammer and their techniques can help the agency investigate fraud methods and distribute information about new varieties of scams.
3. Warn Others About the Scam
Most social media platforms have options for reporting suspected scammers right from the seller’s profile page.
You may also want to share your experience with the Better Business Bureau or by writing a review on a search engine or social media platform, to warn others about your experience.
Meta asks users to provide feedback on their purchases made via Instagram or Facebook; if users repeatedly give negative feedback, the page may lose advertising privileges.
The Facebook page for the “store” Anne tried to order home decor hasn’t posted in a while, but a one-star review warning others about the scam sits near the top of the page.
Bad actors are slick and any social media user can be fooled. When in doubt, ask someone you trust for a second opinion on suspicious incoming messages. They can help you spot warning signs that are easy to miss when you’re excited about buying something new.
Learn more about scams to protect yourself:
How To Stay Safe From Scammers Sliding Into Your DMs
How To Avoid Getting Duped By Gift Card Scams
Have you experienced a social media scam? Contact Lisa Rowan at [email protected].