Online Shopping and Auctions: Legit or No?

The ads that attract your attention may be a sign of online shopping scams.

There’s no shortage of junk available to purchase online and whoever is selling it wants you to buy it. Just like you should never judge a book by its cover, never judge something that’s for sale online by the ad that attracted your attention. If you do you may very well wind up a victim of online shopping scams.

Unfortunately, many consumers click on those ads without knowing anything about the companies behind them. According to the Better Business Bureau, 57 percent of consumers do not conduct any research prior to an online purchase, and of them, 81 percent either never receive it or wind up losing money on it.

All Ads Look Good

Selling a cheap item for a high price is a scam as old as the hills. So it stands to reason that no one who does that for a living is going to advertise it as an inferior product. If the ad contains a photo it will be touched up. Or the photo may be of an entirely different product. The description in the ad will make it sound like it’s an amazing find. Many such ads even appear on quality websites, in popular social media such as Facebook and Twitter, and reputable online classifieds. Therefore, don’t assume that the website’s pedigree protects you from becoming a victim.

The year 2020 proved to be among the worst in memory for online shopping scams, with amounts lost having increased by double digit percentages by almost all measures. This was largely due to the COVID-19 outbreak and associated lockdowns leading to vast changes in shopping habits. The changes and uncertainty vastly increased the opportunities for scammers to ply their trade.

For example, the U.S. Federal Trade Commission (FTC) has published a public consumer warning describing some of the common coronavirus-related scams that have affected the public. The Australian Competition & Consumer Commission (ACCC) published a report of their own around the same time. The bottom line is that losses due to online shopping scams seem to be increasing by double digit percentages compared to previous years.

The FTC found that reports of undelivered goods purchased online quadrupled from 2015 to 2019 but then almost doubled between December 2019 and May 2020. From January 1 through June 30, 2020 reported losses to consumers were $117 million. All told in 2020, the FTC received more than 350,000 reports of online shopping scams. The total amount of losses to consumers surpassed $245 million. In Australia, losses to scam merchandise advertised on online forums such as Facebook Marketplace and Gumtree increased 60 percent in 2020 to AU$4.5 million. And in the United Kingdom, the number of cases increased by 37 percent in the first half of 2020, from 29,900 to 40,900.

Card-not-Present Risks

In any event, should you fall for the scam, you will make your purchase using your credit card. This is known as a card-not-present payment, since the merchant never physically handled it. Then you’ll wait seven to ten days until your purchase arrives. But when you open the package you discover that it’s just a piece of junk. Assuming it really does arrive!

Sometimes it won’t because the scammers aren’t really selling anything. Some publish ads even though they aren’t selling any overpriced junk. Instead, what they want is your name, your address and your credit card number. Offering you a bargain that’s hard to resist is the most likely way they can get what they’re really after: identity theft. Once they have your personal information they use your card to rip you off even more.

How can you check in advance if it’s a scam? First, beware of a Gmail or other generic email address. If it’s a real company it will have its own dedicated domain and website. Second, search for the company on the web. If you can’t find it, consider it a scam.

Online Auctions

While there are plenty of legitimate online auctions, scams exist as well. There are two types of them, traditional and shill bidding.

In a traditional online auction scam, the scammer will call you out of the blue. Ostensibly, the call is to notify you that you have a second chance to buy an item that you previously bid on. The scammer will tell you that’s because the winner declined it, did not pay for it or was otherwise disqualified. In all likelihood, he’ll also claim to be calling on behalf of a legitimate auction site in order to cover his tracks.

But how does the scammer know you submitted a bid? He doesn’t. He’s winging it, hoping that you won’t remember. If you insist that you didn’t, he’ll tell you that someone else (maybe your spouse, parent or even a friendly neighbor) must have done so in your name as a gesture. If he convinces you, he’ll explain how to obtain the car or refrigerator or whatever it is that you’ve won. But you won’t be able to pay using the auction site’s secure payment page. The software, so he’ll say, only recognizes the name of the original winner. So, you give him your credit or debit card number, pay through PayPal or send a bank wire. The scammer makes off with your money and the merchandise, of course, never arrives.

Shill bidding is used by legitimate online auction sites that open up bids on a specific item for a very limited time period. Once you start bidding you’ll notice that someone else is competing against you, raising the ante. Every time you raise your bid the same competitor will raise his until you finally reach the price that the online merchant really wants. Shill bidding is illegal in many jurisdictions, including in the United States and the European Union. It is prohibited by eBay and many other popular auction sites.

If you think you’ve been the victim of an online shopping or auction scam, contact the fund recovery experts at MyChargeBack.