Common Shopify store scams and how to prevent being scammed over

Being one of the most popular eCommerce platforms, Shopify’s an attractive target for online scammers, especially Shopify scam stores. In this blog, we’ll explore the world of Shopify scam stores and discuss how to identify them, examples of recent high-profile cases, how Shopify is addressing the issue, and what to do if you’ve been scammed. Through this article, you’ll be better equipped to navigate the world of online shopping and avoid falling prey to Shopify scam stores.

First things first, you need to understand the definition: Shopify scam stores are online shops that operate on the Shopify platform but use deceptive tactics to trick people into buying fake or low-quality products, stealing their personal information, or taking their money without delivering the promised goods or services.

7 Common Shopify Scam Stores recently

Triangulation Scam

A triangulation scam happens when there are three parties: the unsuspecting customer, the legitimate third-party seller or supplier, and the scammer, which acts as a middleman. To make this scam happen, first, the scammers will create a real Shopify store, in which they sell really high-end items at ridiculously low prices. After the customer purchases and paid, the scammer will then place an order for the seller or supplier with the customer’s order information but using a different credit card, that most likely has been stolen. The customer in this scenario will still receive their purchase and the scammers receive the money, but the victim here is going to be the seller or supplier. Because, in the end, the charge that the scammer made will be refuted by the credit card company. And the supplier/seller is going to lose their products when they haven’t received any payment for them. If the supplier tries to sue, they can’t because the scammer leaves no trace. All the information they got belonged to either the customer or the owner of the stolen credit cards.

Triangulation Scam

In some situations, the customer who buys the product is not really unharmed. The product that customers receive may be counterfeit, of poor quality, or completely different from what they ordered. If any issues happen with the product, there is no way to contact the fake online store or the scammer, as they’re untraceable. And this scam often occurs in the drop-shipping industry, and it is one of the most profitable scams. That’s because the scammer doesn’t just do this to one seller or supplier, but rather a bundle of them with personal information from hundreds of customers.

Duplicate Store Scheme 

This is another extremely popular scam, and you can easily spot it on many eCommerce platforms. A duplicate store scheme happens when scammers create one or many stores that lookalike or even identical to the original, already well-loved, and often high-end store. They copy the design, layout, and logo of a legitimate store to make it difficult for customers to detect the scam. 

Duplicate Store Scheme 

Like the previous scam, this faux store will try to sell its products at a fraction of the price as the real ones. But these products will likely be inferior quality, counterfeit, or even nonexistent. Most of the time, the buyers won’t find out about it. But when they do find out, the chance of getting their money back is so little, and not worth their time and effort to go through all the troubles to cash it back. Because these scammers are really up-to-date with all the current policies of the platform, while most of the buyers aren’t, they may don’t even know about the existence of the policies that were made specifically to protect them. Afterward, the scammer may also use the customer’s payment information to commit further acts of scam or fraud.

Tracking Number Scheme

This scheme is often seen in the PayPal user community, as it’s based on PayPal’s policy of automatically siding with the seller when a tracking number has been summited for them, no matter whether they are real or fake. This is also a common scam tactic that some fraudulent sellers use to take advantage of honest buyers.

Tracking Number Scheme

First, the scammer will provide the buyer with a fake tracking number for a product that they may not even have actually shipped. The buyer will then try to contact the seller, but will likely receive no response. When the buyer files a dispute with PayPal, the scammer will provide the fake tracking number as proof of delivery, causing PayPal to automatically side with the scammer.

Direct Client Scheme

Direct Client Scheme or Off-Platform Sales Scheme is a quite uncommon scam because it required the fraudsters to spend time to gain the buyer’s trust, but it’s pretty effective, and the fraudsters can get a lot of money this way. This is a scam that involves some sweet-talking and persuasion skills.

Direct Client Scheme

To create a direct client scheme, first, the seller will create a legit-looking store. This store even has a lot of reviews and 5-star ratings because the scammer will try to make a few genuine transactions where the products are legitimate. Once the trust is established, the seller suggests a purchase through a direct card payment technique to avoid extra costs and the inherent hassle of shopping on Shopify. Trusting the fraudsters, the buyers will give out their card details and other data. With the information, the fraudsters will proceed to exhaust the buyer’s funds. Needless to say, the buyers won’t receive their purchases. 

Because this is an off-platform purchase, the buyers aren’t under any eCommerce platform’s protection. This makes their card issuers their only hope of getting their money back.

Viral Products Scam

Like the duplicate store scheme, these stores are often very creative in the way they scam people. They will use their creativity to create a viral product, for example, Burrito Blanket, a blanket that’s shaped and colored to look like a giant tortilla wrap. These products not only go viral for their uniqueness, but also the store will try to promote them by creating ads and discounts, and other sale tactics to gain as many product sales as possible. 

Viral Products Scam

But these scammers don’t really want to create a proper business, they just want to scam people. Because most of the time, these products are new on the market, the customer won’t be suspicious if they haven’t had any reviews or ratings. Just by looking at the product’s images and descriptions, which have been crafted carefully, customers will hope to get a great product at a discounted price. But it’s far from the truth, what they receive are often low-quality products made with cheap materials and usually by underpaid workers. Sometimes, customers even receive nothing. These products also take a lot of time to ship, which reduces the chance of the customer being able to make a refund.

After scamming a lot of people, there will be feedback and warning posts from previous victims, and the scammer will ditch this Shopify store and try to create a different one with the same tactics.

Counterfeit Return Scheme 

This is a very specific eCommerce scam that involves the scammer switching out a legitimate product for a fake or inferior one during the shipping process. The Shopify store may not be a scam store at first, but it could be easily misunderstood as one. The scam works by the scammer purchasing a legitimate product from an online store, usually an expensive one, and then returning a counterfeit to the store while asking for a refund. This means the scammer not only gets the refund but also gets the high-value product, which they can sell for a profit.

Counterfeit Return Scheme

This scam will cost the legitimate store a lot of money, from the return shipping fee to the actual cost of the product itself, not to mention the labor cost of inspecting every returned item. Because when receiving a counterfeit, the only way the store should handle is to destroy it. If the returned counterfeit is accidentally or intentionally sold to the customer, the legitimate store could be seen as a scam store, and its reputation that had been built will be heavily damaged. More than that, the scam can even accuse the store to sell counterfeit which causes further damage.

Fake Purchase Order Scam

Similar to the return scheme, this scam involves a proper Shopify store and a scammer.  The scammer will try to create a fake purchase order to trick the store into shipping products that will never be paid for. The scam works by the scammer posing as a buyer and creating a purchase order that appears to be legitimate and from a real company. This purchase order may also include a request for expedited shipping or some other special handling, but this is only to increase the urgency of the transaction. The more urgent the order is, the more careful the store should be. After receiving the product, the store will realize that they can’t cash out their money due to the fact that the payment was made on a stolen card or other fraudulent methods.

Fake Purchase Order Scam

And much like the previous scam. This not only costs the store financially but also costs it credibility. Because the scam will try to blame the store in order to gain another product shipment or refund.

The impact of Shopify scam stores

The Shopify scam stores can significantly affect many parties, from buyers to legitimate sellers or suppliers, and even Shopify platform as well.

  • Financial losses: Buyers who are victimized by these Shopify scam stores may lose money on products they never receive, or sellers and suppliers who are scammed may lose revenue from products they ship without receiving payment. These financial losses can be significant and can cause a great deal of stress and frustration. eCommerce fraud in the US alone is reported to costs around $20 billion in the year 2021.
  • Damage to reputation: For legitimate sellers and Shopify itself, being associated with a scam store can be damaging to their reputation. Buyers may be hesitant to do business with them in the future, even if they had no involvement in the scam. This can have long-term implications for the eCommerce industry as a whole. More than that, as a direct result of these Shopify scam stores, eCommerce platforms like Shopify may face increased scrutiny from regulators and consumers, which could result in more stringent policies and regulations.
  • Legal and regulatory issues: Doing scams means Shopify stores are putting themselves in a lot of trouble. They are not only violating Shopify’s terms & conditions but also violating consumer protection laws and regulations. If caught, they could face up to 20 years in prison, depending on the nature and severity of each case.

How to Identify Shopify Scam Stores

Although not all scam stores on Shopify are the same, there are a few common traits that consumers can pay attention to when shopping:

  • Scam stores may not provide any contact information or may provide fake contact information.
  • Scam stores may offer products at prices that are significantly lower than market rates to lure in uninformed buyers.
  • They may have poorly designed websites with low-quality product images and descriptions that lack professional details or have fake trust badges. Because the more ambiguous the details can be, the more likely they can get away with customers’ hard-earned money.
  • Unverified or uncommon payment methods can be used by Shopify scam stores in order to increase their chances of success.
  • Scam stores may create a sense of urgency or pressure to act quickly. They can create what seems like a one-of-a-lifetime opportunity that tricks people into creating an order.
  • Suspicious website URLs: Scam stores may have website URLs that are slightly different from legitimate websites or may use misspelled words. Instead of using a domain name like .com, they could use other domain names to deceive customers.
  • A Scam store can have no social media accounts or online presence beyond its own website. When it does have social media, check to see if there are any valid ratings and reviews about its products or services. An invalid review is often an overly positive compliment, follow by a 5-star rating, and it often comes from a new clone account with little to no personal information. It may lack specific details or personal experiences. Invalid reviews are typically posted in batches, so they have similar language or phrasing across multiple reviews.

How Shopify is Addressing Scam Stores

Shopify has several policies in place to address and prevent scam stores on its platform. These policies include:

  • Verification: Shopify verifies the identity and contact information of all merchants before allowing them to set up a store.
  • Fraud analysis: Shopify uses AI-powered fraud analysis tools and technologies to detect and prevent fraudulent activities on its platform.
  • Prohibited products: Shopify prohibits the sale of certain products, such as counterfeit goods, illegal drugs, and weapons.
  • Reporting system: Shopify has a system in place for reporting fraudulent activities and scam stores on its platform.

If a merchant is marked as spam, Shopify will take various actions against scam stores on its platform. Shopify has shut down thousands of scam stores on its platform and permanently banned many sellers that are related. Furthermore, Shopify also has taken legal action against scam stores that violate its policies or engage in illegal activities.

These policies and actions have been effective in addressing and preventing scam stores on Shopify. The company has a strong commitment to providing a safe and trustworthy eCommerce environment for its users. It promises to continue to develop new technologies and policies to improve its fraud prevention measures and provide an even safer platform for eCommerce transactions.

Safeguarding Practices (How to Protect Yourself from Shopify Scams)

As safe as it sounds, as with any platform, there is always a risk of fraudulent activities and scam stores. Buyers and legitimate sellers need to remain vigilant and report any suspicious activities to help prevent scams from happening.

Steps to take if you’ve been a victim of a scam store:

If a scam has happened to you, there are a few extra steps you could use to protect yourself and potentially recover your money.

  • If you use a credit or debit card to make the payment for PayPal, you can use the card’s chargeback, this has been proven by many users as being your best bet to get your money back. But this should also be your last resort because doing so means you could get blocked or even marked as a scam on PayPal’s system.
  • Before that, you could try to contact the seller directly and ask for a legitimate tracking number or a refund. Maybe there is a miscommunication somewhere along the way.
  • Further, when the seller refuses, you will have more proof to file another dispute or a claim. This allows a PayPal representative to review the case and make a final decision. You should include screenshots of any communication you’ve had with the seller, a copy of the fake tracking number, and any other evidence that supports your claim. 
  • Finally, you should also consider reporting the scammer to PayPal and any relevant local authorities, such as the Internet Crime Complaint Center (IC3), Federal Trade Commission (FTC), and the Better Business Bureau (BBB).

Preventions you can do to protect yourself

Customers can follow this recommendation to prevent being scammed

  • Learn more about Internet scam news, policies, regulations, and scam guidance. Along with that, learn how to spot a scam store, and how to report it because being informed and sharp is one of the best protection.
  • Monitor your debit and credit card reports. This helps to soon discover any attempts to withdraw money from your account and stop it at the very beginning.
  • Improve your security by having strong passwords, changing them regularly, and using two-factor authentication. By doing so, you are making your account stronger against scammers. 

In conclusion,

While Shopify and other platforms are trying their best to spot and banned scam stores, it is your responsibility to be informed and protect yourself against any fraud. 

To know more about scams on Shopify and how to differentiate yourself from those stores, contact us. We have a team of experts that are happy to answer your questions.

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