Shopify powers much of the ecommerce industry.Scams are a real threat to both business owners and consumers.There is always money to be made and people looking to make a profit. Shopify is thriving and the platform offers more benefits than it has.But, it is important to be aware of all the potential downsides of such a large platform.Here are some Shopify scams that are well-known and targeted at business owners and consumers.
Forums such as R/shopify provide warning signs and advice on how to avoid scams based on Shopify. These scams likely don’t “Shopify only”, as they use the technology and trends that underpin online commerce. It is crucial to do your research before purchasing products online or working with unreliable partners.
Shopify scams target consumers
Scammers are all too common online. Scammers often target consumers due to the wide range of knowledge available. The knowledge available to scammers varies from highly educated individuals to younger teens and older customers. Scammers have a wide range of tricks and strategies to make a quick buck.
- Off Platform Sales Scam
Common schemes start with trusting purchases. As routine purchases are made on the e-commerce platform, the so-called direct client scheme becomes a fraud. A “real” website with real inventory is one example. Customers are able to find the site and place a order. The site is a scam and the merchandise is delivered as promised. Everyone is satisfied. After a few purchases, scammers contact the victim and ask for a sale through the trusted platform. The customer makes the purchase but never receives the merchandise. The scammer takes a small percentage of each sale, and then makes a large profit on the final sale.
- Fake Stores
New brands can leverage the marketing strategies that e-commerce sites have developed. Create a logo or image for a popular product, and then promote it on social media. This strategy works well for most e-commerce brands that Shopify has built. Scammers can use the same strategy to create fake Shopify stores. Consumers have very limited options for recovering their money unless they pay with credit cards or mark invalid purchases.
Forbes shared recently a study by Fakespot which found that approximately 20% of Shopify websites are fake.
Shopify scammers will often attempt to take advantage of consumers by copying popular products from Amazon, Shopify, and Kickstarter. After gaining customers to their Shopify site, the scammers will continue to pitch them with discounts, free shipping and logos from the BBB or credit card companies to get their money back. The scammers have several options after someone has sent their payment. They can keep the money but not send anything in the hopes that they don’t challenge it; send the product, and once the customer realizes that it isn’t what they expected, they will send it back to them to get their money. Or they can send a completely new product that costs almost nothing and force customers to return the product to get it back em>
Shopify scams target businesses
Scammers not only try to steal from customers, but also make detailed plans to take money from suppliers and businesses. Shopify-based businesses are particularly affected by fraudulent purchases. Shopify makes every effort to protect sellers, but they also charge a substantial fee to reimburse companies for fraudulent transactions.
- Triangulation Scam
Triangulation is one of the most lucrative scams. This is why it is a very common tactic used by online criminals. This scheme involves scammers creating fake Shopify websites and then setting up a dropshipping company. Instead of selling their merchandise, the scammers buy inventory using stolen credit cards. The consumer who orders from their site ultimately receives the goods. This is not a scam. The goods were purchased using a stolen credit card, and are therefore likely to be considered stolen merchandise. Although the scammers get money, the credit card company denies the charge to purchase the inventory. The supplier therefore has no merchandise or money.
- Counterfeit Return Scheme
The counterfeit return scheme, although not only used on Shopify is a classic scam that can only be used in a mail-order business. This scam involves consumers making a purchase and then returning the product. The scammer will return a cheaper, similar product instead of returning the product. Depending on the return policies of the business, consumers will either get the right product or their money back. Businesses can take steps to protect themselves from this scam by making returns or adding unique identifiers (e.g. serial numbers) to their products.
- Duplicate Store Program
The duplicate store scheme works exactly like it sounds. This scam involves fraudsters imitating a popular website and failing to sell the merchandise or selling low-quality goods. Due to the ease of Shopify, fraudsters can create duplicate storefronts quickly. Shopify is a popular e-commerce platform that allows you to easily create one. Conniving scammers may also be able to create false or duplicate storefronts using the same platform. Shopify has taken proactive steps to eliminate fraudulent storefronts as the scam continues to spread. This scam is harmful to consumers and business owners. However, Shopify should be able to stop fraud quickly.
Change of scheme
This is one of the most serious scams, as it can cause a loss in long-term sales. This has been a problem on e-commerce platforms like eBay. It basically means that a buyer can make a purchase in your Shopify store and then request a direct invoice directly from PayPal. They will claim that they are having technical difficulties and cannot complete a payment due to the platform.
You will receive a notification from PayPal claiming that they have received your invoice. However, it is fake. It states that the buyer has made payment and is waiting to get the tracking number. The funds are on hold until you provide the tracking number to PayPal. The funds are not held by PayPal so if the seller falls for the scammer’s trick, they will be able to get the products free of charge. A seller could lose a lot of money if they ship a large shipment or sell a product that is very expensive.
Fake return ticket
Another method of fraud is the fake return ticket fraud. This is a slow-burning but very effective scam. This scenario involves a buyer purchasing goods once. They then decide to buy a cheaper, similar product. They ask for a refund on their first purchase. The reason is that the product they received looked different than the photos or had a problem. They then return the second product, which is similar but less expensive, to receive the money back and keep the better, more expensive product.
Fake purchase order
This scam requires the greatest technical and software skills. It’s less common but still very effective. However, you should be cautious. A scammer who is pretending to be a customer would create a Shopify checkout sheet and modify the submit button link. They will then patch it to their PHP program or software that allows saving all data from your checkout. They will then modify the information they have received and adjust it to send you the fake checkout sheet at a lower cost. The price difference will not be noticeable, but you’ll still approve the transaction.
The scam allows fraudsters to obtain products without the seller’s permission or with it, but at a lower price. Before the seller realizes what is happening they could lose the entire shipment.
They have an alternative plan B if they fail to successfully fill out the purchase sheet. They can ask for a chargeback which will still leave the seller with a loss.
Are these Shopify stores a scam?
Shopify scams that use your brand content can put your customers, revenue and brand at risk. In order to reduce traffic to your site, the impersonator attracts potential customers to theirs. This in turn decreases revenue. Customers will spend money on the Shopify fake store, but not on your products and brand.
Shopify fraud victims receive cheap, low-quality products or nothing at all. These scammers can continue to abuse their customers’ sensitive information, including credit card numbers and addresses. This is no surprise. These shoppers are often upset by being scammed and it can have a negative impact on your brand more than the scammer.
Shopify scams that impersonate your brand defraud shoppers. They often return to your store to vent their frustrations. Many shoppers may not realize they were scammed by Shopify and will report the real store. This can result in more complaints and negative reviews, which can tarnish your brand and destroy the trust you have built with loyal customers.
Shopify Stores: Examples of fraud
Shopify fraud is not a common problem. There are many examples of people being scammed by fake websites. These scammers use different methods, making it challenging for brands to protect themselves.
John Koetsier is an example of a Shopify scammer. He shared his entire story in this Forbes Article. John was able to see that the dumbbells at a steep discount were probably too good to be true. They were purchased knowing that GearsRice was a fraud website and he used PayPal to pay for the purchase.
He never received the dumbbells he ordered. Although he received a refund from PayPal, the company never reached out to him regarding any replacements or refunds. The scammers wanted to make money off consumers who bought the fake product, and they hoped that customers would forget to ask for a refund.
However, not all Shopify shoppers are as fortunate as John. MDRN Supply Co was another fake Shopify store that was recently removed from the platform. They were selling counterfeit luxury goods made by brands such as Louis Vuitton. Shopify discovered the fake store only after numerous customers complained that they hadn’t received their orders.
These situations can make it difficult for customers to receive a refund. Fake companies don’t respond to customer complaints and continue operating until they shut down. Brands need to be vigilant about monitoring websites and taking the necessary steps to shut them down when they are discovered.
Shopify scam stores can be reported
These are the steps to follow to report a Shopify scam store that is infringing your brand.
Step 1: Go to Shopify’s reporting page, and select the best option. If the fake website is using content from your brand, then “Intellectual property” is the best option.
Step 2:Enter your personal information. Shopify will request your name, company and contact information.
Provide links to the information that you are reporting. If they have copied your entire site, or specific products, this could be the link.
Fourth Step: Sign the report request using your electronic signature, and then submit.
Shopify will contact you to confirm that they have received your report.
How to protect yourself from Shopify Scams
Some common sense tips can help you protect your interests, both as a consumer and business owner. As a consumer, you should always use your credit card for online purchases. You can file a claim with your credit card company if you make an error in a purchase or if the site you are shopping from is fraudulent. They will then stop paying you. This is an easy way to protect your rights. You can also read some of the comments before you make a purchase, as fraudsters continue to leverage social media sites (and this would be where you’d find it). It is always a good idea to do some research on new brands or companies.
Business owners have a harder time protecting their assets. For simple frauds such as fake returns, you probably have procedures in place to identify your merchandise. There are very few options available to protect your business from fraudulent credit card purchases. Shopify scams will continue to be prevalent, and there’s no reason for you to believe they won’t. Keep an eye on the Shopify message board.
Shopify, for example, takes action to correct duplicate or fake storefronts as a result client complaints. Shopify’s payment tiers offer fraud protection at a fee. To protect your business against severe loss, you can add a verification step to your checkout process for large orders. Accepting fraud is possible, both in-store and online. Then determine how significant the amount to your business. Contact the consumer to confirm a purchase if a consumer purchases more than that amount. If they are a fraudster, they will most likely give incorrect information, such as a fake number.
Buyer beware is a good analogy. Understanding that fraud exists can help you reduce the likelihood of falling for a Shopify scam.
