Online shopping scams involve scammers pretending to be legitimate online sellers, either with a fake website or a fake ad on a genuine retailer site.
How this scam works
While many online sellers are legitimate, unfortunately scammers can use the anonymous nature of the internet to rip off unsuspecting shoppers.
Fake retailer websites
Scammers use the latest technology to set up fake retailer websites that look like genuine online retail stores. They may use sophisticated designs and layouts, possibly stolen logos, and even a ‘.com.au’ domain name and stolen Australian Business Number (ABN).
The biggest tip-off that a retail website is a scam is the method of payment. Scammers will often ask you to pay using a money order, pre-loaded money card, or wire transfer, but if you send your money this way, it’s unlikely you will see it again or receive your purchased item.
Online auction sites
Most online auction sites (e.g. Ebay) have strict policies to ensure their customers are not scammed. Scammers know this, so they will often try to get people to make a deal outside the auction site. Scammers may claim that the winner of an auction you were bidding in has pulled out, and offer the item for sale to you. Once they have your money, you will never hear from them again and the auction site will not be able to help you.
Online classified websites
Online classified websites promote the sale of goods and services, but allow sellers and potential buyers to negotiate on a price outside of the website.
Scammers may pose as genuine sellers and post fake ads for anything, such as rental properties, pets, used cars, boats, bikes, caravans and horses. The scammers may advertise items at a price much lower than comparable items advertised on the same site. These are known as classified scams.
Scammers may also pose as buyers, send you a cheque for more than the required payment on an item, and then ask you to refund the difference. These are known as overpayment scams.
- A product is advertised at an unbelievably low price, or advertised to have amazing benefits or features that sound too good to be true.
- The other party insists on immediate payment, or payment by electronic funds transfer or a wire service. They may insist that you pay up-front for vouchers before you can access a cheap deal or a give-away.
- An online auction seller and any initial bidders have a very poor rating, or the seller wants to complete the sale outside of the auction website. If you do this, you lose any protection offered by the website operator.
- An online retailer does not provide adequate information about privacy, terms and conditions of use, dispute resolution or contact details. The seller may be based overseas, or the seller does not allow payment through a secure payment service such as PayPal or a credit card transaction.
- Check if the website or online auction site has a refund or returns policy, and that their policies sound fair. The better online shopping and auction sites have detailed complaint or dispute handling processes in case something goes wrong.
- When using retail websites, find out exactly who you are dealing with. If it is an Australian company, you are in a much better position to sort out the problem if something goes wrong.
- When making online payments, only pay for items using a secure payment service—look for a URL starting with ‘https’ and a closed padlock symbol, or a payment provider such as PayPal. Think twice before using virtual currencies such as bitcoin—they do not have the same protections as other transaction methods so you can’t get your money back once you send it.
- When buying from an online classifieds website, only pay when you have physically inspected or received the goods. If you have any doubts about the product or the person selling it, don’t go ahead with the deal.
- When using online auction websites, check all comments about the seller you are considering buying from. Never trade outside of the auction website.
- If you are buying from an online auction you may want to use an ‘escrow’ service. Escrow services collect your payment, then release payment to the trader or seller only when you have confirmed that the product has arrived and is what you paid for. There is usually a small fee for this service. Only use a reputable escrow service—online auction sites may provide a list of recommended providers.
- Avoid any arrangement with a stranger that asks for up-front payment via money order, wire transfer, international funds transfer, pre-loaded card or electronic currency. It is rare to recover money sent this way. Never send money or give credit card or online account details to anyone you don’t know or trust and never by email.