12/12/09 - Article No: 37

Retail Website Scams (Online Shopping)

An article about websites that claim to sell products but simply take your money and run. Learn how to shop safely online.

Creating a fake company or service before the Internet became popular wasn’t an easy task. To make it believable, a scammer would have to make their counterfeit company appear official. To do this a scammer would have to possibly create a fake office, and contacting potential victims would mean phoning them up, or even risk face to face meetings. This can be very perilous, and even though some professional con artists still use this method, the advantages cyberspace provide to a scammer means that nowadays online bogus companies are now far more popular than their offline counterparts.

You see, online, all a scammer really needs to look legitimate is a decent enough looking website and a way of getting their website noticed by potential victims. Scammers have managed to create a diverse variety of different cons that include the use of a website, including advanced fee fraud, certain check cashing scams like fake job offers, also phishing attacks and email malware scams. However it is the scams that simply pretend to offer a service, take your money and then disappear that are possibly the most effective and audacious cyber crimes out there. Often wholesale and retail scams (which we refer to as ‘fake product or service’ on this site) may take on the form of some of the pre mentioned scams, like advanced fee fraud, but usually they just take your money and run.

It may surprise people to learn that these bogus websites are often up for months at a time before being taken down. Why it takes so long to shut these websites down is usually down to people not reporting being scammed in a timely fashion, or reporting it to the wrong people, and not to mention that most of the scams originate from different countries to their victims, like West African nations, China and Russia, meaning there is not a lot local law enforcement can do about it.

As well as typically originating from these countries, they also typically sell the same range of products, including electronics, watches, drugs - like steroids, teeth whitening products and acai diet pills.

So how does one go about spotting the fake sites to the legitimate online resellers or wholesalers?

Whilst usually there is no definitive way of knowing if a site is a scam, there are usually certain red flags you should avoid.

One important tool online is the WHOIS database. You can find more information on it by clicking here, but basically everyone who creates a domain automatically has to make certain data available. This data can be a major giveaway if the site is hiding something from you. Registering a .com (commercial) domain means that by default the registrants details are made public, but these can be hidden with various privacy tools. However, what can never be hidden is the date the website was created and registered. Many bogus sites will claim they have been operating for years, but the WHOIS information tells a different story – that their domain was only registered a handful of months ago. Sites like this should be dismissed at this point, there is nothing that can redeem a site when it lies about how long it has been operating. Even if the site itself makes no claims as to how long they have been operating, it is never a good idea to buy from an online reseller that has been operating for less than a year. When it has been around for over a year, there should be significant user feedback about the site floating around online, which you can then use to make a more informed decision about the reseller. Also most of the reseller scams don’t last longer than a year. Of course this no nonsense tactic begs the question that if everyone used this advice then no new online reseller would be able get off the ground. The unfortunate fact is – no where near everyone uses due diligence - this advice if for you, because you have taken the time to read this article.

This kind of treads on the next point – due diligence. We all know that major online resellers like Amazon or online spin-offs from established companies like Walmart are going to be legitimate and a user doesn’t really have to conduct research to reach this conclusion. However, there are thousands of smaller companies that not many have heard of before, and these companies are the ones that require a responsible buyer to conduct research on. Other than the WHOIS tactic, do an Internet search with the company name or URL included. First off by itself and then with certain words like scam or fraud. Are there many hits? Go onto sites like this or scam.com, or ripoffreport.com or check the BBB (better business bureau) for complaints. If a company has been operating for more than a year and negative feedback is a minimum then it is looking good.

As for the site itself, it can be difficult to determine if it is professional or just professional looking. Web designers and developers can spot a poor template in seconds, but inexperienced online buyers will have trouble with this. So in this case look at the About Us section and check for poor grammar and spelling. As many of these scams originate from China or Russia, the English may be poor. On this note, if the site does purport to be from a foreign country, does it have its own non-English version for its home country? Many of these sites will only target Europe and America because the scammer knows it is hard for them to do anything about it, but if they start scamming people from their own country, then this dramatically increases the risk factor.

When on the site, also take note of the payment options. Does it include money transfer services like Western Union or MoneyGram? If yes, then immediately dismiss the site. Why? You can click here for more information on why.

One more sign is price. Everyone is looking for a great deal, but are the prices a company are offering a little too good to be true? Many "Chinese Wholesale" scams will offer unbeatable prices on things like electronics, but are these prices realistic? Don’t be suckered in by cheap price tags. The cheaper an item is, the increased chance you are merely being suckered in.

As we mentioned earlier in the article, some of the scams don’t stop at taking your money and running. Handing over personal details can lead to identity fraud, and many of these scams can turn into advanced fee fraud, where the company not only takes the initial payment for the goods, but continues to ask for payments like handling fees, courier fees and even audacious as requesting money for “bribes” to get the cheap goods out of the country. The victim pays the extra costs, and often ends up paying more money than if they had gone straight to a reputable company like Amazon, and after all that still ends up without the product.

These sites stay up for months at a time, so don’t let the fallacy that criminals don’t own websites fool you. They do, and frankly, they are everywhere.

To be completely safe from these scams, the obvious advice is to stick to reputable major online resellers of which there are many, but for those who insist on looking for the cheapest deals out there, if you do venture to the small companies from abroad, heed the advice on this page as these scams are much, much more prolific than you would think. If anything does raises suspicions, stay away, because in these cases, being safe is definitely better than being sorry.

To reiterate those safety tips, you can also read our top ten tips to shopping safely online by clicking here.

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