Holiday scams aren't so easy to spot anymore. How online shoppers can avoid swindlers.
Melanie Duquesnel thought a pair of sequined trousers might add just the right amount of sparkle to Detroit's Hob Nobble Gobble fundraiser.
Glittery tanks, sequined sheath dresses and sparkly slacks are everywhere this holiday. But those shiny pants proved to be just a tad too disco for Duquesnel, once she opened the package she ordered online from Old Navy.
They threw off such a '70s vibe that she knew immediately that "there's no way I can do this," said Duquesnel, president and CEO of Better Business Bureau Serving Eastern Michigan.
Her holiday shopping story, though, had a happy ending. She easily took the pants she bought online back to a brick-and-mortar Old Navy store in the area and received a full refund.
Unfortunately, not all returns will be as happy this holiday season.
Holiday headaches for online shoppers
Online rip-offs can involve counterfeit goods or items that never arrive. Two big problems for online shoppers continue to be ridiculous return policies, and online vendors who suddenly disappear when something goes wrong.
"You need to understand who you're buying it from, what their return policy is and what do you do if it doesn't all happen in the way you planned it," Duquesnel said.
Spotting a deal on Facebook, Duquesnel said, can be particularly risky if you don't take time to research the offer, investigate potential complaints, such as those reported at BBB.org, and verify that the company is legitimate.
Top brands that scammers focus on, according to an alert from the Better Business Bureau, include Nike shoes, NFL clothing, Apple gadgets, Louis Vuitton handbags, Tiffany jewelry and LEGO toys.
"Just because it's online doesn't mean it's true," Duquesnel said.
Before loading up your online cart, experts say, Google the website name with the words “complaints,” “reviews,” and “scam” to see what other customers are saying. The BBB recommends checking the “About Us” or “Contact Us” section on the company’s website before ordering anything. See if the website lists actual contact details. It's a huge red flag if the only way to contact an online seller is through a form.
"Trust by association is not a good strategy. It just isn't. You really do need to take a moment and do some research on anybody you work with," Duquesnel said.
Online shopping continues to grow in popularity, remaining one of the biggest shifts in consumer behavior from the COVID-19 pandemic, according to the National Retail Federation. The trade group is forecasting that online and nonstore sales will climb somewhere between 7% and 9% as part of its holiday forecast, up from $255.8 billion in sales last year.
And yet, online shopping remains a hotspot for scammers who create imposter websites, sell counterfeit goods, and trigger panic by calling or texting to indicate that something is wrong with a shipment or order.
Fake ads will fool plenty of people
This year, consumers are being warned to watch out for fantastic gift ideas, hard-to-find items and incredible deals that show up via social media platforms, such as Instagram or Facebook.
The BBB Scam Tracker has received thousands of complaints from online shoppers about misleading Facebook and Instagram ads. The Federal Trade Commission warns: "Scammers are hiding in plain sight on social media platforms."
One in four people who reported losing money to fraud since 2021 — including many younger consumers in their 20s — said it started on social media, according to the FTC. The reported dollar losses to scams on social media reached $2.7 billion, far higher than any other method of contact. Consumers are losing money both to online shopping scams and investment scams that start online.
In the first six months of 2023, the FTC said, more than half the money reported lost to fraud on social media went to bogus investments.
Young consumers in their late teens and 20s who often shop online can be vulnerable.
In the first six months of 2023, the FTC said, young consumers ranging in age from 20 years old to 29 reported that the scam where they lost money started out on social media more than 38% of the time.
Consumers complain about clothing, electronics and other items ordered online that never showed up.
Scammers create fantastic ads, lookalike websites that impersonate big name brands and, generally, do a great job making you think you've found a fantastic bargain.
But remember, anyone can steal a photo of an Nintendo Switch OLED or PlayStation 5 and post it online at a price that makes you rush to get your credit card.
If you order it, you might never receive a package. Or, according to warnings from the Better Business Bureau, some consumers have ended up ordering a gaming console at a great price and then getting a ridiculous phone cover or other small item in a box.
Scammers prepare for holiday shoppers
"Many of us start planning our holiday shopping lists weeks in advance. I guarantee you that con artists started planning ways to rip us off months ago," said Teresa Murray, who directs the Consumer Watchdog office for U.S. PIRG, a nonprofit advocacy group.
"This year, we're urging consumers to view ads on Instagram, TikTok and Facebook with massive skepticism," Murray said. "It's so easy for con artists to pretend to be a merchant on social media. They're gone after they steal your money."
Consumers have complained online about seeing photos on Instagram advertising brightly colored clothing, which on second glance seem generated by artificial intelligence. In some cases, consumers who ordered the clothing say they didn't get anything close to what they thought they bought at a bargain price. Sometimes the same pictures are used on multiple websites, a huge red flag.
Or you might spot an ad from what appears to be a small business selling adorable jewelry, T-shirts, or other clever items. The seller says that some of the proceeds from the sale will go to a charity that helps rescue animals, foster children, or support another cause. "Some consumers even report getting direct messages from sellers promoting the products and asking them to spread the word to friends and family," the BBB warns.
But again, the big risk from those who report such scams is that the merchandise never gets delivered. When you try to contact the company, it's a no-go. They're unreachable or reply with a useless automated response.
"In reality, the product never existed," the BBB warned in early November.
More:New INFORM Consumers Act is crackdown against fake goods sold online: How it works
Fake goods and prices that are too good to be true
Another red flag: Prices that really are too good to be true. Counterfeit items being sold online can be offered at prices that might be 30% to 50% lower than prices for the real deal.
Consumer watchdogs report that some Facebook or Instagram ads this year that appeared to look like a well-known company promoted huge clearance sales for “90% off” last year’s stock. But upset customers ended up with damaged goods, counterfeits or nothing at all.
"If it's too cheap, you know it's probably fake," Duquesnel said.
When you think of counterfeit goods, the items that come to mind include fake designer handbags, luxury goods, electronics or great deals on jackets plastered with major league logos. But the counterfeit goods sold online go far beyond those items.
"Any product that has a brand name on it can be counterfeited," said Kari Kammel, director of Michigan State University’s Center for Anti-Counterfeiting and Product Protection.
"We see almost every industry you can imagine and every product line you can imagine counterfeited," Kammel told the Detroit Free Press.
Holiday shoppers, she said, need to realize that counterfeit goods being sold online can include toys, bicycles, bike helmets, clothing of any kind, electronics, and more potential gifts. The risk is that the item might not be properly manufactured or handled.
Kammel testified in October in the Senate’s Shop Safe Act hearings to advocate for an effort to curtail the sale of harmful counterfeit goods by online marketplaces. Trademark counterfeiting has been around for years, she said, but the scope of the problem has changed dramatically with the growth of online shopping.
It's essential, Kammel said, that holiday shoppers know who they are buying from when searching for gifts online.
Many sites, including Amazon, Walmart, Target and others, run third-party marketplaces online, which allow an outsider or someone who is not the manufacturer themselves to sell a popular item. "That's where it becomes really risky," Kammel said.
The seller could even be someone selling stuff out of their basement.
One way to think about the brick-and-mortar experience versus shopping online is to realize that when you go to a store, each store has limited shelf space that's stocked based on supply and demand in the market, said Saleem Alhabash, professor of advertising at MSU and associate director for research for MSU’s Center for Anti-Counterfeiting and Product Protection.
Online we're looking at "limitless shelf space," Alhabash said.
Online marketplaces have created advantages for small businesses and entrepreneurs to offer their products directly to consumers, he said. But the door also has been opened wide for scammers.
"What we're seeing in relation to the counterfeit issue is that a lot of sellers tend to be individuals who are provoking and selling products that are not produced according to the standards set by the manufacturer."
Consumers often don't get the same quality or safety standards.
"It doesn't mean every third-party seller is nefarious or trying to sell counterfeits," Kammel said, "but we also can't trace where they're getting their products from at all."
The safest way to buy many items, Kammel said, is to buy it directly from that manufacturer's or brand name's website. You'd want to review the URL and other factors, such as looking for misspelled words, to make sure the website isn't being run by a scammer impersonating a big brand.
It's possible it will cost a few dollars more or take a few days longer to get by going directly to the manufacturer, she said, but the consumer has more confidence that they'll be getting the real item, not a fake one.
If you decide to buy from any third-party seller on big sites like Amazon or others, Kammel advises to really check out the seller. Some licensed retailers might be on the list, but consumers will have no idea who the other sellers are.
You can find the seller's name on the product page near the button for buying an item and other basic information, like where the seller is located.
If you're searching online for a particular items, such as a bicycle helmet, you might see 30 sellers selling that particular product at one of these online marketplaces. But do you really want to buy a bicycle helmet, once you do your research, from a seller named CheapPetStuff? That can be a clue that maybe they aren't really a legitimate seller, she said.
After seeing pages of listings for a specific product, she said, some consumers might sort by price to find the lowest price first.
"In some cases, the counterfeiters will reduce the price by a penny less than the actual manufacturer," Kammel said, "because they know people are searching by price."
If you received counterfeit goods from a seller, alert the online marketplace and report this issue to the FTC at reportfraud.ftc.gov.
If you believe you’ve purchased a counterfeit or knockoff product, report it to the U.S. Consumer Product Safety Commission at SaferProducts.gov or call 800-638-2772. Problems with counterfeit medications, food and other products overseen by the Food and Drug Administration can be reported to the FDA.
Contact personal finance columnist Susan Tompor: [email protected]. Follow her on Twitter @tompor.