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Online Shopping Scams and How to Avoid Them

With Christmas shopping looming, now is the time to wise up to the tricks of online scammers.

Online Shopping Scams and How to Avoid Them
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In hindsight, there were some red flags. But the offers on the barbecue website bbqarena.com.au were too good to pass up – several hundred dollars off a Weber barbecue. Enticed by the large (but not too large) discounts on a range of reputable brands and the site’s apparent legitimacy, numerous buyers clicked through to the purchase button. They were then prompted to pay by bank transfer. Three weeks later, still no delivery. When they called to follow up, no one answered the phone and the website was ‘down for maintenance’.

Like more than 1000 other Australians in the first eight months of 2017, the would-be barbecue owners had been scammed by a fake online shopping site posing as the real thing. “Please don’t make the same mistake I did,” wrote one in an online forum recently. “One important thing when buying online from an unknown (to you) seller is to ask on forums like this. More than likely someone else will have had some experience and advise a No Go,” wrote another.

The Australian Competition and Consumer Commission (ACCC) receives more reports each year about online shopping scams than any other scams. Australians lost more than $700,000 this way in the first eight months of 2017 alone. While people of all ages are likely to fall victim – people aged 25 to 34 make up the largest category, with women more prone to being scammed than men.

Executive director of the Australian Retailers Association, Russell Zimmerman, this number is set to rise as online shopping gains popularity. Australians now spend about $24 billion a year shopping online, representing about 7.5% of all retail turnover. Online shopping is predicted to increase to about 12% of turnover and then plateau. “Everybody is doing more online shopping – it means you don’t have to go out to get your goods,” Zimmerman says. “There are very strict guidelines in place for retailers in Australia, but often online you’re dealing with retailers from overseas. The only real way to protect yourself is to either deal with someone who has been recommended to you, or deal with an organisation that’s readily recognised.”

The reality is, unlike face-to-face shopping, the very appeal of online shopping is its ease, and it’s this laid-back simplicity – and the lapse in caution that comes with it – that allows scammers to target and lure their victims into thinking they and their money are safe.

In hindsight, there were some red flags. But the offers on the barbecue website bbqarena.com.au were too good to pass up – several hundred dollars off a Weber barbecue. Enticed by the large (but not too large) discounts on a range of reputable brands and the site’s apparent legitimacy, numerous buyers clicked through to the purchase button. They were then prompted to pay by bank transfer. Three weeks later, still no delivery. When they called to follow up, no one answered the phone and the website was ‘down for maintenance’.

The would-be barbecue owners had been scammed by a fake online shopping site posing as the real thing. “Please don’t make the same mistake I did,” wrote one in an online forum recently. “One important thing when buying online from an unknown (to you) seller is to ask on forums like this. More than likely someone else will have had some experience and advise a No Go,” wrote another.

With New Zealanders having spent $3.8 billion online last year, and online shopping growing at a ‘double digit’ rate, some are falling victim to shopping scams and tricks.

Executive director of the Australian Retailers Association, Russell Zimmerman, this number is set to rise as online shopping gains popularity. Australians now spend about $24 billion a year shopping online, representing about 7.5% of all retail turnover. Online shopping is predicted to increase to about 12% of turnover and then plateau. “Everybody is doing more online shopping – it means you don’t have to go out to get your goods,” Zimmerman says. “There are very strict guidelines in place for retailers in Australia, but often online you’re dealing with retailers from overseas. The only real way to protect yourself is to either deal with someone who has been recommended to you, or deal with an organisation that’s readily recognised.”

Netsafe, a non-profit organisation that assists victims of online scams, received over $13 million reports of losses from online scams in 2015. The average loss was $12,995 with the highest loss being $2.1 million.

The World of Fake Websites
The World of Fake Websites
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The message is clear – online shopping scammers are successful thanks to their ability to hide behind fake websites. Using the latest technology, scammers can create a site that looks like a genuine online retail store. They will often advertise these sites on Google, so when you search for a product they will pop up at the top of your results page. More often than not, these online stores are replicas of large stores that you’re familiar with, created using stolen logos, or they have sophisticated, high-end designs. They may have a ‘.co.nz’ at the end of the address, but their NZBN will be fake.

Often those unscrupulous traders are based overseas, making the chance of a shopper getting their money back low.

The Commerce Commission’s Consumer Issues 2016/2017 report found around 20 per cent of ‘.co.nz’ websites were registered to individuals based abroad, which is lulling some online shoppers into a false sense of security, believing they are dealing with a New Zealand–based company.

The swindle works because you trust everything is above board – you make your purchase in good faith but the product never arrives.

Back in June, two Latvian nationals living in Queensland, Australia, were arrested and charged after they set up 28 fake sites selling heavily discounted outdoor furniture, barbecues, marine motors and fitness equipment, with some items worth as much as $5000. The Queensland Police Service has alleged shoppers received what looked like genuine invoices and paid for the products with credit cards or bank transfers, but the goods were never delivered and their money disappeared overseas. It believes more than 200 people lost a total of A$250,000 in the scam. “We’re living in an environment where every­one wants a bargain,” said Detective Sergeant Kris Steadman. “I think if a deal’s too good to be true, it probably is.” Steadman urged online shoppers to restrict their buying to trusted websites and to pay using services that included buyer protection, such as PayPal.

The message is clear – online shopping scammers are successful thanks to their ability to hide behind fake websites. Using the latest technology, scammers can create a site that looks like a genuine online retail store. They will often advertise these sites on Google, so when you search for a product they will pop up at the top of your results page. More often than not, these online stores are replicas of large Australian stores that you’re familiar with, created using stolen logos, or they have sophisticated, high-end designs. They may have a ‘.com.au’ at the end of the address, but their ABN will be fake.

The swindle works because you trust everything is above board – you make your purchase in good faith but the product never arrives.

Back in June, two Latvian nationals living in Queensland were arrested and charged after they set up 28 fake sites selling heavily discounted outdoor furniture, barbecues, marine motors and fitness equipment, with some items worth as much as $5000. Queensland Police have alleged shoppers received what looked like genuine invoices and paid for the products with credit cards or bank transfers, but the goods were never delivered and their money disappeared overseas. Queensland Police believe more than 200 people lost a total of $250,000 in the scam.

“We’re living in an environment where every­one wants a bargain,” said Detective Sergeant Kris Steadman. “I think if a deal’s too good to be true, it probably is.” Police investigations into the fake trader website scam are expected to continue interstate and take up to two years. Steadman, speaking at the time of the pair’s arrest on June 27, urged online shoppers to restrict their buying to trusted websites and to pay using services that included buyer protection, such as PayPal.

Trading Sites
Trading Sites
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Fake sellers are having alarming success posing as genuine sellers on trading sites, often advertising prices much lower than everyone else. They might also approach you through social media or email with appealing offers and posts of pictures of the item they are purporting to sell (often copied from someone else’s genuine advertisement). The terms seem reasonable enough – pay up-front before receiving the item. Your suspicion isn’t aroused until you start getting excuses on why they can’t accept payment through the secure site – they say they are travelling or have moved overseas, for example – so they ask you to transfer funds directly to them.

The goods advertised this way can be anything, from pets to used cars, boats and even holidays. That’s what happened back in April when Nelson woman Mary Bier almost fell victim to a scam buyer when she posted her Suzuki scooter for sale on Trade Me for $2250. According to a report about the incident in Stuff.co.nz, when Bier listed the scooter, she received interest from a buyer who was happy to pay the asking price. To secure payment, the buyer – who had a US address – asked her to join PayPal, so they could deposit the money that way. After setting up a PayPal account, the buyer’s demands began to ‘smell bad’. She eventually terminated the sale, but not before the buyer asked her to pay $750 for a pick-up agent, promising to refund the money into her PayPal account along with the original purchase price of $2250.

Fortunately, the 73-year-old Bier wasn’t fooled by this bizarre request. “Why on earth would I have to pay anything before I get my money?” she told Stuff.co.nz. Her bank confirmed it was a scam, and that other, more trusting sellers, hadn’t been as smart.

“You should never pay by Western Union, telegraphic transfer, bank transfer or overseas money order in order to complete a trade you made on Trade Me,” the online auction site advises. “Everyone on Trade Me must have a New Zealand bank account.”

Fake sellers are having alarming success posing as genuine sellers on trading sites, often advertising prices much lower than everyone else. They might also approach you through social media or email with appealing offers and posts of pictures of the item they are purporting to sell (often copied from someone else’s genuine advertisement). The terms seem reasonable enough – pay up-front before receiving the item. Your suspicion isn’t aroused until you start getting excuses on why they can’t accept payment through the secure site – they say they are travelling or have moved overseas, for example – so they ask you to transfer funds directly to them.

The goods advertised this way can be anything, from pets to used cars, boats and even holidays. That’s what happened last year when Perth mother Sarah Vardy lost nearly $6000 when she tried to buy a puppy for her daughter’s 16th birthday through the Trading Post online classifieds. The scammer was posing as a breeder of cavoodle puppies and asked Sarah some convincing questions, appearing to establish that the dog was going to a good home. They also sent photos of the puppy and an ABN, which later turned out to be false.

Her mind at ease, Sarah transferred $1100 to a bank account for the puppy and interstate travel. She then received a phone call asking for $1800 for immunisation and puppy insurance, followed by another demand for $3000 for a climate-controlled crate. When she called to question the amount, she was reassured the puppy was on its way. The minute she’d transferred the money, she knew she had been scammed.

Social Media
Social Media
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With its instant reach and availability, social media is driving another variation of online shopping scams. Buying beauty goods via social media has become particularly popular. When an online retailer called LuxStyle advertised its products on social media, people who were interested clicked through to their website, which would not display prices unless they entered their mailing and email addresses. The scammers then posted goods to customers – unsolicited – along with an invoice. Those who ignored the invoice received a string of subsequent demands for money. Others, like Hobart mother Asya Moussawi, sent the company an email querying the delivery, to which they replied by telling her to return the goods at her own expense. A few days later, they suggested she could keep the cosmetics at a 50% discount – a price less than the cost of the postage to return them. When Asya refused, she received a string of emails and threats that the debt collectors would be sent round.

The ACCC confirms that in Australia, the consumer is not required to pay for unsolicited products or services, or to pay to return them.

With its instant reach and availability, social media is driving another variation of online shopping scams. Buying beauty goods via social media has become particularly popular. When an online retailer called LuxStyle advertised its products on social media, people who were interested clicked through to their website, which would not display prices unless they entered their mailing and email addresses. The scammers then posted goods to customers – unsolicited – along with an invoice. Those who ignored the invoice received a string of subsequent demands for money. Others, like mother of one Asya Moussawi, sent the company an email querying the delivery, to which they replied by telling her to return the goods at her own expense. A few days later, they suggested she could keep the cosmetics at a 50% discount – a price less than the cost of the postage to return them. When Asya refused, she received a string of emails and threats that the debt collectors would be sent round.

Consumer Protection confirms that in New Zealand, the consumer is not required to pay for unsolicited products or services, or to pay to return them.

 

Genuine or Fake?
Genuine or Fake?
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One of the key problems with online shopping scams is that it’s so hard to tell the genuine from the fake in the online world. As Russell Zimmerman points out, many genuine retailers do often offer substantial discounts online, sometimes as high as 70% off at the end of the season. The industry is fighting back, with technological advances introduced overseas to send verification messages to your mobile phone or require an authentication code before you purchase. “But at the moment, it’s still buyer beware. If you are not certain, it might be better not to buy,” says Zimmerman.

So, what do you do if you are one of the tens of thousands of people who may be scammed this Christmas?

Be Aware and Protect Yourself
Be Aware and Protect Yourself
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Clive van Horen, executive general manager, retail products, at the Commonwealth Bank, advises that consumers should only shop on secure sites and deal with sellers they trust. One easy way of checking is to make sure that the URL starts with ‘https’ or that the address of the browser shows a padlock, indicating a secure site. Often, it’s the simplest of mistakes that can cause the greatest damage. “Never share your PIN with anyone and never send it over the internet,” stresses van Horen. Customers do make these simple but high-risk mistakes. “And always keep your receipts safe.”

Banks are, however, the first to acknowledge that the ease of online shopping means consumers can easily let their guard down and experience a lapse in judgement when shopping online. The first thing to do is to contact your bank. “If a customer believes they have been scammed they should immediately contact their bank so their account can be blocked,” he says. “Commonwealth Bank offers customers a 100 per cent security guarantee. This means we’ll cover any loss should someone [operating a scam] make an unauthorised transaction [from a bogus website] on a customer’s account.”

Just as you would take precautions when shopping in your favourite stores at the shopping centre, such as making sure your wallet or purse is safely concealed and your credit card returned following a purchase, van Horen suggests consumers also take measures to protect themselves when shopping online.

“Ensure your computer has up-to-date anti-virus and anti-spyware, and an effective firewall,” he advises. “And always use a secure password to log on to email and change it frequently. Consider using different email addresses for different purposes, including a specific email for your bank, another for family and friends, and a third for general use, such as online newspapers.”

But still, it is up to you to be as cautious when shopping online as you would in the real world – and that means doing your homework and using your common sense.

When is it safe to give out your credit card details?
When is it safe to give out your credit card details?
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  • Is it a genuine website? Do you trust this seller? Look very closely at the url, check for grammatical errors, spelling mistakes and discrepancies in the company’s name or logo.
  • Check that the website has an ‘https’ and not an ‘http’ in the address and a closed padlock symbol in the bar above. This signals a secure payment mechanism.
  • If possible, use an escrow service, such as PayPal. This means the money is held until you receive your goods.
  • It is usually safe to give your CVV number (the three-digit number on the back of the card) online – this is for security purposes. But never give anyone your CVV number when you are paying by credit card in person.
Tips for protecting yourself when shopping online
Tips for protecting yourself when shopping online
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  1. Never trade outside an auction website.
  2. Never send money or give credit card or online account details to anyone you don’t know or trust.
  3. Never respond to emails asking for credit card details.
  4. Do your homework. Look at other people’s comments about a seller, or do an internet search to see what others have said.
  5. Only send money through a secure payment mechanism. If a retailer asks for a payment via wire transfer, money order, pre-loaded money card or gift cards it is often a scam.
  6. Only ever pay through the website. Don’t respond if the seller subsequently contacts you directly by email or phone.
  7. Pay by credit card if possible as it’s easier to contest a payment. Most scams rely on people using debit cards, when the money comes straight out of your bank account.
  8. Consider keeping a credit card with a low limit ($1000 to $2000) just for your online shopping. That will cap the amount you could lose.
  9. Check the website’s refund or returns policy, and always keep receipts.
  10. Ensure your computer has up-to-date anti-virus and anti-spyware. This will help prevent phishing scams (where scammers send you messages directing you to fake websites).
  11. Use a secure password to log on to email.
  12. Consider using different email addresses for different purposes, including a specific email for your bank, another for family and friends, and a third for general use.
  13. Never share your PIN with anyone and never send it over the internet.
  14. Check your credit card statements closely and query any discrepancies.
Free trial offer! (AKA The ‘Just Pay Forever’ Scam)
Free trial offer! (AKA The ‘Just Pay Forever’ Scam)
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How it works You see an internet offer for a free one-month trial of some amazing product – often a teeth whitener or a weight-loss programme. All you need to pay is $5.95 for shipping and handling.
What’s really going oN Buried in fine print, often in a light colour, are terms that obligate you to pay $79 to $99 a month in fees, forever.

The big picture “These guys are really shrewd,” says Christine Durst, an internet fraud expert. “They know that most people don’t read all the fine print before clicking on ‘I agree’, and even people who glance at it just look for numbers. So the companies spell out the numbers, with no dollar signs; anything that has to do with money or a time frame gets washed into the text.” That’s exactly what you’ll see in the terms for Xtreme Cleanse, a weight-loss pill that ends up costing “seventy-nine dollars ninety-five cents plus five dollars and ninety-five cents shipping and handling” every month once the 14-day free trial period ends or until you cancel.

How to avoid Read the fine print on offers, and don’t believe every testimonial. Check https://tineye.com, a search engine that scours the web for identical photos. If that woman with perfect teeth shows up promoting different products, you can be fairly certain her ‘testimonial’ is bogus. Reputable companies will allow you to cancel, but if you can’t get out of a ‘contract’, cancel your credit card, then negotiate a refund; if that doesn’t work, appeal to your credit card company.



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