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#Shopify

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Small Businesses

#Shopify

6 Shopify Scams To Be Wary Of

November 5, 2020
6 MINUTES
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Stefanija Tenekedjieva

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Just like many other corners of the internet, eCommerce isn’t immune to scammers. Shopify has its own portion of false retailers and fraudulent activity. Here is how to stay safe when using Shopify.

Ecommerce platforms made it possible for small businesses to have a wider market and reach customers beyond their location and borders through their online stores. At the same time, it made it possible for shoppers to find all sorts of new products with well-organized dropshipping and ease of use that the Shopify platform, eBay, Amazon, and other ecommerce websites offer.

But there are two signs to every coin. The bad news is that store owners and shoppers can’t always escape fraudsters on these platforms. The good news is that e-commerce platforms have thorough vetting systems and a vast community that shares reviews, so it’s easy to know the schemes and patterns of ecommerce stores that scam people.

In this article, we’ll focus mainly on Shopify scams. To learn more about the platform’s ins and outs, check out this guide on Shopify vs Wix, as well as this detailed article on Shopify Payments. Now, let’s dig in into Shopify Store scams.

Types of scams on Shopify

In the last year, Shopify became the most popular ecommerce platform for both shoppers and retailers to keep their business afloat during the COVID-19 pandemic. It unveiled many features and updates to help users have a better experience, from better algorithms to a longer trial period and know how resources for new users. Naturally, this also seemed to attract more fraudsters.

Here are some of the more efficient schemes you should know about.

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Triangulation scheme

One of the smartest and most enduring schemes on Shopify and other ecommerce platforms is the so-called triangulation scheme.

Basically, fraudsters create an active Shopify store and market themselves as selling proper products. They then buy products from online suppliers, acting as the middleman in shipping the merchandise to the shoppers’ addresses (which is exactly how dropshipping works).

But, here’s the catch: they buy the merchandise from the suppliers with previously stolen cards. The credit card company will reject the transaction and initiate a chargeback on Shopify. When a chargeback occurs, Shopify doesn’t return the money to the seller, hence they lose both the product and the money.

The triangulation scheme was especially on the rise in 2016 when the Pokemon Go game came out. Lots of fake stores claimed to sell this game and managed to scam a lot of people.

Shopify Store duplicator scheme

The duplicator scheme is so simple, yet it’s hard to believe people can pull it off. Basically, scammers find recently created Shopify Stores and create one with a similar domain name, claiming to sell the same original product. All sorts of products have been “mirrored” on similar web addresses, from original merchandise t-shirts to branded teabags.

The most famous example of this scheme is when scammers created a duplicate store to Mike Lindell’s MyPillow store with a domain name mypillow.com. In 2018, the merchant noticed a twin storefront to his, registered under the domain name mypillowstore.com. Lindell sued Shopify for failing to spot the scamming sites and bigcommerce trademark infringement.

In the meantime, Shopify took down the fake storefront and added more software tools that cost $30 and up and offer monthly maintenance for merchants’ transactions. They also have more tech teams dedicated to combing out the fake Shopify sites.

Switching scheme

This is one of the more serious schemes since it causes a long-term loss with sellers. It has been prevalent in e-commerce platforms such as eBay before. Basically, what happens is that a potential buyer will make a purchase on your Shopify store and request a direct invoice from you straight from PayPal. As a reason for this, they will say they have difficulty and can’t finish a payment because of technical issues on the platform.

After you send them an invoice, you will get a notification that is allegedly from PayPal, but actually fake, that the buyer has paid and is waiting for the product tracking number. Until you give them the tracking number, “PayPal” checkout has the funds on hold. Naturally, if a seller falls for the trick, the scammer will get the products for free, since there is no PayPal holding the funds. If we’re talking about a big shipment or a very expensive product, as a seller, you could lose a lot of money.

Direct Client scheme

This scam takes some sweet-talking scammers. Basically, a buyer makes a purchase that goes well, and the products are at the right shipping address on time. Then, when the seller gains the buyer’s trust, they make a suggestion that next time they should skip the whole hassle and extra costs on Shopify, and go straight to a direct card payment technique. Of course, then they have the credit card digits and data, so they can exhaust the buyer’s fund. The buyer, needless to say, doesn’t get the goods this time.

Fake return ticket

Yet another slow-burning, but effective method of scamming is the counterfeited return ticket fraud. In this scenario, a buyer purchases goods once. Then they decide to purchase a similar, but a slightly cheaper product. They request a return on the first purchase, citing the product that was received looks different from the pictures or there is something wrong with it. Then, they return the second, similar but cheaper product, which enables them to get the money for the first product back and also keep the good and more expensive product.

Fake Purchase order

This is the scam that requires the most technical knowledge and software skills to be performed. So it’s rarer but extremely effective, and you’d still need to be wary. Basically, a scammer that is in the position of a customer will create a copy of the seller’s Shopify checkout sheet in their drive and alter the submit button link. Then, they will patch it to their PHP software or program that enables saving all data saved from your checkout. Afterward, they will modify the data they received and adjust it to send the fake checkout sheet back, at a lower price. You won’t notice the difference in price without knowing it’s doctored, and approve the transaction.

This scam allows the fraudsters to get products without the seller’s consent or with it but for a smaller price, and before the seller realizes that something is going on they can lose a whole shipment’s worth of money.

If they don’t successfully doctor the purchase sheet, they have a good plan B: asking for a chargeback, which will still make the seller lose money.

How to report scams

As a customer, you can report fraudulent activity or bad experience with a merchant here. The list covers many situations, from non-delivery of a sold item to restricted items and illegal activity.

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However, if you’re on the other side of the selling process and being scammed by a customer, apart from having a premium Shopify web store with all maintenance services, it’s mostly up to you to stay careful.

Choosing a secure payment gateway and having a single place for all your transactions with Shopify payments is helpful.

Also, it’s safe to save proof of your transactions, by making screenshots of your communication and transactions that you can later use to prove your case when reporting scams.

Lastly, it’s fair to mention that Shopify, no matter the many measures they take with battling scammers, is still swarming with fraudulent activity. You can check out the discussion board for more info on other possible scams and ways to battle it.

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Stefanija Tenekedjieva

November 5, 2020

Journalist turned content writer. Based in North Macedonia, aiming to be a digital nomad. Always loved to write, and found my perfect job writing about graphic design, art and creativity. A self-proclaimed film connoisseur, cook and nerd in disguise.