Shopify Scams to Watch Out For: How to Avoid Shopify Scams

Shopify is a significant player in the e-commerce industry, which unfortunately makes it a common target for scams that can impact both consumers and business owners. Wherever there is financial potential, some people take advantage of it. Despite these risks, Shopify remains a highly valuable platform with more advantages than disadvantages. However, users should stay vigilant against potential Shopify scams associated with any large online platform.

It’s important to recognize common scams related to Shopify and be aware of the warning signs to protect yourself. These scams aren’t unique to Shopify and often involve broader tactics used in online commerce. Therefore, doing your homework and being cautious when making online purchases or dealing with unfamiliar businesses is crucial.

What Is Shopify?

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Shopify is a comprehensive e-commerce platform that allows businesses to set up online stores. It is hosted on the cloud and provides all the necessary tools to establish, operate, and expand a dropshipping business. Shopify offers various features and tools that assist business owners in various aspects, such as designing and managing their online store and inventory, handling shipping, processing payments, and compiling business reports.

The platform is designed with ease of use in mind, featuring a user-friendly interface with drag-and-drop capabilities and customizable templates. This makes it particularly appealing to those new to ecommerce, enabling them to tailor an online store to their brand and specific requirements. Due to these features, Shopify has become one of the leading online platforms for ecommerce, serving over a million businesses globally.

Is Shopify Legit?

Yes, Shopify is legitimate. It hosts nearly 5 million active stores worldwide that rely on it to create and operate online stores. Shopify emphasizes security, employing strong encryption, secure payment processing, and measures to prevent fraud to safeguard transactions.

Shopify is acknowledged as one of the top eCommerce platforms currently available.

What Security Features Does Shopify Offer?

Shopify, one of the largest ecommerce platforms, implements several robust security measures. Here’s an overview:

• PCI Compliance: This relates to the Payment Card Industry Data Security Standard (PCI DSS), which requires that any organization that processes, stores, or transmits credit card information must maintain a secure environment.
• SSL Certificate: This industry-standard certificate safeguards customers’ personal information on your Shopify store.
• Shopify Payments: Shopify’s payment processing system lets merchants accept payments through their online stores, eliminating the need for third-party payment gateways like PayPal or Stripe. It centralizes payment details on Shopify, aiding in dispute resolution.
• Community: Shopify’s vibrant community includes users, developers, and partners who continually enhance the platform and provide support and resources to newcomers.
• Customer Service: Shopify offers 24/7 customer support via live chat, email, and phone, helping users address and resolve issues promptly.

But despite all these security features, there still can be some gaps that threat actors can leverage to scam you. In the next section, you will find these common scams.

Common Shopify Scams to Look Out For

Scams on Shopify occur in different ways and affect both buyers and sellers. Here’s an overview of the most frequent scams on the platform.

1. Triangulation Fraud

Triangulation fraud is a deceptive scheme that has targeted Shopify and other online marketplaces for several years. Scammers create a fake Shopify storefront in this setup, posing as legitimate vendors. They offer actual products at appealing prices to lure in customers. The scammers don’t ship the product when a purchase is made. Instead, they order it from a legitimate third-party vendor, thus involving three parties: the buyer, the scammer, and the unsuspecting supplier.

The critical element of the scam is the payment method. The fraudsters use stolen credit card details to buy the items from the third-party supplier. Although the customer receives their order, the transaction is eventually disputed when the true card owner spots the unauthorized charge, leading to a chargeback. The genuine supplier is then hit twice; they lose both the merchandise and the revenue, as the chargeback refunds the card owner, not them.

The prevalence of this scam increased notably with the launch of Pokémon Go in 2016. Numerous sham Shopify stores emerged, purporting to sell Pokémon merchandise, thereby cheating many buyers and suppliers. The problem persists, with scammers frequently targeting in-demand products like electronics and luxury items.

2. Duplicate Stores Scam

This common scam on Shopify and other eCommerce platforms involves creating duplicate stores. Scammers replicate the design, layout, and logo of established, often upscale stores, making it hard for customers to identify the fraud. Their goal is to trick customers into believing they are purchasing from a legitimate store, thereby stealing their payment information or selling them fake or non-existent products.

These fraudulent stores often list items at much lower prices than the authentic ones, but the products are usually of lower quality, counterfeit, or nonexistent. Buyers are lured by the convincing appearance of the duplicate store, and they may end up paying for goods that will never be delivered. In some cases, the scam does not stop at the point of purchase; the scammer might also ship a counterfeit or inferior product, leaving the buyer with a worthless item and a financial loss.

It goes even further to defraud customers as online purchases inevitably involve sharing personal data, such as addresses and credit card details—In the wrong hands, this information can be used for additional fraudulent activities.

3.   Counterfeit Return Scam

Though not targeted at Shopify stores alone, the counterfeit return scam is a longstanding fraud tactic that has become more prevalent with the growth of mail-order businesses. In this scam, customers make a purchase and then initiate a return. Instead of sending back the original item, they return a cheaper, similar-looking product.

Ultimately, depending on the store’s return policy, customers may receive both the original product and a refund. This scam primarily affects sellers, causing significant financial losses. The store has to bear the costs of return shipping and refunds and loses the genuine product. Furthermore, the counterfeit items returned may inadvertently be restocked, leading to the potential sale of these fake goods to other unsuspecting customers.

4.   Phishing Attacks

This type of scam involves fraudsters sending emails or placing ads that look exactly like they’re from Shopify. These communications usually include a link that, when clicked, redirects to a phishing website.

Unwary individuals might be deceived into entering personal details or login information on these sites. The primary goal of this scam is to steal personal information.

5.   Fake PayPal Confirmation Scam

The “Fake PayPal Confirmation Scam” targets online sellers, often on platforms like Shopify.  Typically, a buyer will place an order on your Shopify store and request a PayPal invoice directly, claiming they are experiencing technical difficulties completing the payment on Shopify.

Sellers receive what appears to be an official PayPal email notifying them of a payment for a product. The email indicates that the buyer has made the payment and is now awaiting the product’s tracking number. However, no such payment exists in their PayPal account.

The fake notification claims that PayPal is holding the funds until you provide the tracking number. The supposed buyer, claiming to be legitimate, urges the seller to dispatch the item immediately. They might even promise extra payment to speed up delivery, which pressures the seller. This tactic aims to make the seller send the item before noticing the payment is false or missing. When the seller realizes the payment was never made, the scammer has already obtained the goods, leaving the seller without payment and product.

6.   Direct Client Scam

The scam involves threat actors impersonating potential clients, wholesale buyers, or business partners to exploit vendors and businesses. They often show interest in partnerships or large orders, targeting businesses looking to increase sales or enter new markets.

Scammers persuade vendors to hand over free samples of products or extend discounts or credit, pretending it will lead to a significant future deal. However, once the vendor complies, the fake client vanishes, leaving the business unpaid and with a loss from the supplied goods or services.

This scam is particularly damaging as it exploits the trust businesses typically place in new clients or substantial orders. Scammers may use realistic business credentials or websites, making it easier for vendors to identify the deception once it’s too late.

7.   Viral Products Scam

The Viral Products Scam takes advantage of popular trends by offering seemingly unbeatable deals and exclusive opportunities on trending items.

This scam typically involves dishonest operators who advertise viral products at steep discounts or with impressive guarantees. To attract customers, these operators often create short-lived or fraudulent online shops, such as those on Shopify. After securing orders and payments, they might send counterfeit products, low-quality substitutes, or nothing at all.

Scammers also pose as wholesalers, offering large quantities of in-demand products at meager prices. Sellers who buy these products might end up with counterfeit items or receive nothing, which can harm their reputation through customer complaints, chargebacks, and negative reviews.

Purchasing inferior products results in financial losses and poses a risk of legal issues. Selling counterfeit or unlicensed items can lead to legal actions from the genuine brand or dissatisfied consumers, potentially resulting in lawsuits, fines, or business closures.

8.   Fake Purchase Orders

Scammers often target suppliers or dropshipping businesses by submitting fraudulent purchase orders. They masquerade as legitimate firms or customers with detailed order specifications and urgent shipping requests.

The payment methods, such as counterfeit checks or stolen credit card details, often fail to process or are flagged as unauthorized later. Some fraudsters may even allege they have overpaid using these fake purchase orders and ask for a refund of the excess amount. Sellers unaware of the deceit may transfer funds only to discover later that the initial payment was invalid.

For Shopify sellers, this Fake Purchase Order Scam creates a complex situation where an apparent business opportunity quickly escalates into a major problem. Like other scams, it leads to financial losses and damages the store’s reputation. Scammers may further exploit this by blaming the store for soliciting additional products or refunds.

9.   Tracking Number Fraud

In this scam, scammers issue fake tracking numbers to buyers after a purchase, falsely suggesting that their items have been shipped.

The process starts when a consumer completes a purchase and receives what appears to be a valid tracking number from well-known shipping companies like USPS, FedEx, or UPS. Initially, the shipping company’s system might even recognize this tracking number. However, as the buyer waits for delivery, the package has yet to arrive. When they attempt to track their order, they discover the tracking number is invalid or associated with a different, unrelated shipment.

This scam particularly affects businesses that handle large orders. Suppose scammers use a company’s name to provide these fake numbers. In that case, it can severely harm the company’s reputation and future sales potential, as well as cause significant financial losses due to the handling of chargebacks.

How to Identify a Fraudulent Shopify Store?

While most Shopify stores are genuine, it’s crucial to recognize the signs of a fraudulent one. Here are some strategies to help you verify a Shopify store’s authenticity.

• Verify Secure Connections: Always ensure the website has a secure connection before entering personal or payment information. A secure site will display a lock symbol in the browser’s address bar, signifying an HTTPS connection protected by an SSL certificate. Shopify typically provides SSL certificates to all its stores. If the lock icon is absent, the site may likely not be legitimate.
• Evaluate Customer Reviews: Customer reviews are a valuable resource for assessing a store’s legitimacy. Review feedback on the store’s website and from external sources. Authentic reviews often vary in detail and tone. Suspiciously positive or overly vague reviews may be indicators of inauthenticity, suggesting the reviews are not from actual customers.
• Check the “About” Pages: Legitimate businesses often furnish detailed information on their mission, history, and team in the “Contact Us” and “About Us” pages. They usually include contact methods such as phone numbers, email addresses, and physical locations. Be cautious if this information needs to be included or presented.
• Conduct Independent Brand Research: Dig deeper into the brand or its products. A credible brand will often have a noticeable online presence outside of its own website, including mentions in industry publications, reviews on various e-commerce platforms, and active discussions on social media platforms. An absence of such information can be a significant red flag.
• Evaluate the Brand’s Social Media Presence: Authentic brands typically maintain active social media profiles, regularly post content, and engage with their customers. These interactions serve to promote their products and reflect their brand values. In contrast, fraudulent stores might show minimal social media activity, have few followers, or lack genuine customer engagement.
• Carefully Check the Images and Product Descriptions: Well-crafted, detailed product descriptions alongside high-quality images generally indicate a trustworthy online store. These elements show a commitment to customer satisfaction and attention to detail. Conversely, low-quality images and error-riddled descriptions might suggest the store could be more genuine.

How to Secure Your Business Against Identity Theft on Shopify

Securing your brand from identity theft on Shopify involves implementing several important measures to safeguard your business operations and customers’ data.

• Activate Two-Factor Authentication (2FA): Enable two-factor authentication (2FA) for your Shopify account. This requires your password and a second verification form, such as a code sent to your mobile device. It greatly enhances security by making it more difficult for unauthorized access.
• Establish Strong, Unique Passwords: Generate strong, distinct passwords for your Shopify account. A robust password includes combinations of upper- and lower-case letters, numbers, and symbols. Using unique passwords for different sites also helps minimize the risk of security compromises.
• Implement SSL Encryption: Ensure your Shopify store utilizes SSL (Secure Sockets Layer) encryption. This technology secures the data exchanged between your store and customers, safeguarding sensitive details like credit card numbers. While Shopify provides SSL encryption by default, checking its activation on your site is essential.
• Monitor Your Brand Regularly: Monitor the internet for any unauthorized use of your brand name, products, or logos. Setting up tools like Google Alerts can assist in identifying any misuse, allowing you to respond swiftly and maintain your brand’s reputation.
• Trademark Your Brand: It is advisable to trademark your brand name, logos, and unique product designs. This offers legal recourse against counterfeiters and imposters and reinforces your rights in combating unauthorized use.
• Choose Third-Party Apps Wisely: Only add third-party apps from known, reputable developers to your Shopify store, particularly for payment processes. Apps from uncertain sources can introduce malware and other security threats, jeopardizing your data and customer security.
• Review App Permissions Regularly: Frequently check and adjust the permissions for apps on your Shopify store. Limit access to essential data only and uninstall any unnecessary apps to lessen the likelihood of security breaches.
• Inform Your Customers: Provide clear, helpful information to help your customers recognize your authentic store and avoid phishing attempts. Educating your customers fosters trust and assists them in identifying and avoiding deceptive websites or communications.
• Invest in Anti-Counterfeit Measures: Utilize anti-counterfeit services to monitor and eliminate counterfeit versions of your products online. Tools like BrandShield can swiftly identify fake listings and offer valuable information to maintain the integrity of your brand.

Shopify’s Approach to Combating Scam Stores

Shopify implements multiple strategies to tackle and minimize scam stores on its platform. These strategies include:

• Fraud Analysis Tools: The company utilizes advanced AI-driven tools to identify and block fraudulent activities on its platform.
• Verification Process: Shopify conducts verification checks on merchants’ identities and contact information before they are permitted to open a store, aiming to eliminate fraudulent stores.
• Reporting Mechanism: A system is in place for users to report any fraudulent activities and scam stores they encounter on Shopify.
• Product Restrictions: Certain items, including counterfeit products, illegal drugs, and weapons, are prohibited from being sold on Shopify.
• Enforcement and Legal Action: If a merchant is identified as problematic, Shopify takes various measures, including shutting down scam stores, permanently banning fraudulent sellers, and pursuing legal action against those who violate its terms or engage in unlawful acts.

Shopify’s policies and actions have effectively safeguarded the platform against scam stores. The company remains dedicated to maintaining a secure and reliable eCommerce environment and continues to refine its technologies and policies to enhance fraud prevention and ensure a safer shopping experience.

Conclusion

While Shopify provides a robust and legitimate platform for e-commerce, it’s not immune to scams that can harm buyers and sellers. Understanding the common types of scams, such as triangulation fraud, duplicate stores, and phishing attacks, is essential for anyone using Shopify.

By staying vigilant, regularly reviewing security measures, and educating yourself and your customers, you can significantly reduce the risk of falling victim to these schemes. Shopify’s efforts in implementing security features and enforcing strict policies contribute to a safer environment, but the responsibility ultimately lies with users to recognize and avoid potential threats.

Frequently Asked Questions