This blog was written by an independent guest blogger.
Scams occurring during online purchases have spiked since the start of the pandemic, as reported in new research conducted by the Better Business Bureau (BBB). Around 80.5% of consumers who reported this type of scam this year lost money, compared to 71.2% in 2015. Online purchasers scams have been among the three riskiest scams for the past three years but the situation has become significantly more severe in 2020. Whether you are a consumer or an online seller, what are the biggest issues you may have to face in terms of purchase scams and what steps can you take to avoid them?
The 2020 online purchase scams report
The BBB’s new online scams report has found that the number one way consumers were enticed into a scam, was via attractive sales prices. With the job market down and nearly 17 million people in the U.S. having filed initial claims for unemployment insurance at the outset of the virus, indications are already in that the unemployment rate is greater than it was during the pinnacle of the Great Recession. Scammers are therefore taking advantage of the precarious situation of many to entice them with what seems like an irresistible offer.
Scammers and availability
Another way in which scammers are flourishing is by offering unavailable items. In March and April, many consumers found it difficult to access items like face masks, sanitizing gel, alcohol, and other protective items. The study showed that over half of all consumers who were scammed were unaware of the fact until they found that the items they had ordered were not being received. The platforms these products appeared on were varied and included direct merchant websites, Instagram and Facebook, Google, and other ads that appeared while they were browsing other sites.
Online stores are also fighting higher levels of fraud and merchant scams
Interestingly, it isn’t only consumers that are being scammed; so too are sellers who have made the switch to online sales, unwittingly falling for merchant account schemes that have resulted in significant loss. There are many ways that sellers have been ‘taken for a ride.' These include purchasing merchant services from companies that have hidden fees.
Usually, the seller is enticed by attractive rates for services, unwittingly signing on to contracts that then expose them to charges that have not been previously disclosed. In some cases, identity theft is involved, with devastating repercussions for sellers who have provided information such as bank account numbers, credit card numbers, and the like. Companies wishing to avoid being scammed should deal only with reputable providers. They should be wary of discounts and other promises that appear too good to be true.
How Can Online Buyers Avoid Being Scammed?
For online buyers, scam prevention involves a number of steps. The first is knowing the different risk groups. The BBB study indicates that although those aged 35-44 are most likely to be scammed (and younger buyers are at a higher risk than older ones), it is actually older purchasers who are likely to lose the largest amounts of money. Buyers should also be aware of typical scams (these can involve romance, lotteries, loans, access requests for social media sites and the like, and job scams).
In general, buyers should be wary of paying money to anyone they don’t know in person and they should avoid pages that ‘allow them to claim a prize.’ If they come across any suspicious requests, they should report the fact to the tech support team of the site or app they are on. For instance, Google’s G Suite™ offers 24/4 from a real person for paid subscribers, Facebook™ has a report link near the content itself, Instagram™ has a Report button, and the like. The BBB also has useful tips for avoiding employment scams on sites like LinkedIn™ and Indeed™.
COVID-19 has led to a rise both in online purchase and merchant service account scams. In the former, purchasers are asked to provide information such as bank account and credit card information so as to enable scammers to steal funds. In merchant service account scams, online sellers are subjected to hidden terms or even to fraudulent practices that also result in losses of funds. Users should be aware of features to watch out for (including requests for information and promises of deals and prizes that seem unusually attractive). They should also report any suspicious activity they may encounter.