Why fake websites cost Australian e-commerce businesses more than money

f year. It’s worth noting that this is when many retailers announce their End of Financial Year (EOFY) sales. According to Scamwatch, Australians have so far lost over $1.2 million to online shopping scams and a total of over $92 million to scams. Trust issues Fraudsters are using new technologies such as artificial intelligence and more sophisticated methods to defraud online customers, with imitation websites and advertisements difficult to distinguish from real offers. “Creating websites is easier than ever,” e-commerce consultant Lou Simpson told Inside Retail. It is now possible to “create large, multi-page sites so that fake websites can rank on search engine results pages (SERPs),” she added. As more consumers fall victim to fraud, trust in real retailers, brands and marketplaces may erode. Independent watchdog Choice found that 61 percent of online fraud victims interviewed for a new report, Passing the Buck, have lost confidence in making financial transactions online. Mal Chia, managing director at Ecom Nation, told Inside Retail: “The latest wave of online fraud often uses highly sophisticated methods that blur the lines between genuine and fraudulent activities.” “A recent study found that consumers trust traditional e-commerce platforms less than in 2022.” – Chia added. By default, “this leads to an increase in customer service costs as companies have to deal with more security measures, customer complaints and refund requests, which ultimately affects the bottom line,” he said. The integrity of online transactions is the cornerstone of e-commerce, which is why companies are investing heavily in cybersecurity measures and reporting counterfeits, Chia said. Additionally, online retailers should educate customers on safe purchasing practices and work with financial institutions and cybersecurity companies to stay ahead of fraudsters. Fake websites There are an increasing number of fraudulent websites that impersonate well-known retailers or create fake brands in order to deceive online shoppers. These are known as “Trojan horses”. A spokesperson for the Australian Competition and Consumer Commission (ACCC) told Inside Retail: “Many of these websites offer luxury goods such as clothing, jewelry and electronics from popular brands at very low prices. Sometimes you will receive the item you paid for but it will be a fake, other times you will receive nothing. Information obtained through fake sites and other forms of identity fraud can be used for “scraping.” In this case, consumers receive unwanted goods from online sellers who can improve their retail profile through fake, self-written reviews, purporting to be from the recipient. “Another common scam is the subscription trap, where consumers sign up for what they believe is a one-time purchase or free trial, but are trapped into difficult-to-cancel recurring payments,” Chia said. Social media has given fraudsters an easy way to reach consumers by promoting fake websites and e-commerce companies alongside legitimate ones to create a false sense of trust among consumers. “Addressing fake ads on social media is an increasingly popular tactic that bombards users with ads across multiple platforms to appear as a legitimate brand,” Simpson said. The ACCC has identified this trend of fraudsters using social media platforms to set up fake online stores that open for a short time, sell counterfeit designer clothing or jewelery and then disappear after making a few sales. Who pays the bill? In 2023, Scamwatch received 21,352 reports of online shopping fraud, resulting in $7.17 million in losses. “The anonymity provided by the Internet favors fraudsters, making it difficult to track and punish them,” Chia said. While some experts believe that online shopping fraud is a serious problem and should be on the radar of e-commerce companies, others believe it is a bigger problem in media newsrooms than in corporate offices. “I talk to a lot of retailers and honestly, for a lot of people it’s not very popular compared to how big it is in the news cycle,” Nathan Bush, e-commerce expert and director of the Add To Cart podcast, told Inside Retail. “I don’t know if it’s good or bad. “Most retailers I talk to are more worried about being cheated by large corporations, markets and even supermarkets than by fraudsters,” he added. This is especially true for brands that have developed innovative and unique products and experiences. “They put a lot of effort, time and money into gaining traction and an audience. And once this is proven, it will be the same old story. Someone else is doing it for half the price because they have the power of scale,” Bush said. Invest, diversify and listen One way e-commerce companies can make it harder for fraudsters to imitate them is to invest in the details of their websites and customer service channels. “If you invest in your brand, content and design, it will be easier to spot fraud,” Bush said. He also emphasized the importance of “the environment in which you operate as an e-commerce brand and the rhythm of your message.” “Kogan would be quite easy to attack because he communicates multiple times a day via email and advertising on every channel,” Bush said. “Sometimes their ads don’t look very professional and I think this is perfect for scammers who might try to imitate them. If you are selective about where and how you are seen and what you say, scams will stand out quite strongly,” Bush added. To stay ahead of fraudulent activity, e-commerce companies can build social proof using social media conversations. “As an e-commerce company, you may be the last person to know what people are saying, and they are more likely to say it on social media than to you,” Bush said. Another way legitimate businesses can stand out from scam sites is through payment options. Bush noted that many questionable carriers only accept credit cards and do not offer secure payment options such as PayPal, Apple and Google Pay, so it is crucial to adhere to security standards and the latest payment methods. “I work on a custom-built platform. He is 10 years old – ready to be imitated by scammers. Whereas working with a trusted platform like Shopify Pay and Paypal Pay is much harder to imitate,” Bush said.