Shoppers warned to beware of online ghost stores ahead of Black Friday sales | 7.30

Key Concepts

• Ghost Stores: Offshore online retailers that impersonate local businesses to sell low-quality goods advertised as premium.
• Deceptive Advertising: Misrepresentation of product quality, origin, and materials.
• Consumer Scams: Fraudulent online retail practices leading to financial loss for consumers.
• Intellectual Property Theft: Unauthorized use of original designs and branding by scam operations.
• Consumer Protection: Measures and advice for consumers to avoid online scams.

Louise Haywood's Experience with a Ghost Store

Louise Haywood purchased approximately half a dozen items from a social media advertisement for an online retailer claiming to sell handmade pure linen garments made in Melbourne. The total cost was around $490. Upon arrival, the items were of extremely poor quality:

• Tablecloth: Described as "just plain piece of material with a hole in the middle."
• Embroidered Dresses: The embroidery was actually printing on polyester, not genuine embroidery.
• Off-the-Shoulder Top and Pants: The garment did not fit as advertised, with the top not coming off the shoulder and the pants being significantly shorter than expected (barely past the knees, despite being advertised as extra large).

Haywood was devastated by the deception and the significant financial loss. She was offered a 15% refund or the option to return the items for approximately $70. She eventually managed to secure a 25% refund, expressing anger at being scammed.

The Phenomenon of Ghost Stores

• Definition: Ghost stores are offshore retailers that pose as small, local businesses. They sell low-quality goods that do not match the premium items advertised.
• Prevalence: The Australian consumer watchdog, the AC, has seen a "dramatic increase" in reported ghost stores. This year, they received around 700 complaints and confirmed approximately 150 such stores exist. Deputy chair Katrina Low believes the actual number is much higher.
• Sophistication: Ghost stores are becoming more sophisticated, making it harder for consumers to distinguish legitimate sites from fraudulent ones.

Red Flags of Ghost Stores

The transcript highlights several potential red flags to watch out for when identifying ghost stores:

• Urgency Tactics: Websites may feature banners indicating "clearance sale today only" to create a sense of urgency.
• Heartstring "About Us" Stories: The "About" section might contain a fabricated, emotional story (e.g., a mother and daughter closing their business) to build trust.
• Discrepancies in Location: A store might claim to be in a specific, popular location (e.g., Port Douglas, Byron Bay) but lack a physical address or phone number.
• Hidden Offshore Shipping Information: While claiming local operation, the refund and shipping policy, when scrolled to the bottom, might reveal a reference to a "central warehouse in Asia."

Michael Kidd's Experience

Louise Haywood's partner, Michael Kidd, also fell victim to a ghost store. He purchased a shirt from a website that appeared to be based in Byron Bay.

• Product Quality: Upon receiving the shirt, he immediately noticed it was "so small," looking like it was made for a 10-year-old child.
• Refund Difficulty: He was informed that to get a refund, he would have to ship the item to China at his own expense.
• Resolution: He eventually negotiated a 30% refund. The store's website subsequently became inactive.

Kidd's experience has made him "really weary about doing any online shopping."

Impact on Small Businesses and Artists

Ghost stores and online scams are not only affecting consumers but also legitimate small businesses and artists:

• Nicola Thompson's Jewelry Business: Nicola Thompson, a jewelry maker, experienced her designs being copied and sold as cheap knockoffs.
  • Process: Her lockets take approximately 3 weeks to make, involving significant thought and energy.
  • Viral Success: Her work went viral on social media, leading to excitement about turning it into a viable business.
  • Theft: Customers contacted her, having bought counterfeit lockets from websites using her photos and even her face.
  • Product Quality of Fakes: The stolen lockets were made of "crappy metal," broke easily, and were bent.
  • Reporting Challenges: Thompson spent months reporting social media ads using her images but felt like she was in a "losing battle." She expressed heartbreak that her work was being used in this way.

Social Media and Regulatory Response

• Social Media Platforms: Companies state that deceptive content violates their rules and that they have invested in tools to combat it. The AC has urged these platforms to take action against ghost stores.
• Australian Authorities: Australian authorities have limited recourse for misleading conduct by overseas retailers.
• Bank/Payment Provider Assistance: Consumers concerned about online transactions can contact their bank or payment provider, who might be able to stop the transaction.

Conclusion and Call to Action

Louise Haywood and Michael Kidd emphasize the need for consumers to be extremely cautious when shopping online. They express anger and a desire for these fraudulent operations to be stopped and shut down. The overall message is one of increased vigilance and awareness due to the growing sophistication of online scams.