ACCC warns of 'sophisticated' ghost stores ahead of Black Friday, Cyber Monday sales
'Casa Lino' promises linen garments handmade in Melbourne but what customers actually receive is far different. (Supplied)
In short:
The consumer watchdog is urging shoppers to be wary of online "ghost stores" over the Black Friday to Cyber Monday weekend.
Australians are expected to spend a record $6.8 billion over that period.
The ACCC has received more than 700 complaints about online stores suspected of misrepresenting themselves as local businesses.
With $6.8 billion predicted to be spent across Black Friday and Cyber Monday, Australians are also at risk of being exposed to fraud, with "ghost stores" on the rise, hurting consumers and retailers alike.
Louise Hayward was recently defrauded by the practice when she decided to treat herself by refreshing her summer wardrobe for the first time in years.
The Sydney woman told 7.30 she found exactly what she was looking for in a social media advertisement.
It was promoting an online retailer selling "pure linen" garments that were "handmade in Melbourne".
"I purchased maybe half a dozen items — it came to a total of about $490. It is a lot for me to spend, I have never spent that much in one purchase," Ms Hayward told 7.30.
When her order arrived, she immediately regretted it.
Louise Hayward spent close to $500 on what she thought were handmade, pure linen garments as advertised on the left, the image on the right is what she received. (Supplied)
"I couldn't believe what these clothes looked like," she said.
"They looked nothing like the photos … they were all polyester. No linen in sight."
Instead of two embroidered linen dresses, she received two polyester dresses with printed patterns.
She also bought an off-the-shoulder top — but found it would barely fit over her head.
"Their website was so convincing, I couldn't believe they could outright lie," she said.
"I was so angry I had been scammed."
The garments pictured on the website versus what Louise Hayward actually received. (Supplied)
Louise's partner, Michael Kidd, had a similar experience with an online shop that appeared to be in the NSW coastal town of Byron Bay.
"I just bought one shirt … when it arrived, I thought, this doesn't look right at all," he said.
"It looked like it was made for a 10-year-old kid."
When he asked for his money back, he was told he would need to pay to return the item to a warehouse in China.
The return details — including address, phone number and contact name — were the same as those provided to Louise.
After making numerous complaints, both Louise and Michael eventually managed to negotiate refunds of 25 and 30 per cent.
Louise Hayward and Michael Kidd did not receive full refunds on their purchases. (ABC News)
They now realise they were dealing with "ghost stores" — online retailers misrepresenting themselves as local businesses.
The websites for both stores have since been deactivated.
What to watch out for
The consumer watchdog has issued a warning about these operators ahead of the Black Friday–Cyber Monday weekend of sales.
Catriona Lowe, deputy chair of the Australian Competition and Consumer Commission (ACCC), said there was "no question" these stores were becoming "more sophisticated".
"It is more difficult for consumers to tell a legitimate site from a dodgy one," she said.
This year, the ACCC has received more than 700 consumer complaints about suspected ghost stores.
The watchdog is aware of around 150 ghost stores that exist, but believes there are likely many more.
ACCC Deputy Chair Catriona Lowe is warning consumers to be cautious about ghost stores during Black Friday sales and the Christmas shopping period. (ABC News: Matthew Holmes)
Ms Lowe told 7.30 there were several clues that shoppers should look out for when buying from online stores.
"Firstly, the narrative — it is very typical these stores will have a sob story,"she said.
"In effect, it will be 'closing down, all stock must go' — that sort of issue."
Another potential red flag may be found in the fine print of a website.
"Pay particular attention to things like the refund policy. It might tell you to send the goods to somewhere in Asia, even though it purports to be a local Australian store," Ms Lowe said.
Other possible warning signs include a lack of physical address or phone number on a business website, or a relatively new website.
Ghost stores promise higher quality products but deliver fast fashion instead. (Supplied)
"Often with ghost stores, they come and go — very, very quickly," Ms Lowe said.
Artificial intelligence is also making it easier for online retailers to mislead consumers — enabling them to generate realistic images of models, products and locations.
However, some stores use images taken from the websites of legitimate local businesses, and it may be possible to detect this using a reverse image search or Google Lens.
Heartbreaking cost to real businesses
Tasmania-based silversmith Nicholla Thompson told 7.30 her jewellery business had been "destroyed" by offshore retailers taking images of her work from her website, and using them to sell cheap imitations.
Her problems began earlier this year after she posted videos of her unique sterling silver lockets on social media — and they went viral.
Initially, she was inundated with customer orders.
Nicholla Thompson's customers thought she was involved in the scam. (ABC News: Morgan Timms)
"I was really excited, and I thought, 'Oh wow, I'm finally going to make this into a business, a good business that helps the family out'," Ms Thompson told 7.30.
But things quickly turned sour when she discovered photos of her jewellery — and even her face — appearing in social media ads for other online stores.
She was contacted by dozens of customers who had inadvertently purchased cheap knock-offs from other online retailers.
Ms Thompson has been contacted by customers who had bought cheap knock-offs from other websites using her image. (ABC News: Morgan Timms)
Ms Thompson's online jewellery business has been taken over by scammers, who have stolen images and video of her jewellery to sell dodgy products online. (ABC News: Morgan Timms)
"Some people never received anything. Some people received a locket made out of … a crappy metal that breaks, and it was bent," she said.
"Some people were really upset with me … they believed I was involved in the scam."
When contacted by 7.30, a customer service manager for an online company that was using images of the jewellery and Ms Thompson's face said: "We get the products and pictures from … a factory in Japan."
'We cannot provide the name and their email address, but as far as I know, they have authorised many merchants to sell, and we are not the only store," they said.
Ms Thompson said she had been regularly reporting the misuse of her images to social media companies — but new ads kept appearing.
Ms Thompson has spent months reporting social media ads for using her images. (ABC News: Morgan Timms)
"It's grown and grown, and there are now so many people scamming other people with my work," she said.
"It breaks my heart because it was never meant to be used that way."
Social media response
The ACCC has called on social media platforms to take greater responsibility for online retailers misleading consumers via advertisements on their platforms.
Earlier this year, the consumer watchdog wrote to Meta and e-commerce platform Shopify to request they "scrutinise and take appropriate action" against ghost stores, after issuing public warnings about four operators of concern.
The websites for the four stores have since been deactivated.
The store Louise Hayward bought from has also disappeared offline after being contacted by 7.30. (Supplied)
A spokesperson for Meta, which owns Facebook and Instagram, said the company did not want deceptive behaviour on its platforms, and had invested in "tools and technology" to detect it.
"We remove violating content when we become aware of it, and Meta encourages users to report pages or ads that appear to be misleading," he said.
A spokesperson for Pinterest said ads designed to scam users were not allowed on the platform.
According to Pinterest's annual transparency report, it deactivates policy-violating content through "automated tools, manual review, and a hybrid approach that combines elements of both".
Shopify did not respond to 7.30's request for comment.
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