VIDEO: Warnings about ‘ghost stores’ mimicking Australian businesses

LOUISE HAYWARD:  Their website was so convincing and I couldn’t believe they could just outright lie. I was devastated 

FIONA WILLAN:  When Louise Hayward decided to splash out on some new clothes she thought she’d found exactly what she was looking for. An ad on social media for an online retailer selling pure linen garments handmade in Melbourne.

LOUISE HAYWARD:  I think I purchased maybe half a dozen items. It came to a total of about $490 which is a lot for me to spend. 

FIONA WILLAN:  But when they arrived.

LOUISE HAYWARD:  Just a plain piece of material with a hole in the middle. It's a tablecloth.

FIONA WILLAN:  t was meant to look like this. As for the two embroidered dresses she ordered.

LOUISE HAYWARD: They’ve just done the printing on the polyester. This was all supposed to be embroidered and this was all tassels. 

FIONA WILLAN:  And it doesn’t end there. 

LOUISE HAYWARD:  This is my favourite.

FIONA WILLAN:  Louise thought she was buying an “off the shoulder” top, with billowing pants.

LOUISE HAYWARD:  Take a look. Fiona, what do you think?

This doesn’t even come off one shoulder, let alone both shoulders. 

It’s ridiculous but just to show you, these pants are supposed to be extra large, they don’t even come past my knees

FIONA WILLAN:  You've managed to have a bit of a laugh about it but I bet you weren’t laughing when you opened it. 

LOUISE HAYWARD:  I wasn’t laughing – no, not at all. 

FIONA WILLAN:  She demanded a refund and was told she could pay around $70 to return the items or receive a 15 per cent discount. 

She eventually managed to get 25 per cent back. 

LOUISE HAYWARD:  I was so angry that I was scammed. 

FIONA WILLAN:  Louise didn’t realise she was dealing with a ghost store - an offshore retailer posing as a small local business – selling low quality goods instead of the premium items they had advertised.

CATRIONA LOWE, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION:  We have seen a dramatic increase in the number of these sorts of stores being reported to us. 

FIONA WILLAN:  This year, the consumer watchdog has received around 700 complaints about suspected ghost stores and has confirmed around 150 exist.

Deputy Chair of the ACCC, Catriona Lowe, believes there are many more.

CATRIONA LOWE: There's no question that ghost stores are becoming more sophisticated and it is more difficult for consumers to tell a legitimate site from a dodgy one but there are a number of features to look out for.

FIONA WILLAN:  Let’s take a look at some potential red flags.

I’ll show an on online shop that has banners saying they’re having a clearance sale, today only! So there’s some urgency there to buy.

Now if you click through to the About section of the website, you’ll find a story to tug at your heartstrings about a mother and daughter shutting down their business after many years saying a bittersweet goodbye. 

It’s claims the shop is in the heart of Port Douglas which is a popular tourist town in Far North Queensland. Yet there’s no physical address or phone number listed.

However if you go into the refund and shipping policy and you scroll all the way down, you’ll find a reference to a central warehouse in Asia.

MICHAEL KIDD:  Quite an email trail isn’t it?

FIONA WILLAN: Louise’s partner Michael Kidd also had to fight to get a refund after buying a shirt from a store that appeared to be in Byron Bay. 

MICHAEL KIDD:  As soon as I opened it up, I was like this doesn’t look right at all. Firstly, when I held it up, it was just so small, it looked like it was made for a 10-year-old kid

FIONA WILLAN:  He was told to get his money back, he would have to ship it to an address in China at his own expense.

Eventually managed to negotiate a 30 per cent refund. The store's website is no longer active 

MICHAEL KIDD:  It's just made me really wary about doing any online shopping

FIONA WILLAN:  The store Louise bought from also disappeared offline just hours after being contacted by 730. 

But the problem is much bigger than a few operators – and it’s not only affecting shoppers 

NICOLLA THOMPSON:  I am almost defeated. It's devastated my business. 

FIONA WILLAN:  Nicolla Thompson started a small jewellery business after inheriting a set of tools from her father, who was a metal smith. 

NICOLLA THOMPSON:  It takes me about three weeks to make a locket, from start to finish. I put a lot of thought and energy into it.

FIONA WILLAN:  Earlier this year her work went viral after she shared videos on social media. 

NICOLLA THOMPSON:  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. 

FIONA WILLAN:  But she soon discovered her designs were being copied. Nicolla was contacted by customers who had bought cheap knock offs from websites featuring photos of her lockets and even her face.

NICOLLA THOMPSON: People were really upset at me. Some people never received anything, some people received a locket that is made out crappy metal that breaks and it was bent.

FIONA WILLAN:  She has spent months reporting the social media ads using her images but she feels like she’s fighting a losing battle.

NICOLLA THOMPSON: It's grown and grown and now there's so many people scamming other people with my work. It breaks my heart because it was never meant to be used that way. Sorry. 

FIONA WILLAN:  Social media companies say deceptive content is against their rules and they have invested in tools to crack down on it. 

The ACCC has asked platforms to take action against ghost stores appearing on their sites.

If you’re concerned about an online transaction, your bank or payment provider might be able to stop it from going through. 

But there is little Australian authorities can be done about misleading conduct by offshore retailers.

That’s why Louise and Michael want to warn others to be careful.

LOUISE HAYWARD:  I'm very wary, very wary now, and I'm angry. These people need to be stopped. They need to be shut down.