- Thousands of Shopify stores are selling fraudulent products or not delivering on sales.
- About 21% of stores analyzed by Fakespot should get a “caution” or “warning” label.
- Scammers sell dupes of popular items and attract buyers with discounts or free shipping, the report said.
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About a fifth of Shopify sellers evaluated by Fakespot deserve a “caution” or “warning” sign for activities like selling fraudulent products or not delivering items, according to a report from Forbes.
Fakespot, an internet extension that helps protect consumers from fraudulent sellers, analyzed 124,044 of Shopify’s online stores and found that 25,788 are fraudulent or dangerous. The data was originally reported by the Financial Times in December.
Shopify, based in Ottowa, Canada, is an online retailer that allows merchants to set up their own “stores” and sell products to consumers. It now hosts more than one million merchants, according to its website.
Fakespot CEO Saoud Khalifah told Forbes that Shopify scammers often knock off popular products from Amazon, Shopify, or Kickstarter, and then promote those items to consumers using perks such as discounts or free shipping.
Sellers adopt different methods to scam customers, Khalifah said: shipping items that are clearly knock-offs, sending different items entirely, or not sending any products at all, but still keeping the payments from unassuming shoppers.
Fakespot did not immediately reply to Insider's request for comment. Khalifah told Forbes that Shopify scammers can easily set up a store on the site, sometimes even dozens or hundreds of times, without any background checks. Then these scammers "spend heavily" on Google and Facebook ads because of how little investment is needed to run a Shopify store.
A Shopify spokesperson told Insider in an emailed statement that it has closed thousands of stores, and it regularly implements new measures to address fraud or other violations. But there will still be those few that abuse the service. "We take this matter seriously," Shopify said.
"We do not condone the behavior of bad actors, and we employ multiple teams who handle potential violations of Shopify's Acceptable Use Policy (AUP), notices of alleged copyright and trademark infringement, as well as fraud complaints," Shopify said in a statement. "Our AUP clearly outlines the activities that are not permitted on our platform, and we take action when stores are found in violation. We also encourage consumers to report potential unacceptable behaviour here and to contact their credit card companies to file a dispute."
