Analysis shows that the number of misleading sites, and threats to Australian consumers, is more prevalent than previously known.Illustration: Victoria Hart/Guardian Design
There have been more than 140 “ghost” stores operating online in Australia falsely marketing themselves as local brands and selling everything from poor quality clothing to counterfeit sports labels – or nothing at all.
Affected customers have told Guardian Australia that if the products they bought from these sites actually arrived, they were of “rubbish” quality and it was nearly impossible to organise a refund.
The Australian Competition and Consumer Commission (ACCC) is investigating after a surge of complaints about ghost stores, but experts say Shopify and Meta need to take responsibility for enabling these sites and allowing them to run false advertising.
Guardian Australia, aided by consumer experts, has tracked more than 140 online ghost stores, all of which pretend to be local businesses and are often accompanied by a fictitious story telling consumers they are closing down and must get rid of stock.
The analysis shows that the number of misleading sites, and threats to Australian consumers, is far more prevalent than previously known.
On 31 March, Guardian Australia bought a blouse for $69.95 from a site called Maison Canberra, which has since been taken down. The store sent an email on 1 April saying the item had been shipped, but it was never delivered.
Experts say the sites should be subject to Australian consumer law because they advertise on social media locally, but it is difficult to enforce any breaches because the exact location of the owners may be difficult to identify.
Many of the websites use very similar copy, sell similar products, and reuse email addresses. For example, one site reviewed by Guardian Australia which has “Sydney” in its name, lists a contact email for another site with “Dublin” in its name.
We should call this what it is: digital retail fraud
Last November, one online store claimed on its Facebook page that: “After years of having a physical store only in the heart of Melbourne, we decided to open our webshop!”.
However, on its website, it says it is “based in Lennik, Belgium”. It lists an address for a house 30 minutes from Brussels but also says “some of our products are located and shipped from within Australia, while others are shipped from China”.
Another online store claims on its website to be “based in the heart of Melbourne”. But it lists two addresses, one for an office building in central Amsterdam and another for a townhouse about 20km away.
The returns form for a third site instructs the customer to pay return postage to address in Zhejiang, China. The same address is listed on five other websites – one uses “Aussie” in its name, while another uses “London”.
On third-party review websites, customers have claimed they were instructed to send returns to the same Zhejiang address after purchasing products from sites claiming to be based in Norway, Canada, Germany, and New Zealand.
A 60-year-old Brisbane woman, who asked not to be named, said she spent about $350 on shoes and clothing from the site last year after seeing their advertising on Facebook. She says she received the items, but they were “rubbish”.
After trying to arrange a refund, she contacted PayPal and her credit card provider.
The woman said the company sent PayPal the details of their refund process, which listed the Zhejiang address and instructed her to make a false customs declaration, stating the value of the goods is under $5.
“Anything above $5 will be destroyed immediately, resulting in no possible refund,” the form said.
The customer said she was “usually a very tenacious person” but “after four months of backwards and forwards and arguing with people, I thought I’d just cut my losses because it was creating a lot of anxiety”. She was yet to secure a refund.
The majority of the identified ghost stores – based on analysis by Guardian Australia, evidence from customers, and a running list of sites compiled by the Scam Alerts Australia Facebook group – have been built using the Shopify e-commerce platform.
The chief executive of the Consumer Policy Research Centre, Erin Turner, said online platforms must do more to stop “fraudulent players” from using their services.
“Platforms like Shopify and Instagram are making money as these ghost stores pay for advertising and support,” she said.
“We should call this what it is: digital retail fraud. Without coordinated action from digital platforms and regulators, these fraudsters will keep gaming the system.”
Guardian Australia contacted Meta and Shopify for comment, but the companies did not respond by deadline.
Digital marketing strategist Briony Cullin said she had seen the volume of social media advertising for this type of online store increase over the past six months. She has reported the ads for 13 different businesses to Meta. Each time, she said she has been notified that the ad would not be taken down.
One of the “support” messages Cullin received from Meta, seen by Guardian Australia, said the company used a “combination of technology and human reviewers” to process reports.
“There needs to be some balance for consumers here,” Cullin says. “It’s a huge problem that they’re not taking any responsibility for and that’s terrible.”
Maison Canberra and the other stores referred to in this article were contacted for comment.
Do you know more? Contact catie.mcleod@theguardian.com
