How Are Shopify Sellers Getting Scammed? | 5 Common Scams Targeting Shopify Businesses and Sellers

Shopify is the proprietary eCommerce platform of Shopify Inc., a Canadian multinational eCommerce company headquartered in Ottawa, Ontario. The online platform offers online retailers a multitude of services including payments, marketing, shipping and customer engagement tools.

As of May 2021, the company reported that 1,700,000 businesses in approximately 175 countries used its platform. By July 2022, Shopify was among the top 20 largest publicly traded Canadian companies by market capitalization.

Shopify Scams

• Targeting Businesses
• Triangulation Scam
• Counterfeit Return Scheme
• Duplicate Store Scheme
• Switching Scheme
• Fake Purchase Order Scam

Targeting Customers
Safeguarding Practices

Shopify Scams

Online scams are rampant. Where there is money to be made, there are individuals looking to take advantage. Because of its business size in the eCommerce world, Shopify is a prime target for such scammers and fraudsters targeting businesses and consumers alike. These scammers create detailed plans to defraud businesses, suppliers, and consumers.

Targeting Businesses

The following are the Shopify scams targeting businesses and sellers:

Triangulation Scam

A fairly common tactic employed by online crooks, it is one of the most profitable scams. The scammers create real Shopify sites and also create a dropshipping business. Next, instead of selling the inventory they own, they buy the inventory from real suppliers with stolen credit cards. The consumer receives the goods from the seller, so it is not a consumer scam. It is deemed to be stolen merchandise as it is purchased with stolen credit cards. The scammers receive the money, but the credit card company refutes the charge that was incurred to purchase the inventory. In the end, the supplier is out of inventory and has not received any payment for it.  

Counterfeit Return Scheme

This age-old classic scam is not unique to Shopify and it grows in a mail order business. The consumers purchase an item and then issue a return within the stipulated time period. When the executive comes to collect, the consumer returns a duplicate and cheaper product in place of the original. This leads to the consumers receiving back the money they spent on the purchase as well as keeping the original item of purchase. The seller, on the other hand, loses the money and receives a counterfeit product. Fortunately, it is fairly easy for businesses to protect themselves from this scam by simply adding unique identifiers, such as serial numbers to their products.

Duplicate Store Scheme

This scheme works exactly as the name suggests. The scammers create and mimic a popular store sight with a similar domain name, claiming to sell the same original product. However, during an actual sale, they might fail to provide the merchandise or provide a low-quality product. In the end, this is a two-way scam, as sellers and consumers both lose out. However, Shopify has taken pro-active steps to weed out such fraudulent sites quickly through software tools and has added this service to their paid monthly maintenance service offered to merchants.

Switching Scheme

The long-term loss that this type of scam causes the seller makes it one of the most serious schemes. This sort of scam has been prevalent on sites like eBay. A potential buyer will make a purchase from a Shopify store and request a direct invoice from PayPal, citing technical difficulties which are preventing payment completion. Once the invoice has been sent, the seller receives a notification, ostensibly from PayPal, confirming payment by the consumer. The notification will also state that the funds are on hold and require the product tracking number. Of course, this notification is fake. Once the seller updates the product tracking number, the scammer receives the product for free as there are no PayPal funds on hold. This loss can be huge, depending on the size and cost of the shipment.

Fake Purchase Order Scam

This scam is rare but effective and requires technical knowledge and software skills on the part of the fraudsters. A fraudulent customer will create a copy of the seller’s Shopify checkout sheet and alter the submit button link. Then they will patch it to a program that enables saving all the data on the checkout sheet. The data is then modified and a fake checkout sheet is sent back at a lower price. The difference goes unnoticed and approved. What this scam does is allow the fraudster to get the products without the seller’s consent, and the seller ends up losing a lot of money.

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Targeting Customers

Apart from businesses, even customers are prone to Shopify scams like:

Direct Client Scheme

This is a scam that involves some sweet-talking fraudsters. First, the seller gains the buyer’s trust with a few genuine transactions where the products are right and they reach the correct address. Once the trust is established, the seller suggests a purchase through a direct card payment technique to avoid extra costs and the inherent hassle of shopping on Shopify. Once they have the buyer’s card details and other data, they proceed to exhaust the buyer’s funds. Needless to say, the buyer doesn’t receive his purchases.

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Safeguarding Practices

As both consumers and sellers, there are some basic practices that can help safeguard interests. It is, however, easier to safeguard as a consumer. Any fraudulent activity like non-delivery of a sold item, delivery of a lower quality item, overcharging, etc. can be reported to the merchant who is operating on the Shopify platform.

As a seller, however, the best practice is to have a premium Shopify Store with all its maintenance services that guarantee regular checks for signs of any fraudulent activities. Barring this, it is mostly up to the seller to remain careful. A few steps like choosing a secure payment gateway, having a single place for all transactions, and saving transaction proofs can go a long way in safeguarding business operations and having proof when and if reporting scams.

No matter what measures any operating web platform takes, frauds and scammers are always finding new ways for their operations. It is prudent to have personal safety measures in place in addition to the ones that are provided by the operators.

FAQs

Can my Shopify store be hacked?

Almost every online store is prone to hacking and so is Shopify. However, one can protect their Shopify store by conducting proper backup on time and using managed and updated plugins.

How secure are Shopify payments?

Shopify is certified Level 1 PCI DSS compliant. This compliance extends to all the stores using Shopify's platform. In this way, Shopify helps you keep your payment information and business data safe and secure.

How do Shopify scams work?

Shopify scams work in the following ways:

• Counterfeit Return Scheme
• Duplicate Store Scheme
• Switching Scheme
• Triangulation Scam
• Fake Purchase Order Scam
• Direct Client Scheme