Shopify filled with scammers, fakes, says Fakespot

Shopping site Shopify has become an important sales channel for small retailers during the pandemic, but around one in five stores pose a risk to customers.

That’s the conclusion of a report by online security specialist FakeSpot, based on an analysis of more than 124,000 Shopify stores. 26,000 of them were found to be “related to fraudulent practices,” according to the company.  

The New York-based startup specialises in the use of artificial intelligence to help consumers detect when products they’re looking to buy are fake listings or when reviews they’re reading on marketplaces like Amazon or eBay are suspect.

All told, 39 per cent of the suspect stores on Shopify were classified as "problematic sellers", for example because the sold counterfeit goods that infringed intellectual property, or had a bad reputation, for example because they take orders without delivering goods.

Another 28 per cent were described as scam shops with suspiciously cheap listings and privacy leak, while 17 per cent had negative reports from customers and 10 per cent had no transaction history.

FakeSpot’s CEO Saoud Khalifah told the Financial Times that many of the stores they found appeared to be China-based merchants posing as US small businesses.

The Canadian online retail player has seen its sales surge as bricks and mortar businesses have taken advantage of its storefront creator to open new online sales channels. In the third quarter revenues almost doubled to $767m.

“We recognise there will be those – however few they may be relative to our base of more than one million merchants – that may abuse our service, and we take this matter seriously,” said Shopify in a statement.

“To date, we have terminated thousands of stores and routinely implement new measures to address fraud and other activities that violate our policies.”

Photo by Roberto Cortese on Unsplash