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False Claims Act: Online Retail Scams
False Claims Act: Online Retail Scams
Online shopping scams are on the rise, with consumers reporting over $8 billion in losses last year alone according to the FTC[1]. As more of our lives move online, scammers are finding new ways to take advantage of unsuspecting shoppers. From fake websites to phishing emails, these retail frauds can take many forms.
The most common online shopping scams involve sellers misrepresenting products or failing to deliver items already paid for. For example, a scammer may create a fake website pretending to sell popular brands at deep discounts. However, once payment is received the “business” disappears without ever shipping anything.
Some savvy scammers go further by actually sending an item, just not the one the customer ordered. This bait-and-switch allows them to provide tracking information and initially avoid suspicion. But when the buyer receives a cheap knock-off instead of the expected product, the crook has still committed fraud.
While these retail scams target individuals, the cumulative financial toll has attracted legal action under the False Claims Act (FCA). Normally used to prosecute those defrauding the government, the FCA allows private citizens to file whistleblower lawsuits on behalf of government agencies[2]. If the claim is successful, the whistleblower or “relator” is entitled to a portion of recovered funds.
So how does this apply to retail fraud? Enter: online marketplaces. Scammers flock to platforms like Amazon and eBay to access their huge customer bases. However, many are now being caught selling counterfeit or non-existent products. This violates the marketplace terms these sellers agreed to, effectively bilking the platform provider. The online markets themselves are increasingly bringing FCA lawsuits against such fraudsters to recover costs and deter future abuses.
For consumers, the best protection is awareness. Be wary of unbelievable deals, research unfamiliar sites, and pay with credit cards to enable chargebacks. For marketplaces and other retailers, monitoring seller behavior, establishing strict policies, and partnering with legal authorities all help mitigate fraud risks. Together we can make the online shopping world safer for everyone.
Resources
Avoiding Online Shopping Scams (Video)