Online Shopping Scams Thrive On Social Media Platforms, Leaving Consumers Vulnerable

While scrolling through Instagram, Farhana saw an ad that appeared to be for the H&M clothing brand. Lured by the sale price, she ordered clothing items worth Rs 5000. But the next day, when she tried to open the website, it no longer existed.

“I tried the customer care contact given on my order slip, but that was not working. I soon realised I had been scammed,” Farhana said.

It is not an isolated incident but a part of a larger trend in the e-commerce industry, with a high increase in online shopping fraud through Facebook and Instagram ads.

According to a report on India’s digital fraud market by market research firm techARC, digital commerce contributed to more than half (51 per cent) of the total ad fraud in India.

These fake scam companies often use copy-paste templates, sale offers, fake contact numbers, resemblance to famous brands, and online pre-order payments. Most things from their privacy policy to product design are copied from other brands to give these websites an authentic look. However once the customer places an order, these websites change their domain details.

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The scammers reach the customers via Instagram or Facebook ads, giving them a large target base. While Meta has given rise to many small businesses selling their products directly, the lack of checks and balances has opened a free playground for online scams.

“As far as these fake companies are concerned, they can sell whatever they want if you give them a free playground. Where is the accountability of the intermediaries like Instagram and Facebook who allow such fake ads to be run without proper authentication?,” asked Ritesh Bhatia, a cybercrime investigator and founder of V4WEB Cybersecurity.

He added that most cybercrimes can be reduced provided social media intermediaries start taking up responsibilities and cooperate with law enforcement agencies. Still, they refuse to because they enjoy safe harbour treatment in America.

Meta has roughly 2.7 billion users worldwide with an ad revenue of 115 billion U.S. dollars in 2021. In India, it saw a staggering 74% growth in 2022.

Facebook asserts its proactive enforcement of its 'Facebook Community Standards,' which outline acceptable and unacceptable behaviour on the platform, covering areas such as spam, fraud, and deception. Additionally, Facebook releases a quarterly 'Community Standards Enforcement Report' to monitor its efforts better and showcase its ongoing dedication to ensuring the safety and inclusivity of Facebook and Instagram.

But even after several complaints, such advertisements continue to con the citizens, with Meta not having specific statistics on the number of takedowns and opaque ad machinery, making it difficult to trace the origin of these crimes. Even if an ad is removed, it is a cakewalk for scammers to set up a new ad.

On the lack of transparency of the social media intermediaries, Bhatia said, “The entire argument around data privacy concerning Facebook or Instagram ads is baseless. What privacy is there when people are reporting an ad and saying that it’s scamming people, the law of the land needs to know the information about the source of the crime. You cannot act monopolistic in that case.”

Mojo Story contacted Meta spokesperson for comment but no response has been received.

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A similar scam episode happened with S*, who wanted to be anonymous due to legal constraints when he ordered shoes after being lured by the Instagram ad. He made the payment online through Paytm Gateway. But, like Farhana, he also never received the order.

After filing the complaint with the Cyber Crime Police, they could trace the bank account to which the money was sent.

In 2021, the Delhi Police Cyber Cell arrested five people after busting a scam in which multiple e-commerce websites were used to dupe more than 10,000 people of Rs 25 crore over three years. Using mobile phone numbers and established money trails, the accused's location was zeroed in on. But this is not possible in all cases.

Paytm Payment Gateway offers minimum documentation to set up the payment for businesses, which includes a GST certificate, PAN card, bank account details, KYC, shop front photo, etc. Most of these documents including the business addresses are either fake or made in someone else’s name.

In most cases, especially organised cybercrimes, scammers have been found using ‘Benami’ accounts, which makes tracing difficult and lets them get away with their crimes.

“The anonymity and ease of technology are luring many people, not just criminals in the organised sectors but novice people who want to make easy money. Some people do not cross-check the ads and are tempted by the sales and offers. It is difficult for a layperson to distinguish between a real ZARA website and a fake one. There is no awareness of what a ZARA’s domain name would look like,” said Nirali Bhatia, a cyber psychologist, founder of CyberBAAP, and the director of V4WEB Cybersecurity.

She also explained how novice fraudsters including kids are doing online shopping scams just for thrills and excitement. “For the social media intermediaries, it is a business. There’s no mechanism for them to know whether the advertisement is fraudulent until someone flags it.”

Looking at the psychological impact of cyber fraud on consumers’ minds, Bhatia said, “The first emotion that a consumer goes through after a fraud is betrayal. The panic sets in, and at that moment, the consumer may likely compromise further in desperately seeking a solution such as clicking on any helpline scam. Eventually, one faces helplessness, or in some cases, a consumer faces paranoia about the entire social media world.”