Methods of shopping frauds on Facebook and how they are stealing thousands from customers and sending significant amounts of cash overseas

In October, a sea glass Christmas tree emerged on Richard Edmonson’s Facebook feed. It was located between a pal’s meme and a relative’s photograph. Their boughs had different hues of turquoise and translucent blue and a starfish was set on top. Edmonson, who is a resident in Edinburg, Tex. ignored the post; he did not click on it. However, the following day it appeared again, and the day after that. ‘Seeing it many times made me think it was genuine.  I believed it would be an ideal Christmas present for my sister,’ he claimed. He ordered a couple for $40.

The trees appeared on Heather Hopper’s feed at about the same period. Hopper, who,  is a sea-glass collector in Oceanside, California was awed by their artistry and she also clicked on it after the post appeared severally. She became more convinced by the pictures that portrayed their trees with Kristi Pimentel, their manufacturer in her home studio in Florida. Hopper ordered three.

However, there was an issue: Pimentel had nothing to do with it at all. Someone was stealing images from her Easy and placing them on social media and websites ad campaigns. Individuals would come across those images and order her trees. After this they would just obtain dollar shop flotsam. According to Edmonson, he received dinky plastic cones and Hopper claims she got a wooden gnome. She described it as ’the most hideous item I have ever come across.’

In the meantime, Pimentel was mobbed by dozens of perplexed or angry clients each day demanding a refund; the fact was, however, she was not responsible for any of these people’s orders.

 These are common stories. A scenario that is almost similar is happening repeatedly in residences all over the country and globally. Instagram or Facebook users come across an advertisement on their feed for an item being sold at a discount. They use PayPal to purchase the product and receive something bogus that is worthless. The seller goes missing or advises them to send the package back to China. This action is usually more expensive compared to the first order; meanwhile, PayPal does not feature anywhere after this.

In October, a report was issued by the Federal Trade Commission indicating that the number of grievances about frauds that began on social media had become three times more in the last year. The reported losses amounted to a maximum of $117 million in 2020’s  initial six months.

These frauds do not originate from individual amateur criminals. Most of them seem to be part of consistent, smooth, international acts, created to exploit the absence of social media marketplaces information and the flooding of inexperienced online shoppers arising from pandemic quarantines and the closure of physical shops.

A big Chinese firm might be profiting from the proceeds of the biggest recognized shopping fraud. The firm is TIZA Information Industry Corporation INC (publicly traded) whose income was $549 million in 2019.

The international nature of these frauds and the moderately low value of each separate scam, signifies that they have mostly escaped the detection of law enforcement. In the meantime, the number of secret, scam activity is increasing over the holiday period as individuals look for cost-effective presents for their friends and family.

Experts are concerned that if it is not controlled, Americans will go broke because of significant cash losses; also, a digital environment that works as an essential organization for small business may collapse because of a massive number of spam and overall distrust.  ‘All of us are experiencing the pinch of the economic loss worth hundreds of dollars,’ Cybercrime Support Network CEO and president, Kristin Judge remarked. ‘The cash that would have been used on Main Street is currently in China or elsewhere.’

Increase of shopping frauds

For a long time, fraud has been a significant Internet factor. Gallup indicates that  every year, one in every four Americans falls victim of cybercrime such as relationship frauds, Ponzi schemes, phishing and bogus IT support. The previous year, Internet Crime Complaint Center, FBI got 467,361 grievances and reports of more than $3.5 billion losses. The issue has become worse since the onset of coronavirus after millions individuals globally adhered to social distancing regulations and used the Internet for most interactions.

Most of these users are inexperienced in online matters and are gullible victims for old and new tricks. In April and March, bogus COVID cures, sanitizers and medicines started flowing into the Internet. 3M, which is among the major manufacturers of N95 masks in the world, probed 4,000 fraud reports, price gouging and counterfeiting as customers rushed to shield themselves and the ones close to them. In mid-year, a significant increase in cryptocurrency frauds triggered coronavirus to extort or blackmail individuals.

There are various kinds of rackets that merit personal investigation; the e-commerce fraud seems to be the quickest-rising and most troublesome. In 2015, only 13% of frauds reported to Better Business Bureau Scam Tracker involved scams from online purchasing; last year they made up 64%. Online shopping frauds also top the list in each age group, indicates the Federal Trade Commission,

What are the methods used in  these frauds, whom do they impact and what action are big firms that are involved taking to prevent them? Below is a detailed explanation:

Fraudsters set up bogus shopping Websites

We will refer to Californian Heather Hopper’s story, who clicked on a Facebook link and was redirected to a website known as Apriloina.com. If you visit this site, all looks genuine. The words ‘Culture Chic’ are written on top in fashionable serif. A neat grid indicates various discounted items like vegetable slicers and bracelets. A ‘terms of service & privacy policy exists, and MasterCard and PayPal symbols are denoted below.

However, one significant sign that Apriloina is genuine is present on the ‘About Us’ page. A common sentence is visible; ‘we appreciate your exclusiveness.’ If you conduct a search of this same distorted sentence on Google, you will obtain 65,000 results. Clicking on any of them leads you to a different store that is strangely the same in language and layout. When you investigate more, there appears more similar qualities; similar IP addresses, phone numbers, customer support emails and Mainland China shipping addresses. The images overlap; most will feature either terrible reviews or excellent reviews full of malapropisms and repeat phrases (two similar reviews by Div.Store.com or men’s hoodie read ‘it is seen that is sewn factory.’

Fraud sleuths think that these similarities are not accidental and thousands of sites are being set up by a few authoritative, centralized companies. They have named that specific company the ‘Uniqueness Network.’ It presents a minimum of hundreds of websites known as ‘Kokoerp.’ Sleurthers think these networks purchase a huge number of domain names and they are all in broken English but mostly absurd names; KidsManShop, BoldWon and GoShoes so that if one is uncovered, it is closed and another one takes its place. The replacement makes it impossible for authorities to act. ‘You report perhaps twelve and the following day it triples,’ said Suzie Herbert who follows up fraud networks in collaboration with ScamAdviser.com,  the ECommerce Foundation initiative. ‘I believe we are not heading anywhere.’

Most of the sites use Shopify, the online shopping platform, said ECommerce Foundation general manager Iorij Abraham. According to him, the reason is that Shopify enables you to create a shop for two weeks and you do not need a credit card. Fraudsters effortlessly create stores and close them after fourteen days and open a different one. ‘We have an an oustanding number of individuals lamenting about Shopify stores’ failure to deliver items,’ says Abraham. ‘They have really messed up.’

‘We take the complaints about products and services supplied by our platform’s  merchants very seriously,’ wrote a spokesperson from Shopify in a report to TIME. 

‘Acceptable Use Policy from Shopify’ clearly indicates the forbidden activities on our platform; we take immediate steps when shops are in breach.’

 Fraudsters steal product pictures from genuine businesses

As experienced on ‘Apriloina’ fraudsters lay out an elaborate trap for any product a person may search for on Google. Items include exercise equipment, lawn mowing gear, whiskey decanters, jewelry; fashionable attire and bolts and screws. Puppy frauds; here, individuals believe they are purchasing genuine puppies but only receive stuffed animals or nothing. In the previous year, this increased because people were bored at home and were seeking lovely companionship.

Other frauds obtain their pictures from sophisticated shops like L.L.Bean and Pataonia. However, those firms possess extra resources to combat scam on a higher level and clients will possibly head direct to their official site.

Therefore, it appears that fraudsters mainly succeed in stealing pictures from small businesses, mainly accessible on Easy or different e-commerce websites. These are exceptional products  and have significant content and their genuine websites might appear as shoddy as the fraudulent pages. It makes it challenging to find out the real source. Because of this, owners of small businesses globally are becoming a source of income for these fraudsters.

Illdiko Duretz, from the UK has been selling children’s handmade dolls in the last 16 years. She takes one week to make one by hand and can generate a maximum of £900 from collectors in the market.  But, this fall, ads started coming up on social media; being sold between £15 and £60. The fraudulent websites stole images of her dolls, her website banner and written illustrations about herself and her dolls. Shortly, Duretz began obtaining hundreds of messages from conned people.

‘Up to now, each day I am receiving ten to twenty messages,’ she states.’ 

‘They are reviewing me negatively on my Facebook page stating, ‘Your dolls are lousy.’

I am forced to spend a couple of hours each day responding to individuals. If I do not, they will conclude I am the fraudster. It is very distressing.’

Duretz is especially dismayed because majority of the people who email her are elderly. ‘I get many emails form people telling me that they bought it for their grandchild,’ she states. According to her, she reported various fraudulent websites to the Fraud Reporting Center, London Police. However, they informed her that they required a significant number of victims to conduct investigations. When she sought help from a London copyright protection company, she was informed that they were not in a position to do much as the fraudsters were based in China.

‘I would appreciate advice from someone,’ she states, adding that she has no clue where to seek help to put an end to it.

Fraudsters target holiday or seasonal-connected items also, hoping they will attracts parents who are anxious to get presents for their kids and other members of the family. As Halloween approaches, an advertisement featuring a singing pumpkin conned many throughout the state. The other day, Christmas-connected items such as Pimentel’s trees flooded feeds. Abraham (ECommerce Foundation) states that frauds rise by 40% in the holiday period. ‘Our most significant traffic peak falls between Christmas and January 7th. The reason is this is when people discover their item was not delivered,’ says Abraham. People experience a terrible Christmas due to this.’

 Fraudsters flood their ads on Social Media

Fraudsters would generate a significant amount of cash just by waiting for individuals to come across their fake stores through search engines. However, that passive method lacks similar reach as social media campaigns, especially on Facebook. Facebook was at one time a place to hold discussions with your friends or poke them; however, today it has turned into one of the globe’s biggest superstores. The previous year, the firm made $69.7 billion from ads. It made up over 98% of its overall income. These advertisements have turned into crucial tools for the development of businesses on the platform, attempting to get 2.7 billion active users in Facebook each month.

This system has tuned Facebook into scam artists’ feeding grounds. In the FTC study mentioned earlier, 94% of the victims stated that their fraud happened on Instagram (owned by Facebook) or Facebook. Fraudsters use similar maximalist method, which they implement on domain names on Facebook; they set up various Facebook pages for single products then send out many targeted ads, mainly to elderly ladies. They use a single account each time.

For instance, on Facebook’s ad library, in June one page portrays that a fraudulent page known as Byagadgt (currently invalid) ran eight ads in June for a zip-up top over. The ads on the Byagadget page used up $200 – $300 that were viewed 7,000 to 8,000 times; women aged more than 65 made up 39% of the individuals who viewed the ads.

Since such ads continue to control feeds, an annoyed society has come up on Facebook, committed to revealing these fraudulent ads each time they come up. However, these society’s members like Scam Alert Global and Facebook Ad Scambusters state that their grievances are mainly overruled or ignored and Facebook representatives claim the pages adhere to community regulations.

 According to Pimentel, she has made several reports about bogus ads of her trees and filed an official report with Facebook claiming stealing of intellectual property. ‘However, I received a response stating the evidence was insufficient and they were unable to pull it down as the site contained other items on sale,’ she states.

Bryan Denny and Kathy Waters, a couple of anti-scam activists have gone through similar disappointments from 2016. Denny, who is a retired colonel in the U.S. has been involved in several romance frauds; the fraudsters impersonate him to steal cash from lonely ladies. Denny and Waters claim to have had a meeting with representatives from Facebook numerous times and for more than four years shown them fraudulent accounts, but things remain the same. According to Denny, ’Nothing has improved since we began.’

‘The number of excuses Facebook gives for not tackling this issue is equal to the fraudsters claim about why they are unable to communicate directly with you.

In December Buzzfeed News published an article purporting that Facebook and Staff were asked to disregard unusual activities unless it led to ‘Facebook incurring economic losses.’ A different Buzzfeed article stated that Facebook generated over $50 million in income from one criminal marketing agency in San Diego.

A spokesperson from Facebook refuted claims that the firm gains from fraudulent ads: ‘We have all the resources, economic and others to avoid abuse and make the Facebook ads a positive experience,’ they said. Facebook also claims it has increased its efforts to extract negative content. It pulled down 112 organic posts in 2020’s initial first months, an increase of over 35% from the same time in 2019. The previous month, the firm started an awareness move in association with the Better Business Bureau about the rise of shopping frauds during the holiday period.

Also, the Facebook spokesperson addressed a question directly about Pimentel’s circumstances and wrote,’We have erased several pages linked to these ads for breaching our impersonation regulation. We have implemented policies to assist in protecting businesses and people from fraudsters who wish to use them; however, our implementation is not fool-proof. In regard to the breaches Ms. Pimentele experienced, we deem it very serious and are currently examining other accounts and pages connected to these ads.’

The cash is moved to China from Paypal Accounts

In a way, Facebook is exempted from blame as the actual deals did not mainly occur there; the purchasers are directed to the fraudulent websites mentioned before, that mainly use PayPal. A lot of consumers questioned for the story stated that the existence of PayPal was a crucial guarantee that it was genuine.

‘Seeing PayPal made me believe it must be legitimate and they are trustworthy,’ stated Richard Edmonson, the man from Edinburg, Texas, who believed he was buying sea glass Christmas trees.

Consumers like Edmonson state that they have mostly not succeeded in receiving reimbursements from PayPal. Some of them revealed that PayPal has just urged them to deal with the vendor. Promises have been made to others that they will get reimbursement if they personally return the package at their own expense; however, the cost of shipping to China may be more expensive compared to the first order.

‘We have not encountered this issue on a big scale,’ emailed a PayPal representative to TIME. ‘PayPal has a zero-tolerance regulation on its platform for scam activity. Our teams put in every effort to shield consumers against any person trying to steal from innocent people.’

But the grievances on PayPal’s website indicate the opposite, however. One thread about the PayPal account; ‘There are numerous messages in the last three months from individuals claiming that they had made orders for products like baseball bat, decanters, Pimentel’s Christmas trees and hydraulic jacks, which were never delivered, indicates Garland Information Technology Ltd.

‘Is there anything PayPal can do? One user wrote, ‘a scam is happening, is being encouraged and condoned.’

It is challenging to monitor where the money flows from PayPal to real individuals. Fraudster investigators have discovered that most fraudulent websites feature links to British firms where sloppy state regulations facilitate the creation of  shady shell firms for illegal acts. The fraudulent websites’ filings on the state’s Companies House corporate registry have ell kinds of minimal or wrong details such as repeating addresses or names of shared rentable office areas. ‘It is similar to musical chairs; the same names repeatedly come up,’ says Marissa Hadland who is an investigator of the fraudulent networks.

‘This is the company’s director. They quit and become director-shareholder of another firm.’

However, public connections exist between one fraudulent network and a couple of genuine Chinese firms: TIZA, whose objective is to offer commercial Internet IT services, and Youkeshu, TIZA’s subsidiary, a cross-border e-commerce firm selling items via Walmart, AliExpress, Amazon and other companies.

Public records indicate that Youkeshu is the largest shareholder in Shenzhen Guiguyun software technology Co. Ltd, owner of Kokoerp.com domain, the location of most of the fraudulent sites, and a shell firm, Duo Tongguang Electronic Commerce Co. Ltd has experienced a significant number of grievances on Paypal and in different reviews. Internal portals and Email addresses connect the Kokoerp and Youkeshu domains. Some fraud victims of Kokoerp have said they received boxes with Youkeshu’s (YKS) trading sign on the return label.

 Furthermore, TIZA CEO and chairman, Xiao Siqing is listed in public as Youkeshu CEO and Guiguyun legal representative. From 2017 after Duo Tongguang’s incorporation, TIZA’s income rose almost by four times in 2019 to over half a billion dollars. A Youkeshu representative refused to comment. A TIZA representative did not answer instantly when asked to comment.

The war against fraudsters persists

Because of the frauds’ widespread nature, it is impossible for  police precincts in the locality to investigate and apprehend them. In November, this discrepancy resulted in ECommerce Foundation and different companies to begin the initial Global Online Scam Summit. The representatives who took part are from the FBI, Europe and Interpol.

Here, numerous influential individuals vowed to put in additional rescources to fight online frauds. The FTC’s International Consumer Protection lawyer, stated that FTC has began launching a consumer’s website to report global frauds.

Ambraham  commented at ECommerce Foundation saying that the issues will escalate unless a lot of effort and fast teamwork among global and national law enforcement. ‘Interpol and Europol are beginning to fight fraud,’ he states. ‘I am afraid that in the coming few years consumers will be defrauded.’

In the meantime, in the U.S. the problem has been stuck in Congress. A lot of public discussions have taken place about  Communications Decency Act, Section 230, which protects social medial platforms from lawful responsibility for specific activities by their users. President Elect Biden and President Trump have criticized the regulation and advocated for its revocation or repeal. However, Republicans and Democrats do not agree on how it should be altered; it means minimal progress has taken place.

In April, Adam Kinzinger, Illinois Representative presented two sections of legislation during a House floor session to combat criminal acts on social medial. But, his colleagues have given him minimal support and there is no progress on the bills. ‘It’s very challenging. People are eager to forward grievances about the problem. But, when you present a solution they are reluctant to accept it,’ Kinzinger told TIME. ‘It took us one year to write the social media bills as we are attempting to reach an agreement, but we were unable to. In Congress, anything to do with privacy and data has presented challenges. It involves many details.’

Therefore, until something comes up, it is the responsibility of the people who are falling victim to fraud to take up the fight alone. In Texas, Edmonson has filed numerous complaints with Paypal and was informed that he would obtain a refund of $8 from the vendor. Pimentel is unable to handle the significant number of queries and complaints. Her trees continue being circulated on the Internet; apart from Facebook, they now feature on Amazon, Pinterest, eBay and Walmart. The origin of most of those ads is the Kokoerp network.

This week, Pimentel said a woman from Denver call her pleading for reimbursement on her 76-year-old mum’s behalf, who was a victim of a bogus ad. ‘These helpless ladies are being messed,’ says Pimentel.

‘I feel impersonated, violated and exploited and these firms are not shielding me from getting ruined and beat up.’