Small businesses are particularly vulnerable to fraud, with 40% experiencing some form of fraudulent activity, according to a survey by the Better Business Bureau. So it’s crucial to educate yourself on common scams and how to prevent them.
Scammers can use a variety of tactics to target sellers, such as payment scams, shipping scams, and off-platform communication scams. These can result in lost revenue and damage to your reputation.
In this blog post, we’ll provide examples of common scams that can affect Etsy and other ecommerce platforms, as well as tips to protect your business from fraud.
Facts on Ecommerce Scams and Fraud
Ecommerce scams and fraud are a growing problem, affecting businesses of all sizes. Here are some relevant statistics that illustrate the scope and impact of these issues:
- In 2020, the Federal Trade Commission received over 2.2 million reports of fraud, with consumers losing over $3.3 billion to fraud complaints.
- Fraudulent account takeover attacks increased by 282% in the first half of 2021 compared to the same period in 2020, according to a report by Arkose Labs.
- In 2020, the median loss for a fraud case involving a small ecommerce business was $3,000, according to a report by the National Cyber Security Alliance).
- Fraudulent chargebacks cost ecommerce merchants an estimated $40 billion in 2020, according to a report by Chargebacks911.
- The most common types of fraud in ecommerce are payment fraud, account takeover fraud, and refund fraud, according to a report by Experian.
We’ll look at the most common forms of these scams and how they’re often implemented on ecommerce platforms such as Etsy.
Common Types of Scams
Before we dive into specific examples, it’s important to recognize some of the common factors that are present in many/if not all scams.
Scam Patterns
- False sense of urgency: Scammers often create a sense of urgency, asking for quick action or shipping.
- Unexpected Order Changes: Request a change to the original transaction, such as an alternative shipping address or payment method.
- Request to move communication off Etsy: Scammers often use off-platform communication channels to try and take the transaction outside of Etsy’s secure messaging system.
- Overpayment / Order Reversal: Scammers may use tactics such as overpayment or payment reversal to trick you into refunding them more than they are owed.
Here are how these messages will often look…
Mistaken Shipping Address Scam
“Hi, I accidentally put the wrong shipping address on my order. Can you please ship it to this address instead: (insert scammer’s address)? Thanks.”
Message Breakdown
The scammer is trying to redirect the shipment to a different address, which could be their own instead of the legitimate buyer’s address. To avoid this scam, always confirm the shipping address through Etsy’s messaging system and avoid any requests to ship the item to a different address than the one listed on the order.
Urgent Shipping Request Scam
“Hi, I’m interested in purchasing your item, but I need it urgently for a special event. Can you please send it overnight via a specific shipping carrier? I’ll cover the additional shipping fees.”
Message Breakdown
The scammer is requesting that the item be shipped overnight via a specific shipping carrier. Scammers often use urgent requests to pressure sellers into acting quickly without proper verification, which can lead to shipping to the wrong address or using an unverified shipping carrier. To avoid this scam, always verify the buyer’s address through Etsy’s messaging system and only use verified shipping carriers to ensure the safety and timely delivery of your item. If you suspect an Urgent Shipping Request Scam, don’t hesitate to reach out to Etsy’s customer support for help.
International Shipping Scam
“Hi, I’m interested in purchasing your item, but I’m currently out of the country. Can you please send it to this address instead: (insert scammer’s address)? I’ll cover the additional shipping fees.”
Message Breakdown
This message is a good example of an international shipping scam because the scammer is requesting that the item be shipped to a different address than the one listed on the order, which could be their own instead of the legitimate buyer’s address. To avoid this scam, always confirm the shipping address through Etsy’s messaging system and avoid any requests to ship to an address that is different from the one listed on the order. Additionally, make sure to use a reliable shipping carrier that provides tracking information and signature confirmation to ensure the delivery is made to the correct recipient.
Off-Platform Communication Scam
“Hi, I’m interested in purchasing your item, but I have a question. Can you please give me your personal email address or phone number to discuss further?”
Message Breakdown
Here’s an example of an off-platform communication scam, the scammer is requesting that the seller communicate and transact outside of Etsy’s secure messaging system. Scammers often use this tactic to avoid Etsy’s safeguards and protections, making it easier for them to commit fraud or unauthorized transactions. To avoid this scam, always communicate with buyers through Etsy’s messaging system to ensure that you have a good paper trail and that all transactions are secure and protected.
Overpayment Refund Scam
“Hi, I just purchased your item, but I made a mistake and accidentally overpaid. Can you please refund the difference via an alternative payment method?”
——
“Hi, I just purchased your item and sent a check for more than the purchase price. Can you please refund the difference to me? Thanks.”
——
“Hi, I just purchased your item, but I accidentally used the wrong payment method and paid twice the amount. Can you please refund the difference via PayPal? Thanks.”
Message Breakdown
These messages are examples of an overpayment refund scam because the scammers are requesting refunds for more than the purchase price, often using alternative payment methods. They may also use the tactic of sending a check or paying double the amount to make the scam appear more legitimate. To avoid this scam, always double-check the payment confirmation before shipping the item and refund only through the original payment method used for the transaction.
Payment Method Scam
“Hi, I’m interested in purchasing multiple items from your shop. Can you please give me a discount if I pay with a specific payment method or outside of Etsy?”
Message Breakdown
The scammer is requesting a discount for paying with a specific payment method or outside of Etsy. Scammers may ask for discounts in exchange for paying with gift cards, wire transfers, or other non-traditional payment methods. To avoid this scam, it’s important to only accept payments through trusted and secure payment gateways, like those offered by Etsy. If a buyer requests a discount for a specific payment method, be wary and stick to your established payment policies. Don’t let scammers trick you into giving them a discount or accepting non-traditional payment methods. Remember, if something seems too good to be true, it probably is.
Tips for Avoiding Ecommerce Scams
- Use Etsy’s Payment System: It’s essential to use Etsy’s payment system to avoid payment scams. This system protects both the buyer and seller by ensuring that the payment is legitimate.
- Use 2 Factor Authentication: This will make it harder for a scammer to take over your account. If you don’t have it set up already, you can follow our guide for setting up 2 Factor Authentication using Google Authenticator.
- Double-check shipping addresses: Always double-check the shipping address before shipping an item. If a buyer asks you to ship to a different address, confirm it through Etsy’s messaging system before shipping.
- Beware of Overpayments: If a buyer sends a check or money order for more than the purchase price, don’t refund the difference until the payment clears.
- Use tracking and delivery confirmation: Always use tracking and delivery confirmation for your shipments to help protect against fraudulent chargebacks.
- Monitor for unusual activity: Keep an eye out for unusual activity, such as a sudden surge in orders or a high rate of chargebacks, which could indicate fraudulent activity.
- Trust your instincts: If something seems too good to be true or doesn’t feel right, trust your instincts and proceed with caution. Don’t be afraid to ask questions or decline a sale if you’re not comfortable with it.
How to Report Scams on Etsy
If you believe that you have been the victim of a scam as an Etsy seller, you should report the incident to Etsy as soon as possible. To do so, you can contact Etsy’s support team through the Help Center on their website or by emailing them at support@etsy.com.
In your report, be sure to provide as much information as possible about the scam, including any messages or communications you received from the scammer, the name of the buyer, the item(s) in question, and any other relevant details. Etsy’s support team will investigate the incident and take appropriate action to protect your account and prevent similar scams from occurring in the future.
Etsy also provides a list of resources and tips for sellers to avoid scams and protect their businesses, which you can access through their Help Center. These resources include information on how to identify and avoid common scams, how to protect your personal and financial information, and how to stay safe when communicating with buyers.
Etsy Resources
- Etsy’s Purchase Protection
- Account Security Checklist
- Suspect Fraud in Your Etsy Account
- Spam and Suspicious Messages
Ecommerce scams are a significant risk for small business owners, but there are ways to protect yourself. By educating yourself on common scams, being cautious, and using Etsy’s payment system, you can keep your business safe. Remember to always trust your instincts and be wary of any message that seems suspicious. Stay safe and happy selling!
