Meta and Shopify Pushed to Tackle ‘Ghost Stores’ Exploiting Australian Consumers

Over 140 “ghost” stores have been identified operating online in Australia, falsely presenting themselves as domestic enterprises. These platforms sell a range of products from low-grade apparel to counterfeit sporting goods, and in some cases, fail to deliver any products at all.

Consumers have reported to Guardian Australia that the few products which do get delivered are of extremely poor quality, and securing a refund from these sites is often an insurmountable challenge.

Following a wave of complaints, the Australian Competition and Consumer Commission (ACCC) has launched an investigation into these ghost stores. However, specialists argue that platforms like Shopify and Meta must also accept responsibility for enabling these fraudulent activities through their services.

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Guardian Australia, with the help of consumer protection experts, has tracked over 140 online ghost stores masquerading as local businesses, often with fabricated narratives about closing down sales to clear out inventory.

The extent of these misleading sites poses a greater threat to Australian consumers than was previously recognized.

On March 31, Guardian Australia purchased a blouse for $69.95 from a site named Maison Canberra, which has since been deactivated. The store confirmed shipment on April 1, yet the product was never delivered.

Experts contend that these sites should fall under Australian consumer laws as they market on social media locally, but enforcement is challenging due to the difficulty in pinpointing the owners’ precise locations.

Many of these websites feature similar content, offer comparable products, and recycle email addresses. For instance, a site with “Sydney” in its name lists a contact email belonging to another site with “Dublin” in its name.

Last November, one online store announced on its Facebook page that it had transitioned from being a physical store in Melbourne to launching an online shop.

However, its website states it’s “based in Lennik, Belgium,” providing an address for a residence 30 minutes from Brussels but also claiming that “some of our products are located and shipped from within Australia, while others are shipped from China.”

Another site claims to be “based in the heart of Melbourne” but lists two addresses, one in a central Amsterdam office building and another in a townhouse roughly 20km away.

The return instructions from a third site direct customers to send items back to an address in Zhejiang, China, which is also listed on five other websites—one using “Aussie” in its name, another “London.”

On review websites, customers have reported being directed to send returns to the same Zhejiang address after purchasing items from sites purportedly located in Norway, Canada, Germany, and New Zealand.

A 60-year-old woman from Brisbane, who preferred to remain anonymous, said she spent around $350 on footwear and clothing from one such site last year after seeing its ads on Facebook. She received the items, but they were of substandard quality.

After attempting a refund, she reached out to PayPal and her credit card company.

She shared that the company provided PayPal with details of their refund procedure, which required her to falsely declare the goods’ value as under $5.

“Any value above $5 will be immediately destroyed, resulting in no possible refund,” the instructions stated.

The woman mentioned that she is “usually very persistent,” but after “four months of back-and-forth and arguing, I decided to just cut my losses as it was causing too much stress.” She has not received a refund to date.

According to analysis by Guardian Australia, evidence from customers, and a list compiled by the Scam Alerts Australia Facebook group, the majority of these ghost stores are created using the Shopify e-commerce platform.

Erin Turner, the chief executive of the Consumer Policy Research Centre, emphasized that online platforms need to intensify their efforts to prevent fraudulent entities from using their services.

“Platforms like Shopify and Instagram profit as these ghost stores pay for advertising and support,” she stated.

“We should recognize this for what it is: digital retail fraud. Without a united front from digital platforms and regulators, these fraudsters will continue to exploit the system,” Turner added.

Guardian Australia reached out to Meta and Shopify for comments, but neither company had responded at the time of publication.

Digital marketing strategist Briony Cullin reported seeing an increase in social media advertising for these types of online stores over the past six months. She has reported 13 different business ads to Meta, but each time, she was informed that the advertisement would not be removed.

One of the responses Cullin received from Meta, which Guardian Australia viewed, indicated that the company uses “a mix of technology and human reviewers” to assess reports.

“There needs to be some accountability for consumers here,” Cullin stated. “It’s a significant issue that they are neglecting, and that’s unacceptable.”

Maison Canberra and the other stores mentioned in this article were contacted for comment.

• Do you have more information? Contact catie.mcleod@theguardian.com