Spotting and Avoiding Fraudulent Online Retailers

For every great opportunity online, there are a hundred more sites that are really trying to take advantage of you. Here are some ways to identify online scams, especially in retail shopping:

If it's too good to be true, it's not true. You probably know by now that when someone emails you from Nigeria or another foreign country claiming to be the heir to a fortune, which they say they want to share with you, they're trying to make their own fraudulent fortune from your own pocket.

Similarly, notifications that you've won a lottery you don't remember entering are really trying to shake you down for a fake tax you'll have to pay before you can access your winnings, which never materialize.

Well, the same applies to retailers. The email spammer offering you a cheap Rolex watch is really just trying to take your credit card number.

Don't look for the Better Business Bureau stamp as a mark of an honest program: all this means is that they respond to complaints - which only tells you that someone in the office is taking the time to write emails saying, "No, we won't return your money. Have a nice day!"

Does the business have a shopfront or physical address listed on their website? Do they have personnel with real names, ideally names you can find in the phone book? The amount and quality of information isn't a clear indicator, but it does provide a clue as to whether the online storefront is real or fraudulent. P.O. boxes and mail drops can indicate fraud.

Using Paypal is a hint that the business might be legitimate, as Paypal is very careful about security and usually favors the buyer in disputes. On the other hand, Paypal's tendency to favor the buyer means that some legitimate businesses don't use their service, in order to avoid being burned by fraudulent buying. In any case, it's quite possible for a false business to present credentials, and equally possible for a real business to have none. Weigh the presence of information carefully when trying to avoid fraud in online retail. And always make sure you are on the real Paypal site by looking at the address bar of your browser.

Here are some common scam products:

Pharmaceuticals. There are legitimate online pharmacies - some of which require a doctor's prescription, some of which fall into a legal gray area by offering common prescription drugs without the rx - but there are also many scams.

Good signs to look for: buyer testimonials on review sites (http://www.pharmacychecker.com/ is one useful one) rather than on the pharmacy website itself; licensing information in the home country of the pharmacy; personal referrals from friends.

Bad signs to watch out for: If the pharmacy is offering any drugs on the US DEA restricted drug schedules, such as Vicodin, Valium, or amphetamines, it's almost certainly a scam. Operations that sell these are blatantly illegal, and in most cases they will either be investigated and shut down quickly, leaving an empty website complete with payment buttons, or simply be set up to take your money and send you nothing.

You can most likely buy Viagra online, but in order to find a legitimate retailer, it's wise to get outside references on your source, and NEVER click a link in a spam email.

Fashion items. Buying a high fashion brand online carries the risk of acquiring an expensive fake - less likely if you're buying in your own country, but still possible. Buying a fraudulent item knowingly means your item may be confiscated by Customs on the way in. Be careful.

Work-from-home offers. Why am I referring to a job as a product? Because these outfits don't give you jobs - they sell you a little booklet filled with contact information for multi-level-marketing scams and similar fraudulent "jobs". You pay for the booklet, and then the booklet will tell you to send money to third parties to get "information on jobs", often just directions on how to stuff envelopes with your own empty promises.

I fell for one of these, once. The thirty-five-dollar "guaranteed employment leads" guide turned out to be a little blue booklet full of addresses where you could send your money for "more information". I declined to pursue the "leads".

Now, here are some steps you can take to protect yourself from fraud online:

Never buy in a hurry. If you're unsure about something, wait until the next day. There are websites out there which, every day, tout their usual prices as a sale special "ending tonight, (today's date) at midnight!" I was examining one of these websites at midnight once. When twelve o'clock came around, the counter just flipped to the next day. Don't let anyone's false urgency talk you into something you're not sure about.

Pay by credit card or Paypal. Even with the risk of credit card number theft, paying by credit card is still safer than wiring money or sending a check (which has your bank account number on it!) or money order (which can't usually be retrieved or traced) for large transactions. This way, if you suspect you've suffered fraud, you can contact the card company or contact Paypal, and often this will help you get your money back.

Read reviews before you click that button. I've been saved at the last minute by this strategy - remembering to Google the company and the product before I chose to pay, I found evidence of fraud and chose another retailer.

Don't take testimonials on the website as evidence of anything. Instead, find third parties talking about the site realistically. Unless there are very few reviews, nothing should have only vague and 100% positive reviews. Positive reviews with details are good; and a few neutral or slightly negative reviews are good, too. For example, when you see a user who complains about poor customer service or receiving their items late, you'll know this means the company is likely legitimate. Every company has a few screw-ups; what's important is that they send out the product you've paid for.

Safe shopping!