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Scam alert: some online bargains too good to be true

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If you're shopping online and a deal seems too good to be true, you may have stumbled on a scammer masquerading as a legitimate online retailer, warns the Australian Competition and Consumer Commission.

Australians have this year contacted the ACCC's Scamwatch service with more than 1000 reports of online shopping scams worth more than $150,000 in total.

Younger Australians aged 18 to 24 are the largest age group who reported losing money to online shopping scammers.

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Almost one in two people reporting a scam had lost money, according to Scamwatch statistics.

"Australians love shopping online and scammers take advantage of this by setting up fake websites that look like genuine online stores, including professional-looking design, stolen logos, and even a .com.au domain name and/or stolen ABNs," says ACCC deputy chair Delia Rickard.

"The only thing these websites are selling is false hope. The scammers running these sites will advertise goods, often well-known and trusted brands, at unbelievably low prices to lure in unsuspecting consumers shopping around for a good deal."

If something looks too good to be true, it probably isn't true, she says.

Ms Rickard says that while the design of fake retailer websites can make them almost exactly look like the real deal, there are some tell-tale scam signs consumers can look for.

"The biggest tip-off is the method of payment: scammers will often ask you to pay using a money order, pre-loaded money card, or wire transfer, even gift cards from well-known retailers. If you make a payment this way to a scammer, you're highly unlikely to see that money again," she says.

"We all love a bargain, the bigger the better, but scammers prey on this and will use the 'fear of missing out' to cloud your judgement. If in doubt, do a Google search on the website you're thinking of buying a product from. There are many great product review services that can tip you off to stay clear of a fake retailer," Ms Rickard said.

How to avoid a scam

  • Do some independent research on a website you're thinking of buying from and check out reviews from other consumers.
  • Avoid any arrangement with a stranger that asks for up-front payment via money order, wire transfer, international funds transfer, pre-loaded card or electronic currency. Never send money or give credit card or online account details to anyone you don't know or trust, and never by email.
  • When making online payments, only pay for items using a secure payment service-look for a URL starting with 'https' and a closed padlock symbol, or a payment provider such as PayPal. Think twice before using virtual currencies such as bitcoin-they do not have the same protections as other transaction methods so you can't get your money back once you send it.
  • When using retail websites, find out exactly who you are dealing with. If it is an Australian company, you are in a much better position to sort out the problem if something goes wrong. You can check ABNs online.
  • Check if the website site has a refund or returns policy, and that their policies sound fair. The better online shopping sites have detailed complaint or dispute handling processes in case something goes wrong.
  • Avoid clicking on pop-up ads that can download viruses, spyware, malware, and other unwanted software to your computer.

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Sharyn McCowen is Money's digital editor. She has a degree in journalism from Charles Sturt University, and was a newspaper reporter before moving to magazines and finance.
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