Authentication Company FakeSpot Says Shopify Is Riddled With Scammers

Shopify has seen its revenues surge as the pandemic has pushed consumers to buy more goods online. At the same time, however, the online marketplace has become a hub for scams and counterfeit goods, according to eCommerce authentication service FakeSpot.

In fact, FakeSpot said it analyzed more than 120,000 Shopify sites and found “as many as 21 per cent posed a risk to shoppers,” the Financial Times reports. As lockdowns have hit around the world, Shopify has helped traditional retailers open online stores and get their goods out to the market.

The company reported that, in the second quarter of this year, it pulled in $714.3 million in revenue, an increase of 97 percent from the previous year.

According to the company, store creations on the platform exploded due to the overall shift to digital commerce. And the company offered deals, including the expansion of the free trial period on its standard plans from 14 days to 90 days.

However, FakeSpot said, some shops appeared to operate only to collect consumers’ personal data — as opposed to actually delivering a product to consumers. FakeSpot also pointed to other issues for consumers, including counterfeit goods and terrible customer service.

“With the trajectory of Shopify’s growth, there comes a point in time when they will need to tackle this problem very seriously,” said Saoud Khalifah, FakeSpot’s chief executive. He said many of the problem stores appeared to be China-based entities posing as U.S. small businesses.

The FT reported that a spokeswoman for Ottawa-based Shopify said that the company faces an “industrywide” problem. The spokeswoman said that, for “security reasons,” she could comment on how Shopify verifies the location of the online marketplace’s businesses.

She added: “To date, we have terminated thousands of stores and routinely implement new measures to address fraud and other activities that violate our policies.”

Shopify’s software offers templates, inventory management and secure payment functions on a retailer’s own website.