Australia’s consumer regulator has put Shopify and Meta on notice, urging the e-commerce and social media platforms to take action against online “ghost stores” pretending to be local businesses in order to dupe shoppers.
The Australian Competition and Consumer Commission (ACCC) on Thursday issued a public warning about ghost stores and announced it had written to Shopify and Meta after an investigation by Guardian Australia identified more than 140 of these sites.
Consumer experts had previously urged Shopify and Meta to take responsibility for enabling these sites and allowing them to run false advertising, which is often about fake closing-down sales and accompanied by AI-generated images.
The ACCC deputy chair Catriona Lowe said the regulator had urged the online platforms to scrutinise this type of activity on their platforms and take appropriate actions against the operators.
“We are hopeful that by focusing on that part of the transaction, it will actually mean that we can reduce or stop the number of these [sites] getting to consumers in the first place,” Lowe told Guardian Australia on Thursday.
She said the ACCC believed this would be more effective than traditional enforcement, given the “significant practical limitations” of identifying the ghost store operators.
“Typically, the people behind these websites are based overseas, and of course it is all too easy to shut down one website and pop up another one, potentially within minutes,” Lowe said.
Lowe on Thursday said the letters the ACCC sent to Shopify and Meta this week marked the first time the regulator had engaged with the platforms on the ghost stores issue.
“We think the ball is firmly in the courts of the owner of these platforms to come and speak to us about actions that they can take,” she said.
The sites, which are based overseas, include those drop-shipping poor quality clothing and counterfeit labels, while others take customers’ money and fail to deliver anything at all. Some have imitated genuine Australian labels.
Lowe said despite the difficulty in identifying those behind the sites, the ACCC had “some leads” as to where some of the operators were based.
“Theoretically, we could expend what would be a very, very significant amount of time and resource to bring an enforcement action against an overseas entity,” she said.
“But … we just don’t see that that’s likely to be an effective way of tackling the problem.”
The ACCC issued public warning notices about four ghost stores and said it had received at least 360 reports about 60 online retailers since the start of the year, when it began investigating the problem.
The ACCC said it was concerned this type of conduct appeared to be widespread and that it was also aware of complaints about ghost stores refusing to provide refunds, only offering partial refunds, or not responding to customers at all.
The regulator said the sites were known to target consumers through social media ads and also tend to close and rebrand under new names, often using different Australian suburbs, towns or cities in their names to appear local.
A spokesperson for Meta said the company did not want deceptive behaviour on its platforms and it was investigating the issues raised by the ACCC.
“This is an adversarial space where sophisticated groups often change tactics to stay ahead of detection,” they said.
“We are committed to investing in new technology as well as working with government, law enforcement and industry to help prevent scams and other misleading and deceptive behaviour on our platforms.”
Shopify has been contacted for comment.
