Businesses misrepresenting themselves as Australian fashion retailers are defrauding Australian consumers, the Australian Competition and Consumer Commission warns.
The ACCC describes the scammers as so-called ‘ghost stores’, where operators falsely represent themselves as local Australian businesses that sell high-quality clothing and footwear and are imminently closing down.
It was found that these companies are instead based overseas, not closing, and are drop-shipping low-quality goods.
The ACCC has issued public warning notices to consumers regarding four websites: Everly-Melbourne, WillowandGrace Adelaide, Sophie-Claire and Double Bay Boutique – all with dot-com domain names.
The ACCC says these companies are not based in Melbourne, Adelaide or Double Bay, nor are they imminently closing down.
The public warning notices follow 360 reports made to the ACCC in recent months regarding about 60 ghost stores. Media reports suggest many others may be operating.
Some consumers have complained that ghost stores have refused to provide refunds or respond to customers who complain about the inferior quality of the goods compared to the advertised descriptions.
“Often ghost stores will share an emotional story on their social media or website that they are a small, locally operated business, needing to close for financial reasons,” said ACCC deputy chair Catriona Lowe.
“They will claim they are having a ‘closing down sale’ as a result, with all stock heavily discounted and available on a very limited basis.
“This conduct preys on the empathy of consumers who have a genuine desire to support local businesses, as well as creating a false sense of urgency,” said Lowe.
The stores often use names similar to those of genuine local boutiques, which can harm such businesses.
These stores target consumers through targeted, paid social media ads and often tend to close and rebrand under new names, using different Australian suburbs or towns to represent themselves as ‘local’.
“We have written to both Meta Platforms (as the owner of Facebook and Instagram) and Shopify to request they scrutinise and take appropriate action against the operators of ghost stores,” said Lowe.
The ACCC found these organisations use ‘.com’ instead of ‘.com.au’ in their website domains, with return policies suggesting items “will need to be returned to a warehouse or general location overseas which is different from where the items are allegedly shipped from, for example, a store that claims to be based in Melbourne but requires returns to be sent to a warehouse in Asia”.
These websites may lack phone numbers or physical addresses, have terms and conditions that refer to international laws and regulations rather than Australian ones, and may not display ABNs (Australian Business Number) or ACNs (Australian Company Number). Additionally, their Facebook pages may have been created only recently and often feature numerous negative reviews.
The ACCC has urged consumers to check business names on the Australian Business Register lookup, use reverse image or Google Lens searches on their products and search for reviews from other customers online.
Consumers can contact banks or payment providers to check if transactions can be stopped or reversed if products have already been purchased.
The ACCC has recommended leaving negative reviews on the stores’ social media pages and directly complaining to relevant platforms like Facebook or merchants like Shopify.
Websites can also be reported to the ACCC, Scamwatch, or to Google to be delisted.
