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Shopify hosts thousands of fraudulent shops, analysis finds

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Shopify says it does “not condone the behavior of bad actors” after a Fakespot analysis found that more than 20 per cent of the Shopify stores it analyzed posed a risk to shoppers.

Fakespot is a program and browser extension that helps online shoppers to spot fake reviews and counterfeits. But recently, the company used their tools proactively to do an analysis of a little over 10 per cent of Shopify’s storefronts.

The analysis found that almost 26,000 of the over 124,000 Shopify stores it looked into were “related to fraudulent practices” and were flagged with a “caution” or “warning determination” by the Fakespot tool. Shopify hosts over a million stores.

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In addition, almost 39 per cent of the stores were said to be “problematic sellers,” with either poor reputations, counterfeit issues or possible brand infringements.

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Meanwhile, another 28 per cent were found to be possible scam stores – such as those with privacy leaks and suspiciously low prices. In addition, over 16 per cent had problematic consumer reports and just under 10 per cent had no transaction history.

Shopify, an Ottawa-based company, exploded in popularity during the pandemic as many Canadians replaced their in-person shopping habits with online browsing. Shopify provides a one-stop shop for businesses to shift their sales from in-person to online, and many businesses availed themselves of Shopify’s services for their online storefronts as the pandemic pushed Canadians into their homes.

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In July, Shopify’s second-quarter results shattered expectations by reporting US$36 million in profits for the period covering April to June. That’s nearly double the profits the company posted for the same period last year – and executives attributed the growth to changing consumer demands amid the coronavirus pandemic.

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In response to Global News’ request for reaction to these findings, Shopify’s spokesperson said in a statement that it takes steps to try to keep these bad actors away from consumers’ pocketbooks – but acknowledged that some slip through the cracks.

“As with every noble intention, we recognize there will be those — however few they may be relative to our base of more than one million merchants — that may abuse our service, and we take this matter seriously,” read the statement.

“We do not condone the behavior of bad actors, and we employ multiple teams who handle potential violations of Shopify’s Acceptable Use Policy (AUP), notices of alleged copyright and trademark infringement, as well as fraud complaints.”

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Shopify’s AUP specifies that its stores may not “infringe on the copyright or trademarks of others,” nor should they “use the services for deceptive commercial practices or any other illegal or deceptive activities.”

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The spokesperson says the company encourages consumers to report any bad behaviour and, if they find themselves a victim of one of these stores, they should contact their credit card companies to file a dispute.

While Shopify did not explicitly answer Global News’ question as to whether it intends to make any changes to its platform in light of this finding, the statement said that the company has “terminated thousands of stores and routinely implement new measures to address fraud and other activities that violate our policies.”

“Although these issues challenge the e-commerce industry at large, Shopify is committed to being part of the solution,” read the statement.

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