Consumers Beware: ’Tis the Season for Online Holiday Shopping Scams
While consumers were already shopping more online, the COVID-19 pandemic accelerated this trend even more. But cyber thieves abound, and online shopping can come with various risks.
According to a new report from the Better Business Bureau (BBB), nearly 3 in 4 (74.8%) consumers lost money in an online purchase scam in the first eight months of 2021. Further, the median amount lost continues to rise yearly, from $76 in 2019 to $96 in 2020 to $102 in 2021.
Online purchase scams among the most risky
Online shopping scams reported to the BBB Scam Tracker have accounted for 35.3% of all scams reported so far in 2021, down from 38.3% in all of 2020 but up from 24.3% in 2019.
Per the BBB Risk Index, which evaluates schemes based on exposure, susceptibility and monetary loss, online purchase scams ranked among the three most risky from 2017 to 2020. So far in 2021, it’s the riskiest.
While consumers 65 and older have reported a higher number of scams so far in 2021 than in 2020, their susceptibility dipped — from 73.3% in 2020 to 64.4% in 2021.
But younger consumers report losing more money on these scams. So far in 2021, shoppers ages 18 to 24 say they’ve lost a median of $125, compared to the next-highest group (65+) at $108.
Meanwhile, a larger percentage of women are likely to report losing money to online purchase scams in 2021 than men (76.8% versus 72.6%, respectively). But men say they’ve lost quite a bit more money than women (medians of $140 and $100, respectively).
Credit cards are most common payment method reported in online purchase scams
Apparently, those pulling out the plastic have experienced a higher number of scams online. Credit cards are reported as the most common payment method (38.2%) so far in 2021. That’s followed by online payment systems (35.4%) and debit cards (11.6%).
Among the other payment methods cited by consumers:
- Prepaid cards (3.1%)
- Wire transfers (1.7%)
- Cryptocurrency (0.6%)
- Cash (0.5%)
- Money orders (0.2%)
- Checks (0.2%)
Another 8.5% cite “other.”
As for the top payment system types involved in online purchase scams, PayPal was reported the most, accounting for 45% of tracker submissions. Zelle (29%) and Cash App (19%) came in next. A far smaller percentage of online purchase scams were made on Venmo (3%), Apple Pay (2%) and Google Pay (2%).
In some instances, the lost money was recouped. Respondents who used PayPal or a credit card reported the highest ability to get their money back. On the flip side, those who used Cash App, a wire transfer or Zelle appear to have had a less likely chance of getting lost money back.
According to the BBB Scam Tracker, here’s the median dollar loss for online scams among payment system types:
- Apple Pay ($750)
- Zelle ($750)
- Venmo ($700)
- Cash App ($650)
- Google Pay ($645)
- PayPal ($90)
As you can see, the median loss for online purchases conducted over PayPal is far lower than the other payment systems. However, the greatest percentage of online purchase scams reported were made over PayPal.
To protect yourself from online scammers while shopping this holiday season, know the risks and protection policies in place from the payment methods you’re using.
If using a credit card, consider setting transaction alerts when a purchase is made online or over a certain amount. You can also sign up for a LendingTree account to monitor your credit.
Methodology: The BBB pulled data from more than 55,000 online purchase scam reports submitted in the BBB Scam Tracker between 2015 and 2021. In addition, a survey was conducted from Aug. 11-20, 2021, that included respondents who reported online purchase scams in 2020 and 2021.