Blatant tech frauds run amok on the biggest online marketplaces

Online retailers that host third-party sellers, like Amazon and Walmart, have extensive, competitively priced electronics selections. But for years, they have also served as playgrounds for fraudulent sellers, who list products with inflated or deceptive performance claims. Worse, some of these products pose a physical threat to customers.

 

The problem has become so widespread that by the end of this month, the federal government will require online retailers to do a much better job of vetting seller credentials, courtesy of the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers (INFORM Consumers) Act. But scammers are persistent, and workarounds seem inevitable. So what more should we demand from these giant retailers, and what can shoppers, including the less tech-savvy, do to take matters into their own hands?

 

To paint a picture of how prominent scammy tech is online, imagine you're in the market for a roomy portable SSD. You eventually land at Walmart.com, where there's a 60TB drive selling for under $39. The only downside? It's obviously not a real 60TB SSD.

 

In reality, even a 2TB portable SSD will run you three figures. But for years, this scam has run amok on popular online marketplaces. Review Geek recently showed that the scheme includes selling a much lower-capacity microSD card instead of a large-capacity SSD (the site received a 64GB card instead of the advertised 16TB SSD).

 

Fake SSDs are just one example of counterfeit tech scams on huge online retailers, though. Consumers also have to look out for fake Apple chargers, cables that don't meet the advertised specs, and counterfeit batteries that threaten serious physical harm.

 

Despite their considerable resources, these marketplaces have failed to properly vet sellers and their products. Without outside pressure, shoppers will continue to pay the price.

Blatant scams

Counterfeit goods aren't just products that use the brand name of an established company, like a knockoff Gucci handbag. They also include items that look like products from a brand without using its name or logos. The gallery below shows examples of the latter. The $34 16TB "SSD" and 4TB $26 "SSD" don't say "Samsung" but nevertheless look similar to Samsung's popular T7 portable SSDs.

 

On Walmart.com, you can find fake listings for a 4TB portable SSD for $26, a 12TB model for $39, a 16TB drive for $34, or even a 25TB version for $39 (we're linking these products for illustrative purposes—please don't buy them). When I reached out to Walmart about similar listings, it removed them. But I didn't ask the company about the listings above, and they remain active as of this writing.

 

I didn't even have to dig deep to find these listings. Some of the sellers of the above "SSDs" have OK ratings, but it's unclear how much that matters. As of press time, "Shangyoulinxinshengtainongyefazhanyouxiangongsi" is listed as a Walmart Pro seller, despite having a review average of just 1.5 stars.

 

 

Walmart's website, like Amazon's, also puts a more prominent focus on the product's purported brand than the seller, which is listed lower down the page and in smaller font.

 

 

Here's the kicker. Two of the fake SSD listings linked above have sellers with eerily similar names—Joybuy and JoyBuy Selection—and matching logos:

 

Walmart’s feckless fraud-fighting techniques kept secret

Walmart wouldn't give me specifics on the technologies and strategies it uses to identify fraudulent tech listings and sellers, claiming it doesn't want bad actors to develop ways to circumvent them (even though they clearly already are). The company says it uses a mix of people, processes, and policies to fight fraud, and it claims to have zero tolerance for fraudulent sellers or the sale of prohibited items, including counterfeit products. Banned items on its prohibited products policy include products with missing or altered serial numbers, jailbroken phones, and software and hardware enabling "the circumvention of copy-protected digital products, such as boot disks, cards, emulators, or loaders."

 

I asked Walmart how it vets third-party sellers, but it would only say that its tactics are constantly changing:

 

Some of the bad actors unfortunately may be stealing some of the traits or criteria from good sellers. There's just a bunch of different ways that they might be falsifying applications or trying to come in and infiltrate that.

 

The Walmart Marketplace sign-up page brags that you can "start selling to millions of Walmart customers today," making it sound too easy to sign up. Walmart's spokesperson said "today" refers to how quickly one might set up a profile, not necessarily list items online, but that doesn't make me feel any better.

 

One notable aspect of Walmart's third-party marketplace is its "Walmart Restored" refurbishment program, which the company claims only sells products that are “professionally inspected and tested to work and look like new by top-rated, performance-managed suppliers" and products with "no visible cosmetic imperfections when held 12 inches away." Walmart Restored has more stringent seller requirements, including "better than average performance" and "proof that the seller is the manufacturer [and] has purchased refurbished inventory directly from the manufacturer or from an authorized seller or reseller."

Despite boastful stats, Amazon customers are still at risk

I couldn't find the huge-capacity SSD scam on Amazon as of press time, but it's worrisome that this long-running sham was active on the site just this January. Amazon declined interview requests, and the amount of litigation and bad PR it has faced related to this subject suggests it's a sensitive topic.

 

The company has a reputation for hosting sellers that manipulate reviews, including paying for reviews directly, sneaking notes into shipments asking for positive reviews in exchange for rewards, and review hijacking. Glancing at a product's star rating isn't a surefire way to gauge its validity. Amazon has claimed that “more than 99 percent” of the products on its site “contain only authentic reviews.” However, in April, the Federal Trade Commission issued its first fine against review hijacking, demanding supplement maker (and Amazon seller) Bountiful cough up $600,000.

 

So what is the company doing to ensure sketchy sellers aren't using its platform to make money?

 

Amazon's Brand Protection Report, which should naturally be taken with a grain of salt, says the company uses over 15,000 machine learning scientists, software developers, investigators, and other workers, plus over $1.2 billion, to fight fraud. Amazon's April report said it used automated tech to scan over “8 billion daily attempted changes to product details pages for signs of potential abuse.” But it did not offer any hard data on how effective that effort was.

 

Sellers must provide “a government-issued photo ID, taxpayer information, and details about their identity, location, bank accounts, credit cards, and more," and Amazon "systems analyze hundreds of unique data points," including future changes submitted for products, to "detect and mitigate potential risk, including relationship to previously identified bad actors."

 

Amazon says it uses this data to improve its fraud-mitigation techniques and requires live verification (video chats or in person) for prospective sellers. But the company has shown how uninformed it can be about its third-party sellers, reportedly labeling ineligible sellers as Black-owned and/or as small businesses.

 

Other tools Amazon says it uses include:

 

• Brand Registry, which lets companies track sellers ripping off its brand. The data is used for Amazon's infringement-fighting machine learning algorithm.
• Amazon Patent Evaluation Express (APEX, formed for the US in 2018), which uses a third-party evaluator to ID patent fraud.
• Project Zero, whose members list includes Arduino.
• The Amazon Counterfeit Crimes Unit.
• A code users can use to scan in registered products via the Amazon Shopping or Transparency App apps to track authenticity.

 

Amazon's Brand Protection Report says that "even if a customer doesn’t contact us, if we identify a customer purchased a counterfeit product, Amazon proactively contacts the customer, informs them they purchased a counterfeit product, and fully refunds their purchase." The report also claims to have removed 6 million counterfeit products from the supply chain and “pursued” over 1,300 alleged criminals in the US, China, EU, and UK via litigation and “criminal referrals.” Amazon’s report claimed that the number of sketchy sellers on Amazon decreased from 6 million recorded attempts in 2020 to 800,000 in 2022.

 

But despite its fancy reports, one of my Ars colleagues told me he ordered an M.2 SSD from Amazon a few weeks ago and received a coffee filter in an envelope instead (he got a refund, but come on!). And researchers were still able to buy malware from Amazon this year.

 

In 2021, the US Consumer Product Safety Commission (CPSC) filed a lawsuit against Amazon "to force Amazon to accept responsibility for recalling potentially hazardous products," including "24,000 faulty carbon monoxide detectors that fail to alarm" and "nearly 400,000 hair dryers sold without the required immersion protection devices that protect consumers against shock and electrocution."

 

The CPSC said Amazon did not believe the agency had the authority to remove the products. At the time, the company claimed to have removed most of the products, and "for the remaining few products in question, the CPSC did not provide... enough information for us to take action, and despite our requests, CPSC has remained unresponsive."

Scams are common on eBay, too

When I asked eBay how it fights counterfeit tech listings, a spokesperson pointed to the company's money-back guarantee and the fact that it displays "prominent product feedback from past verified transactions."

 

"eBay makes significant investments to deploy best-in-class technology and a highly trained team to detect and deter illegal activity," eBay's spokesperson told me. "We take allegations of fraudulent activity very seriously and make every effort to prevent impacts to our users."

 

Nevertheless, sketchy sellers have found a home on the site, and it remains an active playground for fake SSD peddlers, as seen in the images below.

 

eBay's counterfeit item policy bans counterfeit items "or unauthorized copies," with the former including "knockoff electronics, such as headphones or accessories like a charging cable." The company urges sellers not to list an item if they are unsure of its authenticity, saying:

 

Activity that doesn't follow eBay policy could result in a range of actions including, for example: administratively ending or canceling listings, hiding or demoting all listings from search results, lowering seller rating, buying or selling restrictions, loss of buyer or seller protections, and account suspension.

 

Note that the policy doesn't threaten permanent seller bans.

 

eBay says it does monthly reviews of buyer complaints (even resolved ones) and assigns sellers ratings, but shoppers can only see "top rated" scores. Consequences for poor performance focus more on fining sellers than alerting customers or removing sellers completely.

 

Unlike Amazon and Walmart, eBay doesn’t require a government-issued ID by default, but it may request one. Supporters of the INFORM Consumers Act hope these lax requirements will become a thing of the past.

 

It's worth noting that eBay recently bought marketplace compliance company 3PM Shield, hoping it would improve its monitoring with "new technologies designed to prevent the sale of counterfeit items, unsafe products, and illegal goods.” Pre-acquisition, 3PM Shield had studied marketplaces like eBay, Amazon, and Walmart. 3PM Shield’s website says it offers computer vision and natural language processing to analyze "millions” of daily listings and remove counterfeits at a large scale. It remains unclear how much this acquisition will bolster eBay’s efforts.

When counterfeits become dangerous

So far, we've been looking at SSDs because of how well-documented SSD-related scams are. But SSDs are just one class of counterfeit tech items seen on big online retailers—other products can be actively dangerous.

 

For example, we recently reported on malware-ridden Android TV boxes being sold on Amazon. The company faced a similar problem in 2016 when cheap Android phones sold on its site and Best Buy were found to contain secret backdoors.

 

Going back to 2019, The Atlantic detailed Amazon's responsibility-skirting history when responding to instances of customers being hurt by fraudulent products. For example, one interviewee said he bought an HP laptop replacement battery from Amazon for $15. The Atlantic reported:

 

A few nights later, he was sitting on the couch in his Buffalo, New York, apartment when he heard a sound like a gunshot. His fiancée screamed. The lithium-ion battery in the laptop sitting next to him had ignited, setting his couch on fire. Battery cells were flying all over the living room, leaking acid. 'It was like a war zone,' Jones [said]. Later, he was treated for first-degree and chemical burns. His computer and hardwood floor were destroyed.

 

The Atlantic said the user found reviews from other customers claiming fires, but customer service representatives asked “for his name, the order number, and the story of what had happened over and over again."

 

"Amazon would not put him in touch with the seller and never assumed blame for the fire,” The Atlantic wrote.

 

Amazon-purchased phones, vape pens, and hoverboards have led to accounts of serious injuries and property damage. The company has been sued under claims that Amazon didn’t sufficiently warn customers about potentially dangerous lithium-ion batteries in products sold on its platform.

 

In 2016, the safety organization UL illustrated (PDF) the dangers of products as seemingly innocuous as knockoff Apple adapters. The report found a failure rate of over 99 percent among 400 fake adapters, with 12 carrying a deadly electrocution risk and all but three representing "fire and shock hazards." In 2016, Apple said that nearly 90 percent of Apple products sold on Amazon were fake.

 

More recently, the US Customers and Border Protection (CBP) has boasted about seizing thousands of counterfeit Apple products, including AirPods, Apple Watches, and Lightning cables. The agency has also recently found counterfeit Nintendo consoles and even TV streaming remotes. We don't know where these products were headed, but the stories reflect the continued prominence of counterfeit tech.

The INFORM Consumers Act intervenes

Counterfeiting is a massive problem for law enforcement. CBP said in 2021 that counterfeit products cost the global economy over $500 billion a year. For fiscal year 2021, consumer electronics, an easy target for fraud due to their high demand and complexity, represented 5 percent of seizure lines, CBP said (PDF).

 

These kinds of numbers attract regulator attention. Starting on June 27, online marketplaces must comply with the INFORM Consumers Act, which requires companies like Amazon and Walmart to verify high-volume (at least $5,000 in gross revenue and 200 sales annually) third-party seller credentials, including collecting a government ID, tax ID, and bank account information. This could help deter people from creating new accounts after being banned for fraudulent listings, but there's nothing stopping a seller from creating multiple profiles and keeping each account's sales low to circumvent the rule.

 

Retailers will also have to disclose seller information on product listings, including contact information and whether the seller manufactures, imports, or resells consumer products. This requirement could make it harder for sellers to repeatedly fake identities. The law also requires online marketplaces to let shoppers easily report suspicious marketplace activity.

 

Broadly speaking, these requirements sound helpful, but it's unfortunate that big online retailers haven't implemented them without governmental prodding. After all, fraudulent listings can cause pricey returns, hurt other sellers, and upset and harm customers, resulting in court cases and scarred reputations.

 

Teresa Murray, director of the Consumer Watchdog office at the US Public Interest Research Group (PIRG), said:

 

All of these big online platforms, as well as some of the brick and mortar stores, they've been running around buying goods that maybe they don't know for absolute sure that they're counterfeit, but they have a pretty good idea. They just don't care because they buy and they sell them, and they make money...

 

So the INFORM Act, we think, especially for the big platforms... this is going to help a lot. It's not going to squash every single counterfeit product listed out there now. But it'll make a difference.

Asking retailers to do more

Murray believes marketplaces need to step it up and use their resources more effectively. As it stands, none of them are doing enough, she said:

 

They may never put their hands on the products that are being sold on their platform. They may never lay eyes on it. But you can just tell sometimes from some of the listings—the way that they're worded—that they are probably not legitimate products. And yet the platforms allow them. All of them need to do a much better job, frankly, with their algorithms and how they detect products that should just not be getting sold on their websites.

 

Among the recommendations detailed in the US Department of Homeland Security's 2020 "Combating Trafficking in Counterfeit and Pirated Goods" report (PDF) is a national consumer awareness campaign, including online education.

 

"For example, online marketplaces could prominently display messages on their home pages, as well as on high-risk item pages, warning customers about the dangers of counterfeits and urging respect for intellectual property rights," the report suggests. "Additionally, the campaign could be paired with technologically enabled assurances of authenticity."

 

US PIRG has also shared tips for avoiding counterfeits online, including "looking at a product’s description [and] watch[ing] out for misspellings or mislabelings. Website listings with low-quality pictures of products can also indicate a counterfeit."

 

Online marketplaces should take pride in being a place where customers can find not only a broad selection of products at low prices but also reliable products that aren't dangerous. Unfortunately, history shows that we can't count on the companies themselves to do what's necessary to guarantee the safety and authenticity of the products their platforms host.

 

Ars readers may be able to easily spot online tech scams, but you don't have to be a tech expert to avoid being fooled. Anyone can investigate a seller's profile, ensure reviews align with the product, and compare prices. If something's too good to be true, it probably is—especially if it's coming from a third-party online marketplace.