Saturday Hashtag: #TheDigitalMirage
The Rise of Fake Online Empires
Welcome to Saturday Hashtag, a weekly place for broader context.
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In the early days of online shopping, the convenience of browsing stores from home felt revolutionary and safe. Platforms like Amazon, eBay, and Etsy transformed how we shopped, offering endless choices at our fingertips. But as e-commerce exploded into a multitrillion-dollar industry, a darker side emerged: fake companies, fraudulent websites, and manipulated reviews designed to deceive consumers.
The Shift to Online Shopping
In 2023, global e-commerce sales surpassed $5.8 trillion, with projections expecting them to reach over $8 trillion by 2026. The pandemic only accelerated this shift, driving millions of consumers online for everything from groceries to electronics. As the market expanded, companies flooded the space — some legitimate, others designed to exploit the boom for quick profits.
The Emergence of Fake Companies
As online shopping grew, so did the proliferation of fraudulent websites. Sleek storefronts with irresistibly low prices on “luxury” goods began to surface, luring consumers into making purchases that never arrived. A deeper dive into domain registrations revealed that many of these sites were based in countries with lax fraud regulations.
For instance, luxstylebags.com, a bogus luxury handbag retailer, was registered in Bulgaria and was part of a larger network of scam sites. Similarly, the site bestelectronicsdeals.store enticed buyers with promises of steeply discounted high-end electronics, only to vanish without delivering any products.
According to the Global State of Scams Report 2024, consumers lost over $1 trillion to online griffs in 2024.
The Fake Review Industry
Online reviews have become critical to the success of e-commerce, but a lucrative industry around fake reviews has emerged. Some companies realized that fake five-star reviews could boost their sales and reputations.
Platforms like fiverr.com make it possible for users to purchase fake reviews for as little as $5, with more extensive packages for hundreds of fabricated five-star ratings. Platforms like getreviews.com offered to flood sites like Amazon with fake positive reviews for a fee.
Research shows that 30 percent of online reviews on major e-commerce sites are either fake or manipulated, with paid freelancers or AI bots creating glowing testimonials for subpar products. This results in 92 percent of consumers encountering fake reviews at least once every 12 months.
Projections indicate fake reviews will cost online consumers worldwide $1.23 trillion in unwanted purchases by 2030.
Case Study: Actif Prenatal Vitamins
A revealing case of online duplicity involves Actif Organic Prenatal Vitamins. This product strangely shot up to a bestselling spot on Amazon, but a closer look uncovered signs of manipulation and deception. Using Fakespot, a tool that detects fake Amazon reviews, revealed that 60 percent of their reviews were fake, earning them an “F” rating.
Further investigation revealed even more red flags, literally. The company’s website, filled with generic stock images, falsely claimed to be a “fully US-owned and operated” business, but the company’s Instagram previously displayed a now deleted Liberian flag along with bogus reviews and posts.
Customer complaints flooded their now scrubbed social media, with numerous reports about poor quality and unresponsive customer service. Adding to the suspicion is the company’s listed headquarters at 221 North Broad Street in Delaware — which is actually a residential house that is used by 25 other businesses, including a reptiles company, a sales consulting firm, and a COVID-19 pass service. This indicates that the company is using a virtual office setup, designed to create the illusion of a legitimate US business presence.
The Fallout and the Future
As fake companies and manipulated reviews spread, the digital marketplace is increasingly difficult to navigate. AI and bots are now capable of generating fake reviews and even creating entire fraudulent websites. This makes it harder for shoppers to distinguish between legitimate businesses and scams.
The online shopping world has become a minefield, where distinguishing real from fake is harder than ever. Until stronger regulations are enacted, consumers must stay vigilant, questioning every deal, review, and website they encounter.
Protect Yourself on Every Front
Although the FTC banned fake reviews in 2024, enforcement remains inconsistent, often relying on online marketplaces that have their own questionable reputations.
Amazon, for instance, is currently under multiple investigations in 18 states and Puerto Rico for a range of antitrust violations. Internal Amazon documents provide evidence that the company has stolen third-party vendor products to sell as its own and manipulated search results to prioritize its own brands.
This strategy extends to Amazon’s Whole Foods subsidiary, where the company has been accused of discontinuing and replacing outside vendor products after copying versions of them for its own controversial 365 Brand. The Whole Foods brand already had a history of illegal actions long before Jeff Bezos. For context, if Amazon (2.4 trillion) were a country, its GDP would surpass that of Russia (2.1 trillion), Brazil (2.3 trillion), and South Korea (1.7 trillion)
Ultimately, vigilance is the best defense against digital scams. Always verify websites, question testimonials, and beware of pressure tactics or steep discounts. Take a moment before clicking “Buy Now” to ensure the companies you’re dealing with are legitimate by using vetting sites like: Better Business Bureau, Reviewmeta, Web of Trust, PhishTank, Whois, SiteJabber, ScamAdvisor, Trustpilot and FakeSpot.
Amazon Has Ceded Control of Its Site. The Result: Thousands of Banned, Unsafe or Mislabeled Products
From The Wall Street Journal: “Just like tech companies that have struggled to tackle misinformation on their platforms, Amazon has proven unable or unwilling to effectively police third-party sellers on its site.”
FTC Fake Review Ban: Key Prohibitions and Implications
The author writes, “On August 14, 2024, the FTC announced a final rule aimed at combating fake reviews and testimonials, a move that will have far-reaching implications, particularly for global ecommerce giants like Amazon. With the final rule now in place, the agency is positioned to combat deceptive practices, including AI-generated fake reviews, by introducing strict penalties and enforcement measures. This development marks a pivotal moment for both US and international markets, especially as it targets the integrity of online reviews — a cornerstone of consumer trust.”
The State of Fake Reviews — Statistics and Trends
The author writes, “With technology making it easier to fabricate opinions, telling genuine feedback apart from fake, bought reviews and comments is now becoming a new challenge for consumers and businesses alike. In this article, we’ll explore the state of fake reviews, starting with the methods used to create them, the statistics that reveal their prevalence, and the impact they have on consumer trust and businesses alike.”
Consumer Reports Study Reveals Nearly Half of Consumers Have Experienced Cyberattacks or Digital Scams
From Consumer Reports: “Cyberattacks and digital scams continue to pose serious threats, often leading to devastating consequences for American consumers, with Black and Hispanic Americans who experienced a digital attack or scam being twice as likely to lose money compared to white Americans who experienced a digital attack or scam.”
Hijacked Reviews on Amazon Can Trick Shoppers
The author writes, “Looking at a charging cable with thousands of positive reviews? Some of them could be for other products.”
Retail E-Commerce Sales Worldwide From 2014 to 2027
From Statista: “In 2023, global retail e-commerce sales reached an estimated 5.8 trillion U.S. dollars. Projections indicate a 39 percent growth in this figure over the coming years, with expectations to surpass eight trillion dollars by 2027.”
As Nationwide Fraud Losses Top $10 Billion in 2023, FTC Steps Up Efforts to Protect the Public
From the Federal Trade Commission: “Federal Trade Commission data show that consumers reported losing more than $10 billion to fraud in 2023, marking the first time that fraud losses have reached that benchmark. This marks a 14% increase over reported losses in 2022.”
