By Olga Kharif No doubt, E-commerce is booming. Nearly 50% of Americans bought something online last year, according to market consultancy JupiterResearch. Unfortunately, as many as 10% of those consumers were fooled. Instead of buying what they thought were genuine products, they ended up with counterfeits.
Indeed, fakes of all shapes and sizes are proliferating online. On June 21, high-end jeweler Tiffany & Co. (TIF) sued auction site eBay (EBAY), alleging that 73% of the Tiffany brand-name jewelry sold there was counterfeit. On June 17, the U.S. General Accounting Office issued a report showing that 6%, or 4 of the 68 drug samples investigators bought in U.S. and foreign online pharmacies, were fake. "The volume and severity of counterfeiting has gone up," says Peter Neupert, chairman of online retailer Drugstore.com (DSCM). Partly, he blames mounting health-care costs, rising at double digits annually for prompting patients to seek cheaper alternatives for prescription drugs.
Overall, discerning a fake online is no simple task. You can't finger the item as you might in a brick-and-mortar store. You can't take a good look at the seller or his shop to see whether or not they look legit. However, the case for safe cyber-buying isn't hopeless. Online consumers can take lots of steps to protect themselves from getting scammed by the charlatans. To help you in this effort, BusinessWeek Online has put together 10 tips from experts on how to avoid buying fake goods online.
1. If the price seems too good to be true, it probably is. A Louis Vuitton bag simply doesn't cost $20 ($200, more like it). A fire sale should be a major red flag.
2. Whenever possible, work with reputable online retailers. Consumers should check out Web sites of brick-and-mortar retailers first, says JupiterResearch analyst Monique Levy. That way, they can return any questionable goods to the store in person. They can also stop by the store to complain or to ask any questions.
3. If you aren't familiar with the online retailer, always review the site's general appearance first. If it looks unprofessional, has no returns policy prominently posted, or lacks the seller's physical address, those are warning signs. Also, make sure the company's phone number is listed and working before making your purchase, suggests Dennis Prince, the author of numerous books on online auction sites.
4. Look for appropriate certifications. A reputable online pharmacy, for example, will often have, usually at the top of the site, a certification from the National Association of Boards of Pharmacy (NABP). It means the NABP checks that pharmacy's storing conditions (certain medications lose their potency if not stored or shipped at proper temperatures), as well as its procedures involved in buying and selling drugs. Another certification to look for is the SquareTrade seal, which certifies that the site has a good track record of selling goods.
5. Don't buy drugs without a prescription from your doctor. If a site offers you medications without a prescription -- and you know these drugs aren't available over-the-counter -- chances are, the transaction is illegal, according to Drugstore.com. Fake drugs are typically not harmful, since the tablets are often made of rice flour. But they won't help you, either. And there's a good reason why prescription drugs require a doctor's visit: Despite the overwhelming come-ons for buying Viagra online, a condition like erectile dysfunction could actually be indicative of more serious health problems.
6. Don't be afraid to ask the seller questions, just as you would in a brick-and-mortar store. Online-auction buyers have a right to know just how long the seller has had the item they're interested in and how he got it, says Prince. If a poster, dating to 1964, looks like new after hanging in its owner's garage for 40 years, it's probably not genuine. Also, if you're buying an especially valuable item, like jewelry, it's perfectly all right to ask the seller for a copy of an appraisal report. Many legitimate sellers would have those handy anyway, says Prince.
7. When buying expensive items, say, over $500, consider using an escrow account to complete the transaction. Escrow.com, the only U.S. escrow site approved by eBay, will hold your payment and not transfer it to the seller until you receive your purchase, compare it to the photograph of the item you bid for, and confirm its authenticity. Escrow.com's commission typically add up to less than 6% of the purchase price, and buyers and sellers often split the fee.
8. Do your homework before buying. If you're bidding for golf clubs, check out the original manufacturer's site for info on where special stamps and numbers should be located. If you're buying collectible items, such as stamps or coins, eBay recommends that users visit one of its specialized online discussion groups, where they can ask other collectors for advice.
9. Don't trust "certificates of authenticity." Lots of folks buying autographs online -- of which more than 90% of those are likely to be fakes, says Prince -- feel better about making the purchase if they come with such stamps of approval. The problem is that the certificates can be fake, says Prince. Even if you think you know what the signature you're buying looks like, it's easy to be fooled online. Often, you can hire online experts who can help you determine whether the autograph appears genuine.
10. Check the seller's rating. Auction sites like eBay post the sellers' ratings and comments from people who've dealt with that seller in the past. A lot of disappointed buyers is an obvious stop sign. With other Web sites, it's a good idea to do a search for the site's name or the company name to look for comments from disgruntled customers or buyers in discussion groups.
Remember, getting taken by a fake online is way too easy if you don't start out with a suspicious mind -- and a set of tips like these -- to guide you. Kharif covers technology for BusinessWeek Online in Portland, Ore.