Buyer beware: Little recourse for online shoppers stuck with counterfeit goods

Sean Ralph thought he'd found a great deal when he spotted a portable camp chair for $30 US on his Facebook feed in March.

The avid mountain biker from Ottawa said he particularly liked the innovative look of the chair's rocking mechanism, perfect for post-ride relaxation. 

Ralph, 51, said the ad looked "respectable" enough — the website appeared to be based in North America and the purchase would be protected by PayPal — so he decided to go ahead with the purchase. 

A month and a half later, Ralph received a notification that his chair had arrived in the community mailbox of his suburban neighbourhood. 

"Which was surprising because I was thinking, how are they going to stuff that in the parcel box?" he recalled.

The chair turned out to be just 28 centimetres tall, a flimsy folding footstool at best.

After some back and forth correspondence with the seller, Ralph now feels cheated and is calling on PayPal to do more to protect its customers. 

He's not alone: other online shoppers say a loophole in the PayPal system has allowed vendors to exploit unsuspecting buyers with a bait-and-switch scheme involving the delivery of low-quality or counterfeit merchandise.

PayPal's promise 

PayPal's official purchase protection policy includes the following promise: "If you don't receive the item that you ordered, or it shows up significantly different from its description, you may qualify for Purchase Protection, and we'll reimburse you for the full purchase price plus any original shipping costs, subject to terms and limitations."

But Ralph said when he attempted to resolve his chair dispute through Paypal's system, he was told that in order to receive a full refund PayPal would first have to confirm the item had been returned to the original vendor. 

But the return address was printed in Chinese characters, and Ralph determined it would cost him more than $60 to send the item back to Hong Kong.  

"It's a bait and switch," he said. "It's throwing good money after bad to try and ship it back to China, and you may or may not get a refund."

Many unhappy returns

Other online shoppers say they've found themselves in a similar situation, facing heftier bills to return an item than it cost in the first place.

Last fall, Casselman, Ont., resident Robert Bacal ordered $40 worth of loudspeaker components, but instead received a tiny roll of decorative adhesive tape.

He did some research before deciding against sending the package back for a refund.

"They refuse it or they just say they never got it," said Bacal, who said he now only uses his credit card for online transactions. 

"It's like whack-a-mole," said Marissa Hadland, an administrator behind Facebook Ad Scambusters, an online group dedicated to shutting down sites peddling fake merchandise.

Hadland's group looks at patterns in online ads to reveal networks of sellers who "scrape" artwork, images and ad copy from legitimate businesses, then manufacture miniature or counterfeit versions at little cost. She said it's not always easy to spot.

"PayPal wants to maximize their profits, and algorithms are not perfect," Hadland said from her home in Richmond, B.C. "It's not designed for the scams that we're seeing."

Hadland said one member of her group has built a website that will check to see if a given e-commerce site is suspiciously new, or contains elements seen on confirmed fake sites. Hadland advises people who have received bogus goods to speak in person to a PayPal agent on the phone.

PayPal did not respond to CBC's questions, but instead forwarded them to Edelman Canada, a Toronto public relations company. Edelman declined to answer questions about this story.

Not their gnomes

Legitimate sellers like Casper Revenant of Gooderham, Ont., are getting caught up in the scheme, too. 

Revenant and his partner make zombie-themed "horror gnomes" that they sell mainly on Etsy, but last month noticed their creations and accompanying copy popping up in dozens of bogus online ads. On one day alone, the couple reported more than 40 such fake ads to Facebook.

They've also watched helplessly as a steady stream of customers complain online about the tiny, poor-quality counterfeits.

"It's like being stalked and robbed," said Revenant. "It's very gross. We haven't been able to find any recourse. You'd think there'd be something you could do about it."

When contacted by CBC News about the dubious-looking ads, Facebook removed them and wrote: "We want people to come to Facebook to engage with authentic content, and when we are made aware of content that is violating our policies, we remove it from our platforms." 

Use credit cards: Anti-fraud centre

"Fraudsters know most consumers are not going to put the time, energy or money into pursuing them," said John Pirie, a lawyer who specializes in fraud and financial crime litigation with the firm Baker McKenzie.

The Canadian Anti-Fraud Centre recommends using a credit card with basic purchase protection benefits whenever online shopping. 

Sean Ralph said he'll follow that advice, and be more careful about his online purchases in the future. 

"I don't think PayPal's policy currently really supports you as a buyer in these scenarios," he said.