March 6 through 9, marks National Consumer Protection Week. In recognition, Michigan Attorney General Dana Nessel re-released the consumer alerts on the subjects that Michigan residents report to the Department most frequently.
On Thursday, Nessel drew Michigan residents’ attention to the department’s drop shipping consumer alert, offering tips to avoid scams during the online sale or purchase of goods.
“Online scams often follow the same pattern, promising you an unbelievable discount or get-rich-quick employment opportunity that seems too good to be true,” Nessel said. “Stay vigilant and be sure to reference the Department of Attorney General’s resources to prevent a bad actor from taking advantage of you.”
Drop-shipping happens when a seller sets up a website and sells products that the seller does not keep in stock. When an order is placed, the seller sends it to a third party — the manufacturer, another retailer, or a wholesaler — who ships the goods directly to the buyer.
It’s a fast-growing trend of online middlemen who keep the difference between the wholesale and retail price and costs you extra money. While drop-shipping is not illegal, there is a lot of room for problems and abuse for buyers and sellers.
Many drop shippers are trained to trick customers about where a product is coming from. They must rely on their suppliers for product quality and authenticity, fulfillment speed, and returns. If there are issues, you may not know about them until you receive a drop-shipped package and realize where it came from, its quality, and how much you overpaid.
Drop shippers often set up shops on social media sites. The Better Business Bureau reports?the most common place to find sites selling counterfeit goods is social media, particularly Facebook and Instagram, which share the same ad network.
Before you buy:
• Research the product and the seller.
• Do an online image search of the product and any other images the seller has posted to see where the product is coming from, how much it really costs, and who else is selling it.?Watch this video to learn how.
• Compare prices for the same or similar products from other sellers.
Drop-shipping business is the new get-rich quick scheme. Scam artists promote drop-shipping as a lucrative “work from home” opportunity. Prospective sellers may be enticed to pay for expensive seminars or webinars designed to teach them how to become a successful drop shipper.
Few drop shippers make any profits. In addition to not having an exclusive deal with suppliers and little control over the supply chain, a drop shipper could be responsible for helping another party further an illegal scheme. As one company put it: “Whatever illegal activities your suppliers are up to, as their vendor you’re automatically complicit.”
Before you sell:
• Do not go into drop-shipping thinking you will get rich quick. There is a lot of competition and smaller businesses have to cut their profits to stay competitive.
• You have no control over the supply chain, and you must depend on your supplier for product quality, authenticity, and delivery. Yet, you will be the one dealing with the buyer when there is a problem.
• Most companies offering to teach you how to become a successful drop shipper are making their money selling you and others their training programs.
The Michigan Department of Attorney General addresses more than 30,000 consumer complaints annually, ranging from identity theft and online scams to robocalls or fraudulent business practices. For additional information about popular consumer scams, or for those who believe they have been a victim, residents can contact the Consumer Protection team Monday-Friday at 877-765-8388 or complete our online complaint form at https://secure.ag.state.mi.us/complaints/consumer.aspx.
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