Nessel warns of drop-shipping scams during holiday season

Michigan Attorney General Dana Nessel is back with another video for the 20 Days of Scams holiday consumer protection series to warn consumers about drop-shipping and potential scams as a result of the practice.

Drop-shipping is when an individual or entity sets up a website and sells products that the seller does not actually have. When an order is placed, the seller sends it to a third party who then ships the product directly to the buyer. Consumers are essentially paying more than what a product costs for someone else to order the product for them.

While drop-shipping is not illegal, there is a lot of room for problems and abuse for buyers and sellers.

“It’s important for Michiganders to be extra careful when shopping online,” Nessel said. “In one’s eagerness to purchase a gift or other necessities this holiday season, consumers run the risk of falling into a scheme that will cost more money than it should. Drop-shippers may attempt to lure in customers with flashy websites and products that appear to be on sale, but consumers must be cautious that the websites they are visiting are legitimately run operations.”

Many drop-shippers are trained to trick customers about where the product is coming from, going as far as using stolen photos from brick-and-mortar stores to trick customers into thinking the seller has a physical location.

Another risk seen in some cases of drop-shipping is that the product seen online may not be the product a consumer receives – or worse, they never receive the product at all.

To avoid falling victim to a drop-shipping scam, keep the following in mind:

• Research the product and the seller.

• Do an online image search of the product that the seller has posted to see where the product is coming from, how much it really costs, and who else is selling the product.

• Compare prices for the same or similar products from other sellers.

Nessel is committed to protecting Michigan consumers from drop-shipping schemes. Most recently, the Attorney General’s Office reached an agreement with a drop-shipping operation called Direct Home Supplies after the online business allegedly violated the Michigan Consumer protection Act (MCPA).

For additional information about drop-shipping and other consumer tips, visit the attorney general’s website at www.michigan.gov/ag.