As part of her continuing Holiday Scams Campaign, Michigan Attorney General Dana Nessel is re-issuing her consumer alert, Drop-Shipping: What you Need to Know Before You Buy or Sell Online to caution consumers about the risks associated with this retail method.
In drop-shipping, sellers act as middlemen but do not retain stock for the products they sell. The seller advertises products online and forwards customer orders to another company — like a wholesaler or manufacturer — for shipping.
“While drop-shipping is a legal and common retail practice, it’s not without risks,” said Nessel. “Consumers and aspiring entrepreneurs should think carefully before using or investing in drop-shipping schemes. They can promise low prices and quick riches, but often deliver more problems than profits.”
Consumers are advised to take the following precautions to protect themselves:
• Research the product and seller. Use online tools to compare prices and verify product origins.
• Be cautious of social media ads. Drop-shippers often promote their goods on platforms like Facebook and Instagram, where fake or counterfeit goods are frequently advertised.
• Check for signs of fraud. Suspicious brand names, misspellings, or overly vague product descriptions can indicate a scam.
• Understand the risks. Items may arrive late, not match the description, or fail to arrive at all.
The Attorney General’s alert warns entrepreneurs against entering drop-shipping schemes as a “get rich quick” opportunity. Many programs promote expensive seminars or lists of suppliers, which may result in financial losses.
Sellers who use drop-shipping face significant challenges, including:
• Quality control issues. Sellers depend on suppliers for product quality and delivery, which can damage their reputation.
• Legal liabilities. Suppliers may use fake goods, counterfeit goods, or trademarked logos, leaving sellers responsible for promoting illegal products.
• High competition. Saturation in the drop-shipping market often forces sellers to reduce profits.
To view all the holiday scam alerts, visit the Department of Attorney General’s website at www.michigan.gov/consumerprotection/scams/holiday-scams. Consumers who suspect fraud can file a complaint with the Attorney General’s Consumer Protection Team at:
Consumer Protection Team
P.O. Box 30213
Lansing, MI 48909
517-335-7599
Fax: 517-241-3771
Toll-free: 877-765-8388
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