British shoppers are being urgently warned about a surge in sophisticated online 'ghost stores' capitalising on the Black Friday and Christmas sales season, with regulators highlighting that artificial intelligence is making these scams increasingly difficult to detect.
The Rising Threat of Ghost Stores
The Australian Competition and Consumer Commission (ACCC) has identified these deceptive operations as 'scam adjacent', with some sending counterfeit products from overseas while others fail to deliver anything at all. Although this warning originates from Australia, the threat is global, and UK consumers face identical risks during the peak shopping period.
Ghost stores typically present themselves as legitimate local brands, using sophisticated tactics to appear authentic. Recent investigations have uncovered numerous examples of these fake retailers offering Black Friday discounts across various product categories including jewellery, makeup, and children's toys.
How Ghost Stores Operate
One prominent case involves the online makeup retailer Legacare, which has been running Facebook advertisements promoting Black Friday sales while claiming to operate from headquarters in Queensland. The company markets a 'Biomimic' foundation for mature skin, allegedly favoured by '42,000+ Happy Women'.
Legacare's deceptive practices include using fabricated media endorsements. One advertisement featured what appeared to be a screenshot from Australian Women's Weekly with the headline: 'This Australian brand is outselling Sephora bestsellers.' However, the article never existed.
A spokesperson for Women's Weekly owner Are Media confirmed the image was 'unauthorised and fabricated', representing a deliberate misuse of their brand to mislead consumers. 'We take the misuse of our brands very seriously,' they stated, urging global tech platforms to implement stronger measures against fraudulent advertising.
Further investigation revealed that Legacare isn't registered in Australia, lacks an Australian Business Number, and its domain name was registered less than a year ago.
The Role of Technology in Escalating Scams
These ghost stores continue to proliferate despite major tech companies being aware of the problem for months. Both Meta, Facebook's parent company, and e-commerce platform Shopify have received formal communications from the ACCC urging closer scrutiny of such activities.
When Guardian Australia examined the Legacare website, they discovered an AI-generated image purporting to be the company's founder, 'Ruby'. The image URL indicated it was created using Replo, a content delivery network that enables users to build Shopify pages with artificial intelligence.
Catriona Lowe, ACCC Deputy Chair, emphasised that artificial intelligence enables criminals to create more realistic scams that are significantly harder to detect. She urged consumers to maintain healthy scepticism about supposed discounts, noting that even some legitimate retailers make misleading claims to attract customers.
Meta declined to comment on specific websites but acknowledged that ghost stores and fake ads represent an 'adversarial space where sophisticated groups often change tactics to stay ahead of detection.' The company noted that user reports about scam ads have declined by more than 50% over the past 15 months.
How to Protect Yourself from Ghost Stores
The ACCC recommends several protective measures for online shoppers:
- Conduct reverse image searches of product photos to verify if they've been copied from other websites
- Check business registration details and look for legitimate contact information
- Be wary of unrealistic discounts and pressure to make quick purchases
- Report suspicious websites and advertisements to relevant platforms
When Guardian Australia applied the reverse image search method to Legacare's products, they discovered five nearly identical 'biomimic' foundations on Amazon that had been available since September 2024 - months before the Legacare domain was registered in January.
Despite requests for clarification, Legacare failed to provide its Australian Business Number when questioned. In an email response, the company maintained it was 'an Australian business' working with 'a trusted overseas supplier' while avoiding direct questions about drop-shipping cheap products at inflated prices.
With the holiday shopping season intensifying, regulators stress the importance of vigilance. 'It's enormously important that platforms are proactively seeking to track what's occurring on their platforms,' Lowe stated, calling for better consumer reporting tools and timely responses to scam reports.
