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Nearly 21% of Shopify stores pose fraud risk to customers

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BRAZIL - 2020/07/26: In this photo illustration the Shopify logo seen displayed on a smartphone. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)
Nearly 20% of Shopify stores were 'related to fraudulent practices,' according to new analysis. Photo: Rafael Henrique/SOPA Images/LightRocket via Getty Images

Nearly 21% of Shopify (SHOP) stores pose a fraud risk to their customers, according to new analysis by e-commerce authentication service Fakespot.

Nearly 26,000 of the 124,000 Shopify stores analysed by Fakespot were “related to fraudulent practices,” says Fakespot.

Around 39% of those were found to be “problematic sellers,” with issues of counterfeit products, possible brand infringements or a poor reputation.

Some 28% were possible scam stores, with privacy leaks and suspiciously cheap listings and just under 17% had negative reports from consumers, while 10% had no history of any transactions.

“We recognise there will be those — however few they may be relative to our base of more than 1 million merchants — that may abuse our service, and we take this matter seriously,” Shopify said in a statement to the BBC.

“To date, we have terminated thousands of stores and routinely implement new measures to address fraud and other activities that violate our policies.”

Yahoo Finance UK has reached out for extra comment.

Shopify provides the technology for businesses to set up an online store to sell their products and also includes features such as inventory tracking and software to help understand sales trends.

The company has boomed during the coronavirus pandemic as many small firms have moved online due to lockdowns and social distancing regulations.

Many small businesses turn to Shopify because it is relatively cheap and easy to set up and many can't afford to pay for a custom website to sell their products.

Shopify technology powers over 1 million businesses in more than 175 countries, according to the Canadian company.

Shopify’s total revenue in the third quarter was $767m (£572m), a 96% increase over the same quarter in 2019.

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