Need to know
- Online fashion outlets are misleading consumers by claiming to be small local businesses and denying refunds for poor-quality goods
- Shoppers have had to spend more money and been asked to lie on official documents to get their money back
- We explain how to spot these operators and what to do if you've bought from them
When the retailer asked CHOICE member Ian to lie on a postal declaration form, he knew he'd gone as far as he could in pursuit of a refund.
He'd purchased the shoes he was trying to return with noble intentions, after coming across an ad for a local fashion store on Facebook.
The post by Nuova Melbourne told the story of a small business in his area that was closing down.
"I got completely sucked in," he recalls. "I don't think of myself as entirely stupid, but I just thought: this is a Melbourne company [and] I want to support local industry."
After perusing the store's website, he'd sent off an order for a $100 pair of boots in his size that had caught his eye.
"[They] were described as orthopedic, handmade leather, that sort of thing." he explains.
"[But] when they arrived, they were basically plastic, and narrower than my foot, so I couldn't even get my foot halfway in."
I got completely sucked in... I thought: this is a Melbourne company [and] I want to support local industry
Ian, ghost store victim
Ian contacted the store to get his money back – something consumer law gives Australian shoppers the right to when goods end up being very different to how they're described.
But he soon discovered the vendor's promised "easy refund" process would be anything but.
"I wanted to take them back to a local Melbourne depot and get my refund… [but] they said I had to return them to China," he says.
A bigger shock came when the retailer issued instructions on how he should go about mailing the return parcel.
It demanded that when filling out any declaration forms, Ian should state that the boots he'd bought for $100 were worth less than $5, threatening that the package would be destroyed and he wouldn't get his money back if he didn't comply.
Ian believes the business was trying to avoid paying extra import charges and he didn't go ahead with attempting the return, fearing that making a false declaration would be in breach of the law.
"Not only are they scamming me, but they're trying to coerce me into committing a crime on their behalf," he says. "This isn't the behaviour of an upstanding company."
We tried to reach Nuova Melbourne's administrators for comment. The online store no longer exists.
On this page:
- The 'local' ghost stores haunting shoppers
- How they reach consumers
- What happens when you buy from them?
- The battle for a refund
- Tech platforms called out
- How to spot a ghost store
- What to do if you've bought from a ghost store
The 'local' ghost stores haunting shoppers
Ian is just one of the many consumers CHOICE has heard from this year who've lost money to these outlets that sell poor-quality clothing and footwear at premium prices and then block, deny and evade requests for refunds.
These businesses commonly associate themselves with a specific Australian town or city, despite having no presence there. This has led the ACCC to dub them 'ghost stores'.
Unlike other shopping scams impersonating famous national brands, ghost retailers leverage this local angle and tug on shoppers' heartstrings.
Many claim to be small, family-run fashion boutiques in stylish locations like Thredbo and Byron Bay, or major cities like Sydney and Melbourne.
Stories of these earnest enterprises having to close down due to rising costs, slow sales or, in one case, a kindly elderly owner becoming a grandmother, make them appear to be honest operations you can trust.
Ghost stores claim to be small businesses in stylish locations selling high-quality products.
In reality, these stores don't exist beyond carefully curated websites and slick pages on social media. Many are likely run by people based overseas and operate as drop shipping schemes.
Drop shipping refers to when a retailer has not bought, stored or shipped any of the products it's selling. Rather, this side of the business is run by a third party in a different location.
Drop shipping can be used by legitimate businesses, but ghost stores abuse this process by misleading consumers into thinking they're entirely based in Australia.
Drop shipping can be used by legitimate businesses, but ghost stores abuse this process by misleading consumers into thinking they're entirely based in Australia
On top of this, they then tend to sell poor-quality products at overblown prices and withhold refunds.
A persistent consumer seeking their money back will eventually discover the goods have to be sent back overseas at their own expense before a full remedy can be provided.
CHOICE isn't alone in witnessing an uptick in ghost store complaints – the ACCC says it received at least 360 reports about 60 different online ghost retailers in the first half of this year, and believes many more might be operating.
How they reach consumers
CHOICE has spoken to several people who've bought from these outlets, most of whom are still out of pocket, to get an understanding of how they work.
Many say they first came across a ghost store after seeing it advertised on Facebook or as a sponsored entry among search engine results.
All of the stores reported to CHOICE claimed to be local Australian businesses, with names like Thredbo Boutique and Armoire Melbourne.
Thredbo Boutique is no longer operating and neither its administrators nor those of Armoire Melbourne responded to requests for comment.
But searching the names of these outlets online suggests the aggrieved shoppers CHOICE has spoken to aren't alone – both have attracted overwhelmingly negative feedback and allegations of being scam operations on social media and sites like TrustPilot.
Many shoppers first came across a ghost store after seeing it advertised on Facebook or as a sponsored search result
Most of the suspected ghost retailers we saw sold clothes and shoes, but consumers and the ACCC report encountering similar tactics from dubious vendors of other popular items such as jewellery and antiques.
The familiar ghost store claim of being on the brink of shutting for good helped draw in some of the victims CHOICE spoke to.
Several said 'closing down' discounts and photos of friendly shopkeepers led them to believe they could support a local business while also getting a bargain.
And while the advertised discounts were attention-grabbing (as big as 80% in some cases), items were still expensive enough to give products an air of quality.
Pairs of shoes for $100, jackets for $130 and dresses for $75 served to sway some shoppers, who said the higher prices led them to believe they were buying premium items rather than fast fashion.
One victim who ordered a cashmere sweater received an item made of polyester and spandex.
What happens when you buy from them?
In reality, fast fashion would be a kind description for many of the products we've seen from these outlets.
One CHOICE member who spent over $140 on wool and cashmere jumpers received clothes made of polyester, acrylic and spandex.
After paying premium prices and waiting weeks for deliveries, consumers report receiving goods they describe as "dreadful", "horrific", "unwearable" and, in one case, coming with a "strong, unpleasant" smell.
The battle for a refund
Retailers that sell products in Australia are meant to adhere to Australian Consumer Law and accept returns and provide refunds when they sell products that are very different from those advertised.
But many ghost store victims we've heard from are still out of pocket and have resigned themselves to giving their purchases away to charity.
This is because these retailers make getting a refund very difficult, if not impossible.
Unhappy buyers are met with a flurry of counter-offers ... but the full remedy required under Australian Consumer Law is never proffered
Unhappy buyers who contact a store to get their money back are often met with a flurry of counter-offers – many report being urged to keep items and accept reimbursements worth 10, 20 or 30% of the purchase price or store credits.
If shoppers can endure weeks of back and forth emails and persist with pursuing a full refund, these offers can get as high as 60%, but the full remedy required under Australian Consumer Law is never proffered.
If a store does raise the prospect of a refund, it'll only be provided if the buyer pays out of their own pocket to mail back returns.
And products can't be returned to the Australian town the advertising implied they came from – rather, they have to be sent to an entirely different country.
Returning products no guarantee of refund
If you do cough up the price of overseas postage, expect weeks of waiting and even then the prospect of still not getting your money back.
We've heard from people who've spent up to $40 to return goods overseas, with mixed results.
CHOICE member Michelle bought a jacket and shirt from a store that had 'Sydney' in its name. She thought the items could be returned to a Sydney address, and was frustrated to learn she'd have to send them all the way to China for a refund.
Nevertheless, she persisted and paid for tracking on the parcel, only to see it stall just short of the return address she'd been provided.
"It sat in China in a depot for weeks. And then suddenly it came back… it couldn't be delivered," she recalls.
Ghost store return addresses are unreliable. Products sent to them often can't be delivered and will be returned to the buyer.
Michelle never got the $148 she spent on the items, and the store she bought from no longer exists.
CHOICE is aware of another shopper, however, who went through a similar drawn out process with a different retailer and did eventually get a full refund.
But this second victim only got her money back after she'd paid out of her own pocket to send the items to the Netherlands, where they were unable to be delivered and then returned to her in Australia.
Tech platforms called out
Michelle says the social media platform where she first encountered the supposedly Sydney-based store deserves some of the responsibility for her months-long ordeal.
"I blame Facebook, they allow this to happen," she says. "They're all over Facebook, these bogus bloody ads, so I just don't buy off Facebook anymore."
With other consumers reporting similar experiences, the ACCC says it's asked Facebook owner Meta to "scrutinise and take appropriate action against the operators of ghost stores".
They're all over Facebook, these bogus bloody ads, so I just don't buy off Facebook anymore
Michelle, ghost store victim
Meta isn't the only global giant being told to take more responsibility for dodgy retailers using its services.
Shopify is an ecommerce platform used by millions of business to set up and run online stores and the ACCC says ghost retailers have been among the company's clients.
Several ghost stores seen by CHOICE mentioned being powered by Shopify in their fine print, or referenced the platform's templates in their source code.
Shopify didn't respond to our requests for comment, but a Meta spokesperson said the company had taken action against specific ghost stores highlighted to it by the ACCC.
They added that Meta is "committed to investing in new technology [and] working with government, law enforcement and industry to help prevent scams", and encouraged users to report ads for ghost retailers.
How to spot a ghost store
What to do if you've bought from a ghost store
- Contact your bank or payment provider – see if they can stop the transaction or arrange a chargeback. Ask if your interactions with the site could pose an ongoing risk to your finances or personal details.
- Don't try to send the item back for a refund – it'll mean losing more money on postage, and return addresses provided by ghost stores are often unreliable. You'll likely end up with the item being sent back to you.
- Beware of haggling for reimbursement – a refund worth more than 10% or 20% of what you paid can take multiple emails and weeks of negotiating. Meanwhile, ghost stores and their associated contact details can be shut down without warning.
- Report suspicious posts or ads to the social media platform you see them on. If a suspicious retailer appears to be hosted by Shopify, report it to the platform. Leave a review or social media post to warn other shoppers.
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You know without hesitation what's safe for you and your family. And our recent sunscreens test showed just how important it is to keep business claims in check.
So you'll never be alone when something goes wrong or a business treats you unfairly.
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Stock images: Getty, unless otherwise stated.
