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Falling Prey for Social Media Shopping Frauds: The
Victims’ Perspective
Yurita Yakimin Abdul Talib a*
,
Fariza Hanim Rusly a
a School of Accountancy, College of Business, Universiti Utara Malaysia, Malaysia
Ab
s
t
r
ac
t
:
Proliferation of e-commerce and the advent of social media utilization have contributed to the significant progress
of social commerce around the world. Similar to existing internet applications for businesses, such as conventional e-commerce
and mobile commerce, interactions and socialization on online medium (with less visibility of sellers and buyers physical
presence) over the social media also possess risks of unreliable and fraudulent transactions. Despite the informed risks of
online dealings, fraudulent social commerce incidents are growing. While the existing literature on social commerce provided
insights on social commerce development in terms of its advantages and adoption, dearth of studies offer understanding of the
dark side of social commerce, particularly with regards to the occurrence of social commerce frauds. This proposed qualitative
study intends to bridge this gap, with the focus to examine the occurrence and the nature of the social commerce fraud, and
consequently to understand how and why shoppers become victims of social commerce fraud. Findings are expected to
contribute towards conceptual understanding of social commerce fraud phenomenon and offer inputs to increase awareness
among social commerce community.
Keywords: Online Fraud, Social Commerce, Online Shopping, Social Commerce Fraud.
1. INTRODUCTION
Internet users in the world were 3,270
million in the first half of 2015 (Internet
World Stats, 2015). However, the
revolution of internet and the related
technologies has created huge opportunities
to perpetrate old and new kind of frauds
(Smith, 2010). The Australian Competition
and Consumer Commission (ACCC)
(2015) found that, 231 online shopping
scams were reported in September 2015
alone, with a total financial loss of
$85,733. In Malaysia, CyberSecurity
(2014) reported 4,117 cases or 51.6% of
online security incidents involved frauds,
including online shopping frauds, and this
domination is expected to continue in the
future. Pusat Aduan Pengguna Nasional
(NCCC) reported that losses due to online
frauds amounted to RM68 million in 2015
compared to RM61 million in 2014.
(Kosmo, 2015). Internet has become the
vehicle for scammers to connect with
victims.
Online fraud can be defined as the use of
internet to deceived other party to give
money with a promise of goods or services
that do not exist nor intended to be
provided, or were misrepresented, which
led to financial and non-financial loss
(Button et al., 2014; Cross et al., 2014). In
other words, victims give money via the
Internet to the fraudsters but never get what
they paid for. Diverse range of frauds
perpetrated online including romance
scam, fake online auctions, malware
attacks, and online purchasing or e-
commerce fraud (Button et al., 2014). This
research focuses specifically on e-
commerce or online purchasing fraud
__________
* Corresponding author. Tel.: +604-928-7337; Fax: +604-928-7216.
E-mail address: yurita@uum.edu.my
Copyright © 2015. The Authors.
where the purchasing activities are
performed via social media platforms.
An advanced development of social media
has revolutionized the way online shopping
or e-commerce is accomplished, known as
social commerce (Wang and Zhang, 2012).
However, the advent of the social media
technology as a shopping platform comes
with the risks of people becoming fraud
victims. The Australian Competition and
Consumer Commission (ACCC) (2015)
found that, in September 2015, 10.2% of
online shopping scams reported were
conducted via social media. More recently,
it was reported that RM700,000 was ripe
off from hundreds of individuals by an
online seller via his Instagram shop (Harian
Metro, October 1, 2015). The amount of
cases and losses are expected to be higher
as many online fraud cases go unreported
due to many reasons, such as
embarrassment, self-blamed, and do not
know what to do (Button et al., 2014). That
is how it continues to be successful scam
for the scammers.
Despite a substantial increase of social
commerce fraud, little is known on how online
shoppers falling prey for social commerce
fraud. Of relevant studies are conducted by
Button et al. (2014) in the UK and Wales, and
Cross et al. (2015) in Australia. However, these
studies focused on all aspects of online fraud,
including employment scams, investment
scams, romance frauds, malicious attacks and
purchasing of goods scams. Button et al. (2014)
called for more in depth study to understand the
modus operandi of the fraudsters on some of
the more common scams. Hence, this study
aims to examine the occurrence and the nature
of the social commerce fraud, and to
understand how and why shoppers become
victims of social commerce fraud. This paper
draws upon research in victims of social
commerce fraud in Malaysia to examine in the
victims own words and their conversation with
fraudsters how they become victims of social
commerce scams. The findings will allow us to
understand the modus operandi of the
fraudsters, hence provides some insights for
prevention.
2. LITERATURE REVIEW
The Evolution of Social Commerce
Online shopping or e-commerce is a common
trend in society nowadays. Online shopping is
describe as purchasing products or services via
the Internet. In 2014, one-quarter of 300,000
global respondents were users of e-commerce
and more than half (55%) are willing to use it
in the future (Nielsen, 2014). Malaysians are
ranked among the most passionate online
shoppers. By 2015, Malaysia's online shopping
market is expected to increase to RM5 billion
(US$1.52 billion) (Nielsen, 2014). Variety of
products could be purchased online easily
including tickets, clothing items, home
accessories, electronic gadgets, foods, and
many more. Shopping activities over the
internet has been part of the lifestyle due to the
advantages offered by online services. For
instance, individuals are attracted to shop
online due to wider products selection, cost and
time saving, as well as convenient shopping
experience (Wu and Wang, 2005).
With the evolution of the Internet and its
related technology, completely new forms of
interactions for acquisition of goods and
services have emerged through social
networking platforms, such as Facebook,
Instagram, Whatsapp, and Telegram. Across the
world, there were 21.6 billion users of the
social media in 2015, and it is expected to grow
(Statista, 2015). Accordingly, social networking
was the second most popular activities among
Malaysian internet users (Malaysian
Communications and Multimedia Commission,
2014). Therefore, one of the major
developments in the e-commerce industry
recently is social media shopping or social
commerce that is expected to evolve as a
widely acceptable practice. “Social commerce
is no longer a media hype or a business fad. It
becomes an established practice, although the
specifics of this practice continue to emerge
and evolve” (Wang and Zhang, 2012, p. 121).
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As a subset of e-commerce, social commerce
involves commercial activities, such as
marketing, selling and buying products and
services, using social media technologies to
support online interactions and user
contributions (Liang and Turban, 2011). The
interactions among the social media users may
result in discovering products, aggregating and
sharing product information, and
collaboratively making shopping decisions
(Shen, 2012). In essence, the two important
attributes of social commerce are commercial
activities and social networks. The capability of
social networks that allows for users’ content
participation, such as reviews and
recommendations, for example, represents the
major advantages of social commerce (Liang
and Turban, 2011).
The social media revolution has raises a variety
of new research opportunities. Review of
literature indicates that most discussion about
social commerce has been on the evolution of
social commerce, advantages of social
commerce and the drivers for social commerce
adoption. Wang and Zhang (2012)
systematically examined the evolution of social
commerce from 2005 to 2011, along four
dimensions: people, management, technology,
and information. Previous social media
shopping research examines the way social
support and relationship quality affect the
intention to adopt commercial activities in
social media (Liang et al., 2011). Further, Hajli
(2013) identified that trust and perceived
usefulness of social media have effect on
intention to buy. Hajli (2012) proposed a social
commerce adoption model by measuring the
recommendations and referrals, forums and
communities, and rating and reviews elements
of social media. These previous studies in
social media shopping have provided much
insight on social commerce development.
However, to date, the extant literature offers
little concrete knowledge of investigation on
fraud issues in social commerce.
The Social Media and Implications for Online
Shopping Fraud
Fraud occurs when a person is deceived by
other party (individual or business) to give
money with a promise of goods or services that
do not exist nor intended to be provided, or
were misrepresented (Button et al., 2014).
Button et al. (2014) reported that online frauds
that have been experienced by victims in
England and Wales includes purchasing goods
or services that did not exist/arrive or
purchasing of goods found to be fake or faulty.
Victims realized that they had been defrauded
when seller was unresponsive to their
communications (Button et al., 2014).
In Malaysia, a recent statistics showed that
2252 cases of online fraud were reported in
between January 2015 to August 2015
(CyberSecurity, 2015). This is a continuation
from the previous year as financially motivated
frauds is the most online incidents that has been
reported for the year 2014, which is expected
to escalate along with advancement of the
Internet and its technologies (Xiao & Benbasat,
2011). Virtually, anyone can fall prey to online
fraud. The extant literature suggests that active
online shoppers and active participants in
online forum possess higher risk for online
fraud victimisation (Van Wilsem, 2013). Thus,
it is believed that there are many more
Malaysians who have become victims of online
fraud but have not lodged police reports
(CyberSecurity, 2015).
There are various reasons contributing to the
occurrence of online fraud. When shoppers are
dealing over the Internet, they do not know the
sellers well enough and it is very difficult to
prove that the acts of frauds had occurred.
Hence, online shoppers are advised to be
extremely careful and be suspicious whenever
an advance payment is required. When money
is involved, there is always someone trying to
take advantage.
The explosive growth of the online shopping
via social media may have also increases the
risks of fraud. In social commerce, almost
anyone can become online sellers because they
do not have to invest in a website or pay to
online marketplaces. Stephen and Toubia
(2010) claimed that sellers in social commerce
are individuals instead of firms. The anonymity
afforded by online social media can bring out
non-genuine sellers or scammers to rip off
innocent shoppers. Hence, anyone is vulnerable
to social media shopping scams in which the
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ICoEC 2015 Proceedings |
perpetrators, anonymously or even posing as
people one’s trust, cheat them in the purchasing
activities. The non-transparency and invisibility
of sellers in social media create risk of
victimization to social media shoppers.
Social media connects online shoppers directly
with others to form a social community. The
immediacy provided by social media allows
online shoppers to obtain and share products-
related and sellers-related information within
their social community. A market survey by
Nielsen (2014) reported that 92% of
respondents worldwide trust recommendations
by friends and families, and 70% of them
ranked online consumer reviews as the second
most trusted source of information. Researchers
discovered that social media characteristics
such as social support that facilitate the social
interaction of consumers, lead to increased trust
and intention to buy (Liang et al., 2011; Hajli,
2013). While, the interactions and exchanges of
information help online shoppers to make
informed and smart buying decisions, online
scammers may misuse it to lure their victims.
Prior studies found that victims responded to
scams because of appeals to trust (Buchanan
and Whitty, 2014; Button et al., 2014). Further,
social media platforms provide a ‘liking’
function. For example, Facebook ‘like’ button
and Instagram ‘follower’ button indicates
numbers of people following the business or
sellers’ online page. The higher the number of
‘like’ or ‘follower’ of the sellers, the higher the
trust of shoppers on that particular sellers.
Hence, social media shoppers may tend to
believe that these sellers are real and make
online purchasing activities with them.
Visceral appeals was another key strategies of
scammers to lure victims (Langenderfer and
Shimp, 2001; Button et al., 2014). It relates to
appeal to basic needs such as money and love
(Button et al., 2014). Some social media
platforms such as Whatapps, WeChat, and
Facebook Messenger applications allow
shoppers to communicate directly and
personally with online sellers. Scammers may
use these platforms to offer and convince
buyers’ hopes of financial savings or gain for
engaging in the purchasing fraud. Shoppers
may fell prey for the fraud as they felt that they
are getting a good deal.
When making a buying decision, many people
need proof (authority) that a seller and its
product are legitimate. In social commerce, the
proof can be obtained from reviews by others.
Nowadays, it’s a trend for sellers in Instagram
to promote their Instagram Shop (InstaShop)
through reviews by famous celebrities,
bloggers, or other sellers. Famous celebrities’
reviews were used to dupe online shoppers to
purchase their product (The Star, October 2,
2015). One of the victims reported that she was
attracted to buy a branded handbag from an
InstaShop seller not only because the price is
cheap but also influenced by reviews by
celebrities. The victims may believe that if
celebrities buy from the seller, it means that the
seller is trusted and has good reputation. Social
commerce fraudsters may use this technique to
decoy potential victims.
3. METHOD
The methodology of this qualitative research
comprises of two phases. Phase one involves
face-to-face semi structured interviews with
key authorities responsible in regulating and
handling online commerce fraud incidents such
as CyberSecurity Malaysia, Tribunal Tuntutan
Pengguna Malaysia (TTPM), and Khidmat
Aduan Pengguna Nasional (NCCC). The
interview focuses on evidence review, such as
statistic of cases, how the online fraud offenses
are being committed, the seriousness of the
offenses, the impact of the fraud to victims, and
the procedures to report. Phase two involves
interviews with actual victims of social
commerce fraud. In-depth interview will be
conducted with 40 victims who had
experienced particularly in social media
shopping fraud. The interview will enable
understanding of social commerce phenomenon
based on individual victims’ experience, with
the focus on recognizing how the fraud had
been committed (the modus operandi of the
scammers), what actions have been taken once
the victims realized they have been scammed,
and the impacts they had experienced.
Interviews will be audio recorded (with
permission) and transcribed. Characteristics of
the victims and their purchases will be assessed
to achieve diversity in term of their age, gender,
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employment, social media platform usage, and
type of product purchased.
4. CONCLUSION
Social commerce has become a new way on
how people perform their commercial activities
online. However, social commerce has unique
characteristics that are likely to create
opportunities for fraudsters to trap innocent
shoppers. We believe that while social media
increases users’ trust and intention to buy, it
increases risks and vulnerabilities for frauds.
There is, therefore a gap in literature relating to
social commerce frauds and the victims.
Findings from the proposed study could
contribute to the development of conceptual
understanding of nature and characteristics of
social commerce fraud and the modus operandi
of fraudsters. This conceptual model can offer a
basis for further empirical studies and
theoretical development to better understand
the phenomenon. Practically, findings and
conceptual understanding offered by this
proposed study could create awareness among
potential and existing online customers of risky
online dealings, hence minimizing the risk of
fraud occurrence through social media
shopping. Findings could also provide input to
policy makers and regulatory bodies in
designing an effective policy to curb online
fraud cases, and promote good social
commerce practices among online shopping
community.
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