CONSUMER ALERT: Ahead of Cyber Monday, the NYS Department of State’s Division of Consumer Protection Warns Shoppers About AI-Generated Fraud and Scams Online

As we enter the holiday shopping season, the Department of State’s Division of Consumer Protection is reminding New Yorkers shopping online to remain vigilant about scams and the overall safety of the products we purchase. New laws signed by Governor Hochul require online stores to conspicuously disclose refund policies and the use of algorithms to set prices for consumers — but with scams always evolving and the surge in AI-generated fraud, it’s important for consumers to make sure they are cautious when shopping online. The New York Department of State’s Division of Consumer Protection is providing tips to help New Yorkers shop safely to avoid the loss of time and money during this busy holiday season. To protect yourself and your family, consumers should be aware of current trends and follow these important tips. 

“Don’t take the clickbait while browsing online this Cyber Monday,” said Secretary of State Walter T. Mosley. “There are more and more fake websites and scammers out there trying to take advantage of New Yorkers purchasing gifts for their loved ones this time of year. These tips from the Division of Consumer Protection will keep you one step ahead of these fraudsters as you do your holiday shopping.”

The Latest Online Shopping Scams:
Scammers are creating AI-generated sites that lure shoppers to fake online stores. In 2024, New York consumers reported over $17 million in losses from online shopping scams and over $41 million in losses relating to business imposters, according to data collected by the Federal Trade Commission. In addition, counterfeit products are becoming more common when shopping online. In addition to being a waste of money, these products may pose serious safety hazards.  According to U.S. Customs and Border Protection, in fiscal 2025, they seized nearly 79 million counterfeit items. Counterfeit clothing, consumer electronics, toys and medications were among the top seized items.

Tips to Avoid Online Shopping Scams:

• Verify the seller: If you’re unfamiliar with a seller, be cautious and do your research before buying. Search online for information about the company’s reputation and consult consumer reviews.
• Beware of fake AI-generated websites: Scammers often create fake websites to imitate legitimate brands. Review the seller and product before buying by carefully inspecting the URL. If the domain name doesn’t match the official company name or website, it could be a scam site. Scammers will make slight changes to trick your eye (ie: replacing a zero for an o, or adding a dash mark or extensions at the end). That’s why it is important to look carefully at the URL before shopping. Scammers often copy websites, but they cannot replicate a company’s official URL.
• Be careful when shopping on social media: Scammers may use social media to lure shoppers to fake online businesses that trick customers into paying for products that never arrive. They may lure consumers with unrealistic discounts, fake reviews and fake AI generated product images.If an offer seems too good to be true, it usually is. Don’t purchase a product directly from the social media site or a link you find on the site. Open a new browser and make your purchase through the retailer’s official website. If it is not a known or trusted store, do some research: put the name of the vendor into your browser and write the word “scam” next to it to see if other people have made complaints.
• Watch out for 3^rdparty seller scams: Confirm the legitimacy of the seller if shopping in an online marketplace. If redirected from a trusted site to a third-party site, read the seller’s policies and reviews, look for any consumer comments and, most importantly, do a broad internet search on the seller before making your purchase. Warranties from trusted sites may not cover third party sellers they host, so you could be unprotected if you get a substandard product or no product at all when you order from an unknown third-party vendor.
• Check for suspicious AI-generated product images or AI-generated models: Examine images closely and look for unrealistic, inconsistent details. Check for flaws like blurry areas, inconsistent lines or objects that seem to fade away, which are common imperfections in AI-generated images. Look for unrealistic, inconsistent details throughout the image.
• Read product specifications and terms: Make sure you read product descriptions carefully, including the fine print. It’s important to understand what you’re purchasing and the terms of sale to ensure you are getting what you want.
• Learn how to spot a fake review: Fake reviews are not always obvious, so look at reviews from a variety of different sources to better understand the product, brand or seller. Some red flags to look for include a review with no specific details, multiple reviews posted during the same time frame, or a reviewer profile that looks vague and recently created.
• Check for return policies: Sellers, including online sellers, must disclose their return policies. Avoid sellers with vague, missing or exceedingly limited return or refund policies. Before making a purchase, make sure you know who pays shipping costs for returns and any time limits for making returns.
• Check for algorithmic pricing: Online businesses may use AI or other automated processes to collect and use personal information in setting prices. New York State Law requires businesses to alert consumers when they have used their personal data to set a price using an algorithm. Look for these disclosures and consider comparison shopping or shopping through alternate methods if the price seems high.

Tips to avoid buying unsafe or counterfeit products:

• Inspect the package: Look for spelling mistakes, sloppy packaging, or lack of an origin box. These are signs of a counterfeit product.
• Scan the universal product code: Many products have a Quick Response (QR) code on the packaging or on the product itself. The QR code links directly to information about the product through your phone or an app. These QR codes serve to improve transparency and may link directly to a dedicated authentication portal on the manufacturer's website which has verifiable product details.
• Buy from authorized sources: Purchase directly from the brand's official website or through authorized retailers listed on the company's site.

Tips to use safe payment methods:

• Check the website’s encryption: Before entering your credit card information, make sure that the website’s address (URL) begins with “https” and that there is a closed lock on the website address bar or unbroken key symbol in the lower portion of your window. These indicators show that the site is secured with a digital certificate and that any information sent between your browser and the website is sent securely.
• Don’t save your payment information on websites: Many websites allow you to save your credit or debit card information for future purchases. Always opt out and instead enteryour card number each time you make a purchase.
• Pick your payment method wisely: Credit cards generally offer some level of fraud protection to help consumers get their money back if you ever need to dispute a charge. If you realize you paid a scammer, immediately report the payment to your bank or credit card company. The earlier you report fraud, the more likely you will be able to access available services and get your money back. Avoid using debit cards for online purchases. Debit cards do not offer the same level of protection against identity theft as credit cards. 

About the New York State Division of Consumer Protection

Follow the New York Department of State on Facebook, X and Instagram and check in every Tuesday for more practical tips that educate and empower New York consumers on a variety of topics. Sign up to receive consumer alerts directly to your email or phone here.

The New York State Division of Consumer Protection provides voluntary mediation between a consumer and a business when a consumer has been unsuccessful at reaching a resolution on their own. The Consumer Assistance Helpline 1-800-697-1220 is available Monday to Friday from 8:30am to 4:30pm, excluding State Holidays, and consumer complaints can be filed at any time at www.dos.ny.gov/consumer-protection. The Division can also be reached via X at @NYSConsumer or Facebook.

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