Purchase Scams: The Emerging Threat Banks Can’t Afford to Ignore

Purchase scams are becoming increasingly common among scammers.

While their average financial impact on victims is typically lower than other scams, they should not be underestimated. As digital marketplaces expand, the incidence of purchase scams rises accordingly, with losses from these scams reaching record heights in many countries. 

A purchase scam occurs when a victim pays for goods or services that are never delivered. More broadly, these scams target all users offering or requesting goods or services on digital marketplaces and social media, posing risks to both buyers and sellers. They undermine e-commerce, erode consumer trust in the digital environment, and damage brand reputations. 

The rise of digital platforms, social networks, auction sites, and online marketplaces like Facebook Marketplace, TikTok, Amazon, Temu, or eBay has significantly facilitated purchase scams, leading to specific subcategories such as “Facebook Marketplace scams” or “Amazon purchase scams.” These scams can involve any type of product or service—from flight tickets to vehicles, home appliances, electronics, or car tires. Scammers particularly target platforms lacking built-in payment security features, as they are easier to exploit. However, they don’t hesitate to operate on secure platforms either; all it takes is persuading the victim to bypass the safeguards. 

Rising trend in purchase scams 

The surge in purchase scams began during the pandemic in 2020, with over 38% of all scams worldwide attributed to online purchases that year. Although their prevalence later declined, they have been gaining popularity once again—in 2023, their share rose to 41.9%, setting a new all-time high, according to Statista. 

The UK reported a similar trend, with purchase scams seeing the largest increase in 2023: cases rose by 34% and losses grew by 28% compared to the previous year. Overall, purchase fraud accounted for 67% of all APP scam cases recorded in the UK in 2023, contributing to 19% of total losses. Losses from purchase scams totaled £85.9 million, marking the highest overall loss ever recorded from this type of scam. 

In the United States, where the FTC categorizes “Online Shopping and Negative Reviews Scams,” losses reached nearly $398 million, making it the second most common fraud category after imposter scams. In Australia, online shopping scams resulted in nearly A$7.15 million in losses in 2023. 

Tracking purchase scams: Losses and sources 

Purchase scams employ varied tactics depending on the platform and whether scammers pose as buyers or sellers. Losses also differ; while purchase scams generally involve lower amounts, this is not always the case. In the US, the average loss in the “Online Shopping and Negative Reviews” category was $126 in 2023, in Australia, it was A$145, and in the UK, £549. However, data from UK Finance’s Voluntary Code members reveals that 9% of cases—and two-thirds of losses—in the UK involved purchase scams exceeding £1,000. 

One thing is certain: purchase scams almost always occur online—up to 99% of the time, according to UK Finance. Statistics from Lloyds Banking Group indicate that 78% of purchase scams originate on social media platforms. 

The growing threat of Facebook marketplace scams 

According to TSB, Facebook Marketplace scams are a major issue, accounting for 73% of all their purchase fraud cases. TSB’s estimates that over a third (34%) of the ads on the platform could be fraudulent. This suggests that customers across all banks may have lost up to £60 million on Facebook Marketplace in 2023, equating to £160,000 in daily losses on the platform.1 

Amazon, the world’s largest retailer, is also a prime target for scammers, with various types of Amazon purchase scams proving popular among fraudsters. 

Tactics of purchase scams: Scammer as a seller 

When identifying scammers on online platforms, the best strategy for consumers is to question whether an offer is too good to be true. If online sellers are offering products at unusually low prices, it’s a clear signal to stay cautious. As Becky Holmes, an online fraud expert, notes: “There are sellers who sell faulty or stolen items, ‘bait and switch’ transactions where the sale conditions change at the last minute, sellers who insist on posting items rather than them being collected, and giveaways which usually involve clicking on a link to an external site with malicious software.” (Read Becky’s expert commentary on purchase fraud here.) 

Another tell-tale sign of a scam is the use of social engineering tactics—such as the seller rushing the sale, pressuring consumers into quick purchases, lying about their situation, or exaggerating the number of interested buyers. Scammers often list high-demand items to create urgency and pressure buyers.  

A surge in ‘puppy scams’ during the pandemic in 2020 serves as a strong example. As demand for pets skyrocketed due to social isolation, Australians lost nearly $300,000 to fraudulent puppy sellers in just the first five months of 2020, according to the Australian Competition & Consumer Commission (ACCC). 

Other tactics used by fraudulent sellers include: 

• Selling stolen, damaged, or defective products 
• Requesting buyers to bypass the platform’s payment mechanisms in favor of bank transfers, cryptocurrency payments, or gift cards 
• Posting offers that are actually phishing links, leading to the loss of sensitive data 

Tactics of purchase scams: Scammer as a buyer 

Scammers posing as prospective buyers can be just as dangerous as those pretending to sell. They often use elaborate schemes to defraud even cautious consumers. Common tactics include requesting a deposit or asking for payment of insurance or shipping fees. These scammers may claim they are unable to collect the goods in person and will send a courier instead, but first require the victim to pay a certain amount. Once the payment is made, the “buyer” disappears and is never heard from again. 

Fraudulent buyers often send fake bank statements or payment receipts to convince sellers to ship goods before the funds have actually arrived in their account. In more sophisticated scams, they claim to have accidentally overpaid and present a fake receipt as proof, then request a refund for the “overpayment.” In such cases, the victim not only loses the item they intended to sell but also the additional amount sent as a supposed refund. 

AI-powered purchase scams 

As with other types of scams, AI poses a significant challenge in detecting purchase scams. When fraudsters leverage AI on a large scale to generate realistic images, texts, videos, or scripts, these scams become even harder to identify. AI tools can quickly create fake product listings, mimic genuine customer reviews, and even generate convincing chat responses that simulate authentic seller-buyer interactions. This level of sophistication allows scammers to build trust with victims, making the deception nearly indistinguishable from legitimate transactions. 

This isn’t a future concern—it’s already happening. Purchase scams have quickly become the most prevalent category of AI-driven fraud. 

Additionally, fraudsters benefit from services like phishing-as-a-service and other fraudulent tools. ESETESET recently uncovered the source code of Telekopye—a toolkit that streamlines online marketplace scams, allowing scammers to rely on persuasion rather than technical expertise. Integrated as a Telegram bot, it offers intuitive menus with clickable buttons, enabling users to generate phishing web pages and send phishing emails and SMS messages using predefined templates. 

Although Telekopye primarily targets Russian online marketplaces like OLX and YULA, scammers also use it to exploit other national and international platforms such as BlaBlaCar, eBay, JOFOGAS, and Sbazar. 

How to thwart purchase scams 

All parties involved should play a role in eliminating purchase and marketplace scams. A significant part of the responsibility undoubtedly lies with the online platforms where scammers advertise or reach out to potential victims—ranging from eBay and Amazon to social media platforms, especially the ever-popular Facebook Marketplace. However, as Becky Holmes notes, “Sadly, Meta in particular has shown worryingly little interest in improving Facebook Marketplace to keep genuine users safe, nor take more proactive steps to keep fraudulent users off the platform.”  

It is therefore crucial that banks, in particular, play their part in combating Facebook Marketplace scams, Amazon scams, and other similar frauds. Protecting their clients should be a top priority—especially since bank transfers remain a favored method of payment for fraudsters. 

It’s no easy task. Purchase scams often involve lower-value transactions and typically consist of a single payment. Unlike investment or romance scams, victims in these cases usually catch on fairly quickly—often as soon as the goods they paid for fail to arrive, or when the payment for items they “sold” never materializes. 

Using behavioral insights to outpace scammers 

Traditional fraud prevention systems face significant challenges when it comes to purchase scams. Fortunately, advanced technology offers a solution. By leveraging behavioral intelligence, organizations can detect scams even when a legitimate user carries out the transaction, making this technology especially useful in combating purchase scams. 

ThreatMark’s Behavioral Intelligence Platform offers a powerful way for financial institutions to prevent purchase scams. By harnessing advanced AI, data analytics, and machine learning algorithms, this sophisticated system goes beyond traditional detection methods. It continuously gathers and analyzes data on user behavior patterns—ranging from login frequencies and transaction habits to navigation preferences and keystroke dynamics—to establish a normative profile for each user. 

This detailed profiling proves invaluable in spotting transactions that deviate from a customer’s typical spending habits. Once such irregularities are detected, the system promptly alerts the financial institution, enabling them to take proactive measures and prevent potential fraud. 

Moreover, ThreatMark enhances the ability to stay ahead of evolving purchase scam tactics. By continuously monitoring transaction patterns across a wide range of customers, the system can identify emerging scam trends, such as the use of specific products or services as bait. This proactive, adaptive capability enables financial institutions to protect their customers’ funds more effectively, keeping pace with the constantly shifting landscape of purchase scams. 

Learn more about the Behavioral Intelligence Platform 

Protecting brand reputation with threat detection  

ThreatMark’s Behavioral Intelligence Platform also provides proactive threat scanning through its Cyber Fraud Fusion Center. Leveraging strong partnerships with app stores, search engine providers, internet domain registrars, and hosting services, the CFFC actively identifies and shuts down threats, such as phishing sites impersonating legitimate sales platforms. This not only safeguards customers but also protects the reputation of brands that fraudsters exploit in purchase scams. 

This capability proves invaluable not only for banks but also for impersonated sales platforms. For example, Amazon ranks as the second most frequently targeted brand, with the FTC documenting 34,000 cases in 2023 alone, leading to $19 million in damages. By detecting and swiftly taking down phishing sites, ThreatMark can shut down fake platforms before they have the chance to deceive customers, significantly curbing purchase scams right from the start. 

If fraudsters are using AI, then banks must follow suit. This is the only way to effectively counter and prevent further damage from such types of fraud. By leveraging ThreatMark’s solutions, banks can ensure that the allure of a “bargain” doesn’t end up costing customers their money—and, more importantly, eroding trust in their financial institution.