The short answer
A price that looks far too low is the first warning sign. The FTC says unusually low prices are a sign of a scam. Treat a deep discount on a popular item as a reason to slow down, not to hurry. Then run the checks below, and walk away if any one of them fails.
Source: FTC Consumer Alerts, "Don't let scammers get in the way of your holiday shopping," November 2024.
Step 1: Look at the price and the ad
The FTC describes a common pattern. Scam sites run social media ads that show popular products at unbelievably low prices. Clicking the ad can lead to a site that takes your money and sends something very different from what was shown, or nothing at all.
Ask yourself three plain questions. Is this item usually much more expensive elsewhere? Did I reach this page from an ad rather than by typing the store name myself? Does the page push me to buy right now? Two yes answers mean you should stop and check the seller.
The same FTC alert says many of these fake sites copy photos and logos from real businesses. A familiar logo is not proof. Anyone can copy it.
Source: FTC Consumer Alerts, November 2024.
Step 2: Check whether the "sale" price is real
Some discounts are false even on a real shop. The FTC has long had a rule of thumb for this, called the Guides Against Deceptive Pricing (16 CFR Part 233). It says a "former price" is a fair basis for a sale only if it was the actual price at which the item was offered to the public on a regular basis for a reasonably substantial period of time.
The guide also describes the false version. If a seller sets an inflated price just so a later cut looks big, the bargain is a false one. In that case the "reduced" price is probably just the seller's regular price.
You can test this at home. Look at the same item on two or three other stores and write down the totals. Check the page again a few days later. If the "was" price never appears anywhere else, and the sale never seems to end, the discount may be a label rather than a saving.
These guides are federal advice for sellers, not a promise that every store follows them. They give you a useful yardstick, though.
Source: FTC, Guides Against Deceptive Pricing, 16 CFR 233.1 (Former price comparisons), as published in the electronic Code of Federal Regulations.
Step 3: Read the reviews with care
Reviews can be faked too. In August 2024 the FTC announced a final rule against fake reviews and testimonials. The Federal Register shows the rule was published on August 22, 2024, and took effect on October 21, 2024.
The rule covers reviews written by people who do not exist, including AI-generated ones, and reviews by people who never used the product. It also bars businesses from buying fake reviews or paying for reviews that must be positive or negative. It stops a company from running a review site while falsely claiming the site is independent.
For a shopper, the lesson is simple. A wall of perfect five-star praise on a site you have never heard of proves very little. Look for reviews on other sites, and search the seller's name plus words like "complaint" or "scam," as the FTC suggests.
Sources: FTC press release, "Federal Trade Commission Announces Final Rule Banning Fake Reviews and Testimonials," August 14, 2024; Federal Register, Trade Regulation Rule on the Use of Consumer Reviews and Testimonials, August 22, 2024.
Step 4: Check the terms and how you pay
Before you buy, read the full terms. The FTC says to look at the price, other charges, the refund policy, who pays for return shipping, and whether there is a restocking fee. A great headline price can vanish once fees are added.
Payment method matters most. The FTC advises paying by credit card when possible, because cards give you the option to dispute a charge if what arrives is not what you ordered, or if nothing arrives. The agency also says to never buy from a seller who demands payment by gift card, wire transfer, payment app or cryptocurrency. In its words, only scammers tell you to pay that way.
Source: FTC Consumer Alerts, November 2024.
A quick checklist and what to do if you were caught
- The price is far below what other stores charge: stop and compare.
- You arrived from a social media ad: type the store name yourself instead.
- The "was" price appears nowhere else: treat the discount as unproven.
- Reviews are all glowing and all new: look for outside opinions.
- The seller wants a gift card, wire transfer, app or crypto: leave.
- The refund and return terms are hard to find: leave.
If something still goes wrong, the FTC says to contact the seller first and try to work it out. If that fails, contact the company you used to pay and dispute the charge. If they cannot help, report it to the FTC at ReportFraud.ftc.gov. Do this soon, because speed helps.
Holiday shopping adds pressure, with many deals in a short time. A calm five minutes of checking costs far less than a lost payment.
Source: FTC Consumer Alerts, November 2024.
Sources
- Federal Trade Commission, Consumer Alerts: "Don't let scammers get in the way of your holiday shopping" (November 2024), consumer.ftc.gov.
- Federal Trade Commission, Guides Against Deceptive Pricing, 16 CFR Part 233.
- Federal Trade Commission, press release on the final rule banning fake reviews and testimonials (August 14, 2024), ftc.gov.
- Federal Register, Trade Regulation Rule on the Use of Consumer Reviews and Testimonials (August 22, 2024).