Beware of online ads with elaborate backstories. They may not be from a real small business

Deceptive online retailers are increasingly using fake backstories and AI-generated imagery to create an illusion of authenticity, leaving consumers vulnerable to scams as the holiday shopping season approaches.

Two seemingly charming family-run businesses—Melia & Co. and Olivia Westwood Boutique—illustrate this growing trend. Melia & Co. presents itself as a small operation featuring hand-knitted Christmas sweaters by a woman supposedly closing her studio after decades in business. Similarly, Olivia Westwood Boutique claims to be run by twin sisters who continued their mother’s 1972-founded boutique, even offering a sale honoring what would have been the founder’s 95th birthday.

A closer examination reveals troubling inconsistencies. Both websites display identical Icelandic and Nordic sweaters using the same stock images. Their domains were registered in China this November, just before the holiday shopping season begins. Consumer review sites like Trustpilot feature numerous complaints about both businesses, with customers reporting poor-quality merchandise and difficult return processes.

When contacted for information, Melia & Co. did not respond. A careful review of their marketing materials reveals small disclaimers identifying their heartwarming story about a 72-year-old Swedish knitter as an “advertorial” and acknowledging that people in photos are models. At least three other websites sell the same supposedly “hand-knitted” sweaters.

Olivia Westwood Boutique replied to inquiries by vaguely stating it works with “trusted global fulfillment partners” without providing specific information about ownership or location.

Such deceptive practices are becoming increasingly common. According to a Pew Research Center survey from April 2025, approximately 36% of Americans failed to receive refunds after purchasing items online that never arrived or proved counterfeit. The growing sophistication of digital tools makes these scams increasingly difficult to identify.

“Vendors and fraudsters have taken advantage of AI-generated images to create websites that have an aura of artisan authenticity or that point to a long history as a trusted small retailer,” explained Seth Ketron, marketing professor at The University of St. Thomas. “If you’re not careful or you’re really paying close attention, or you don’t really even know what to look for or what AI photos look like, it’s easy to kind of just gloss over or miss that it’s probably not real.”

These misleading e-commerce sites often appear as social media advertisements or website banners. Experts recommend several steps consumers can take to protect themselves before making purchases.

Deanna Newman, owner of legitimate online jewelry retailer C’est La Vie in Ontario, learned about these scams firsthand when customers began complaining about poor-quality items she never sold. Scammers had created multiple fake C’est La Vie websites claiming locations in New York, Birmingham, and Dublin.

“Sometimes people were receiving products from China and very low-grade jewelry, and then some people weren’t receiving things at all,” Newman said. Despite her efforts to address the situation, the negative reviews hurt her business.

Newman advises consumers to look for verifiable addresses and contact legitimate businesses directly when in doubt. “It’s hard, because the consumer has to do a little bit of research on their side, but I would say, too, that if it looks too good to be true, it probably is.”

Consumers should be particularly wary of emotional marketing tactics. Scammers frequently employ fictional hardship stories, such as going-out-of-business sales or promotions honoring deceased family members, to manipulate shoppers into making purchases.

Virginia Tech computer science professor Murat Kantarcioglu recommends checking third-party review sites like the Better Business Bureau or Trustpilot before purchasing from unfamiliar retailers. “If the small business claims to be there for 30 years, they should have reviews about them, maybe from at least a couple of years back.”

Checking domain registration through resources like the Internet Corporation for Assigned Names and Numbers, GoDaddy, or Whois can reveal discrepancies between claimed and actual business locations. Recently registered domains claiming long business histories are particularly suspicious.

As AI technology advances, detecting fraudulent operations will become increasingly challenging. “As AI gets better, scammers or people doing dubious business practices are going to have an easier time duping people,” Ketron warned. When something seems suspicious, experts advise consumers to trust their instincts and avoid making potentially regrettable purchases.