Michigan Attorney General Dana Nessel has renewed a consumer alert regarding the risks of drop-shipping, as part of her ongoing Holiday Scams Campaign. The alert, titled "Drop-Shipping: What you Need to Know Before You Buy or Sell Online," aims to inform consumers about potential issues with this retail practice.
In drop-shipping, sellers act as intermediaries without holding inventory. They market products online and pass customer orders to another company for shipping. Nessel stated, “While drop-shipping is a legal and common retail practice, it’s not without risks. Consumers and aspiring entrepreneurs should think carefully before using or investing in drop-shipping schemes. They can promise low prices and quick riches, but often deliver more problems than profits.”
Consumers are encouraged to take several precautions:
- Research both the product and seller by comparing prices and verifying origins.
- Be wary of social media advertisements, which often feature counterfeit goods.
- Look for signs of fraud such as suspicious brand names or vague descriptions.
- Understand that items may arrive late or not match their descriptions.
The alert also advises entrepreneurs against viewing drop-shipping as a "get rich quick" scheme due to financial risks associated with expensive seminars or supplier lists.
Sellers engaged in drop-shipping face challenges including:
- Quality control issues that can harm their reputation due to reliance on suppliers.
- Legal liabilities from promoting potentially illegal products.
- High competition leading to reduced profits.
For more information on holiday scam alerts, visit the Department of Attorney General's website. Suspected fraud can be reported to the Attorney General’s Consumer Protection Team at:
Consumer Protection Team
P.O. Box 30213
Lansing, MI 48909
517-335-7599
Fax: 517-241-3771
Toll-free: 877-765-8388