Online shoppers are being fooled by dozens of websites using artificial intelligence (AI) to look like small, struggling businesses, according to a recent visual investigation by ABC News. These sites use AI-generated images, videos, and stories to make it seem like they are run by individual craftspeople or family stores, but in reality, many sell low-quality imported goods at higher prices.
Researchers found that these AI-powered shops advertise everything from hats and clothes to jewelry and lamps. They create fake backstories, emotional appeals, and even fake testimonials to win over customers. For example, one ad claimed to be from a craftsman retiring after 53 years of hand-making flat caps. The ad convinced Denny Svehla, a musician from Rockford, Illinois, to buy a hat and even leave a tip. Svehla later discovered the hat shipped from China and was poor quality. He told ABC News, “I’m sitting there thinking I’m trying to help someone…and I’m looking at, you know, what am I going to do if I can’t go anymore?”
Other sites use AI to create dramatic stories, like a clothing shop in New York supposedly closing after their store was destroyed. When reporters checked the address, there was no sign the business ever existed. Online detection tools showed that the images and videos used were made by AI. On social media platforms like TikTok and YouTube, these fake businesses post AI-generated videos showing craftspeople at work, but experts say even trained eyes can be fooled by how real these videos look.
According to Marshini Chetty, an associate professor of computer science at the University of Chicago, “People can do this at scale, create these images, create these websites, put them up quickly, take them down quickly.”
According to a report by PYMNTS, the Federal Trade Commission (FTC) reported that Americans lost $2.1 billion to scams starting on social media in 2025—an eightfold jump since 2020—and received three million fraud reports last year, with impersonation scams as the top category according to the FTC. Most scams go unreported, so the real number could be even higher. Social media makes these scams especially effective, as people might click and buy quickly without checking the details.
Marketplaces and payment platforms are trying to catch up by using their own AI tools to spot fake sellers, but experts say the technology is evolving quickly and it is hard to keep up. Only about half of businesses have adopted new AI systems to fight fraud, and many expect AI-driven scams to get even worse by 2026.
The FTC plans to release new guidance on AI-generated deception later this year.
Recent Comments