Fake small business sites use AI-generated backstories to deceive shoppers

Fake online storefronts are using AI-generated images and fabricated family histories to impersonate small businesses on social media and the web, deceiving shoppers into purchasing goods that consumer reviewers say arrive shoddy or not at all, an Associated Press investigation found. Two sweater retail sites — Melia & Co and Olivia Westwood Boutique — display many of the same Icelandic, Nordic and festive sweaters using identical stock images while presenting themselves as distinct family-run operations, operating under domains registered in China in November, ahead of the holiday shopping season.

Faster and more sophisticated digital tools are making such deception harder to detect, experts said, as AI-generated images allow fraudsters to project artisan authenticity at scale. Consumer-protection researchers recommend verifying addresses, checking domain registration records and consulting third-party review sites before buying from unfamiliar online merchants.

Sob stories and shared sweaters

Melia & Co’s website features a photo of a woman hand-knitting a Christmas design alongside a narrative about a craftsperson closing her studio after decades of work. A pop-up ad identifies her as Nola Rene, a 72-year-old Swedish knitter who is hanging up her knitting needles. Fine print at the top labels the content “advertorial” and notes the people in the photos are models.

Olivia Westwood Boutique presents a different story: twin sisters running the shop their mother opened in 1972, staging a sale to honor the late founder on what would have been her 95th birthday.

Yet both sites sell many of the same sweaters using the same stock images. At least three other shopping sites also sell what they describe as sweaters “lovingly hand-knitted in small batches” using matching imagery.

Melia & Co did not return a request for more information about the owners. Olivia Westwood Boutique, in response to questions about its location and ownership, said it was an online boutique “working with trusted global fulfillment partners to serve our customers.”

AI lowers the barrier for deception

Seth Ketron, a marketing professor at the University of St. Thomas in St. Paul, Minnesota, said some vendors and fraudsters have taken advantage of AI-generated images to create websites that project an aura of artisan authenticity or a long history as a trusted small retailer.

“It’s getting more and more common,” Ketron said. “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.”

Online shopping scams are not new. About 36% of Americans failed to receive refunds after purchasing an item online that never arrived or turned out to be counterfeit, according to a Pew Research Center survey conducted in April 2025 and published in July. Misleading e-commerce ads often appear on social media feeds or as banners on other websites.

A real business caught in the middle

Deanna Newman, who owns C’est La Vie, an online jewelry retailer in Ontario, Canada, said she discovered the problem when a customer left an angry comment on her Facebook page about receiving low-quality goods — goods Newman had no record of selling.

Newman said scammers had used her store’s name to create sites that falsely claimed brick-and-mortar locations in New York, Birmingham, Dublin and other cities. Some customers received low-grade jewelry from China; others received nothing at all.

She posted a warning on her Facebook page and online shop, and made videos on Instagram and TikTok to demonstrate she was a real person running a real business. Some of the copycat sites were taken down. An influx of poor reviews and complaints nonetheless hurt her sales, she said.

“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,” Newman said.

Steps shoppers can take

Murat Kantarcioglu, a computer science professor at Virginia Tech, recommends checking third-party reviews on sites such as the Better Business Bureau or Trustpilot — as well as on Amazon or Etsy if the brand has a presence there — before buying from any smaller business online.

“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,” Kantarcioglu said.

He also recommends doing a domain name search through the nonprofit Internet Corporation for Assigned Names and Numbers — or through GoDaddy or Whois — to find out where a website was registered. A company claiming to operate in one country but registered in another is a red flag. So is a site registered within the past few months but marketed as belonging to an established business.

Newman advises shoppers to look for a verifiable address or other details that may indicate a site is authentic, and to reach out directly to the owner by email, phone or contact form if anything seems unclear.

Ketron said the detection challenge will only grow as AI tools improve. “As (AI) gets better, then scammers or people doing dubious business practices are going to have an easier time duping people, because things are gonna look more and more convincing,” he said.