Stevie Holmes, a jeweller in Hove, is dedicating significant time to handle complaints mistakenly directed at her legitimate business due to a scam website named Scarlett Jewels that uses AI-generated images. This incident highlights the growing issue of AI-facilitated online fraud impacting small enterprises.
Stevie Holmes operates Scarlett Jewellery, a genuine business in Hove, but since July, she has been receiving daily phone calls, web chats, and emails from dissatisfied customers. These individuals believe they are contacting her company, but in reality, they have interacted with Scarlett Jewels, a fraudulent website. Holmes spends at least an hour each day explaining the distinction to protect her reputation from unfair social media complaints. Without this effort, she fears her business could suffer from negative reviews based on mistaken identity.
The scam website, Scarlett Jewels, deceives shoppers by presenting AI-generated images of jewellery and a false narrative of a retiring jeweller closing her workshop. However, its small print reveals it is run by Denimtex Limited based in Hong Kong. The site claims thousands of satisfied customers and displays five-star reviews, but experts assert these images are AI-generated or stolen, and Trustpilot reviews largely rate it poorly, with many customers labeling products as substandard or non-existent.
Professor Ana Canhoto, a digital business management expert at the University of Sussex, notes that such scam sites are increasingly common because AI makes it easy and cheap to create convincing images. She points out that AI images often appear too perfect or have flaws, like non-functional earrings, and the use of false scarcity is a typical tactic to pressure buyers into quick purchases. This accessibility has led to a surge in similar deceptive operations targeting unsuspecting consumers online.
Victims of the scam include Roy Morton from York, who ordered earrings and knew it was a fraud when delivery was confirmed without any item arriving. Similarly, Olga Grychak in Luxembourg recognized the AI-generated nature of the site’s imagery and avoided buying, though she worried about others being duped. Their experiences illustrate how easily consumers can be misled by sophisticated digital deceptions, emphasizing the need for greater awareness and caution when shopping online.
In response, regulatory bodies have taken action; the Advertising Standards Authority has banned several similar ads and issued public warnings, while Facebook restricted Scarlett Jewels from creating new ads after the BBC’s inquiry. These measures aim to curb the spread of such fraudulent activities, though the problem persists due to the ease with which scammers can create new sites and advertisements using AI tools.
Andrew Laughlin from Which? compares the emergence of these sites to a game of whack-a-mole, emphasizing that consumers should watch for red flags like unnatural AI images and excessive discounts. He advises seeking authentic customer reviews to verify legitimacy, as scammers often fabricate positive feedback to appear trustworthy. This guidance is crucial in an era where digital fraud is evolving rapidly, and consumers must rely on critical thinking to avoid financial losses.
This case underscores the broader implications of AI in commerce, where small businesses like Holmes’ face reputational damage from impersonators, and consumers risk financial loss. It calls for enhanced digital literacy, robust consumer protection laws, and continued vigilance from platforms to mitigate the risks associated with AI-driven scams, ensuring a safer online marketplace for all.