Shopify Purges Thousands of Merchants for Price Gouging and Making False Covid-19 Claims

Scammers come out of the woodwork with every calamity, and it’s no different with the Covid-19 pandemic currently sweeping the world. Now e-commerce services and payments provider Shopify Inc. reports it has purged numerous merchants engaged in questionable practices related to the new coronavirus, or Covid-19.

“In March, we terminated thousands of merchants charging unfair prices or making false claims about Covid-19-related items such as face masks or hand sanitizers,” the Ottawa, Ontario-based processor said in a news release issued after the markets closed Wednesday. Shopify had 1.07 million merchants on its platform as of Dec. 31, according to a company filing.

A Shopify spokesperson tells Digital Transactions News by email that more than 5,000 merchants to date have been terminated. Given the reported shortages of personal protective equipment as doctors and nurses try to treat afflicted patients and prevent themselves from getting infected by the highly infectious coronavirus, it’s no surprise Shopify or any other merchant processor would have clients in their portfolios charging high prices or stating untruths about what they were selling.

Shopify said patterns it has noticed in its merchants’ business since March 8, about the time governments began urging people to say home, include pivots from physical to online commerce, and heavy use of discounts to promote sales. The company didn’t give any numbers, however.

Shopify also said it has “taken a number of actions to support our merchants and protect our stakeholders during this time.” They include committing $200 million to its Shopify Capital merchant-funding program and expanding it to more countries, making physical and digital gift cards available to users of all of its plans, enabling curbside pick-up and delivery options for point-of-sale merchants, and extending free trials to all merchants signing up for its standard plan. Merchants currently on a 14-day free trial can have it extended to 90 days.

And like many other companies, publicly traded Shopify suspended its financial guidance for 2020. The company said it will report first-quarter results May 6.