<div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>Exclusive:</span></strong><span> A shopper has been caught trying to </span><a href="https://www.9news.com.au/fraud" rel="" target="_blank" title="defraud"><span>defraud</span></a><span> an Australian </span><a href="https://www.9news.com.au/business" rel="" target="_blank" title="small business"><span>small business</span></a><span> by using </span><a href="https://www.9news.com.au/artificial-intelligence" rel="" target="_blank" title="generative AI"><span>generative AI</span></a><span> to make it look like her order was destroyed in the mail.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The worst part is that it almost worked.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Gabbie Foord, founder and creative director of </span><a href="https://www.9news.com.au/victoria" rel="" target="_blank" title="Victorian"><span>Victorian</span></a><span> candle brand </span><a href="https://www.milkwick.com.au/" rel="nofollow" target="_blank" title="MILKWICK"><span>MILKWICK</span></a><span>, told nine.com.au there were no red flags when the new customer initially placed an order.</span></div></div><div><div id="adspot-mobile-medium"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/how-close-is-australia-to-recession-warning-signs-explained/f6c2e2a9-dc84-4f1c-8de3-d01c8e782eaa" target="_blank"><strong><span>Is Australia headed for a recession? The latest job data paints a grim picture</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Then she got an email from the customer claiming the order had been damaged in transit, including a photo of two ruined candles.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The customer wanted a free replacement, which Foord would usually have no issue with.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>But something in the photo the customer supplied seemed off.</span></div></div><div><div class="OUTBRAIN" data-reactroot="" data-src="//www.9news.com.au/national/small-business-ai-fraud-damaged-products-milkwick-tiktok-exclusive/f325e286-8eee-49c4-ab06-27bab8d60065" data-widget-id="AR_5"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Initially when I saw it I was like, 'Oh my gosh, that's been severely broken, something really bad has happened during transit,'" Foord told nine.com.au.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Then, within a few seconds, I realised that the shape of the [candle] jar doesn't match the shape of our jars.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"I noticed that the writing on the label had kind of been jumbled up [and] the more I looked at it, the more I discovered red flags."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Foord said the "proof" the customer sent was obviously an AI-generated image.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/how-to-choose-9news-as-your-preferred-source-in-google/7e8c11bd-1b8b-4e7f-8fff-154231ab5d16" target="_blank"><strong><span>How to Choose 9News as your preferred source in Google's Top Stories</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The fact that the customer asked MILKWICK to replace the two damaged candles with different scents only made her more suspicious.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Fortunately, she shared her concerns with husband Kane before he sent out replacement candles.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Initially he wasn't thinking it was AI and he was definitely going to proceed with it," Foord said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"That's what was quite shocking, that this customer almost got away with it."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>She asked the customer to send a video of the damaged order, at which point Foord claims the customer became defensive and threatened to report the business.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>When Foord told the customer she would report any fraudulent claims to Victoria Police, the customer cut contact.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>And that's exactly what this was, according to Jeannie Paterson, Professor of Law at The University of Melbourne – attempted fraud.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"It's actually a criminal offence, because you're fraudulently trying to obtain an advantage," she told nine.com.au.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Fraud means intentionally deceive someone and you cannot argue it's not intentional. You're trying to operate a fraud on a business."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/world/how-to-fly-to-europe-from-australia-without-stopping-over-middle-east-explained/f9f0fe00-fa2d-48e8-853b-95e843c617ff" target="_blank"><strong><span>How can Aussie travellers get to Europe now major Middle East airports are shut?</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Paterson has also heard of consumers using AI to generate fake receipts to try and access refunds they may not be entitled to.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>She described it as a kind of "reverse scam" where shoppers target sellers.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"We're in this spiral of fakes and frauds. I just feel awful about it," she added.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Foord never imagined fraud by way of AI-generated images would be part of her journey as a small business owner.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The experience has forced her to reconsider how she processes replacements for orders damaged in transit.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Currently, MILKWICK doesn't require customers to ship damaged products back to their Victoria warehouse because it's an extra cost for the business.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>That may change as AI becomes more ubiquitous.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Maybe we will have to move to paying for those to be shipped back to us, even though they're broken and that will be an extra expense for our business," Foord said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"You can't risk people just stealing from you."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/world/us-israel-attacks-iran-strait-of-hormuz-explained-oil-gas-prices/f8e7c1ed-f6d9-4fe5-8277-6a11c09d8de6" target="_blank"><strong><span>The 39km-wide stretch of water threatening to throw the global economy into turmoil</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Paterson predicts AI fraud cases like this could push small businesses to raise prices to cover the cost of additional shipping insurance or losses due to fraud.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Businesses may also start requiring video proof of faulty or damaged goods before issuing replacements, exchanges or refunds.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"It's very hard to see our way around this problem of AI fraud by the customer, because at the end of the day if the customer says the product broke or the product didn't arrive, what does the business do?" Paterson said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"If they refuse to refund, they may be said to be in breach of the law, and they may also get bad reviews online which can be a killer for a business."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>She urged small business owners to educate themselves on AI and the red flags to look out for.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/world/middle-east-flight-routes-is-it-safe-to-fly-how-airlines-are-navigating-the-airspace-explained/200ad73a-3432-422e-8255-f6851425f6f8" target="_blank"><strong><span>How are planes still flying through the Middle East? Are there safe routes for Australians to use?</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Foord echoed that message in a social media video she posted, warning other Aussies to watch out for this new type of fraud.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>It has already received nearly 300,000 combined views across Instagram and TikTok.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"I just wanted to raise awareness that there's people out there that are unfortunately doing this," Foord said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"There's people out there that have probably gotten away with it as well, and think they can get away with it again."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><em><span>NEVER MISS A STORY:</span></em></strong><span> </span><em><span>Get your breaking news and exclusive stories first by following us across all platforms.</span></em></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><ul><li><strong><em><span>Download the 9NEWS App here via</span></em></strong><span> </span><a href="https://apps.apple.com/au/app/9news/id1010533727" target="_blank"><strong><em><span>Apple</span></em></strong></a><span> </span><strong><em><span>and</span></em></strong><span> </span><a href="https://play.google.com/store/apps/details?id=nineNewsAlerts.nine.com&amp;hl=en_AU&amp;pli=1" target="_blank"><strong><em><span>Google Play</span></em></strong></a></li><li><strong><em><span>Make 9News your preferred source on Google by</span></em></strong><span> </span><a href="https://9.nine.com.au/8x987w" target="_blank"><strong><em><span>ticking this box here</span></em></strong></a></li><li><strong><em><span>Sign up to</span></em></strong><span> </span><a href="https://login.nine.com.au/edm?client_id=nineatnine" target="_blank"><strong><em><span>our breaking newsletter here</span></em></strong></a></li></ul></div></div>