This photo looks harmless. It's actually the hook in a costly 'reverse scam'

Exclusive: It looks like a normal photo of damaged makeup but alarm bells went off in Tanielle Jai's mind as soon as she saw it.

The Queensland-based makeup artist and business owner has recently seen a spike in customers trying to use AI to 'reverse scam' her business.

It's forced her to overhaul her returns process, which is how she caught the photo.

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The customer who sent it claimed it showed that the bronzer they ordered had been damaged in transit and requested a full refund.

But Jai noticed some inconsistencies, like the cream product appearing to be runny and crumbly at the same time.

"The formula we have just couldn't physically do that," Jai told nine.com.au.

"We also ran the image through AI detection websites and it came back as completely fake."

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She asked the customer for a video of the damaged makeup, which they sent.

But Jai said there were inconsistencies with that too, leading her to believe both the photo and video had been altered using AI to fraudulently claim a replacement or refund.

It's become a surprisingly common occurrence for Australian small business owners.

Several have reported a surge in AI 'reverse scams' wherein consumers claim a product arrived damaged and provide AI-altered photos as proof.

They then request a refund or replacement, effectively cheating businesses out of cash or stock.

"Over the last two months we have seen an increase in attempts to use AI to claim faulty products," Jai said.

Just last week a customer from the US emailed her claiming she didn't like the items she ordered for her own makeup kit and that they arrived damaged.

Jai requested photos of the damage, but the images the customer sent appeared to have been "tampered with".

She said AI detection software also flagged them as having been altered.

Jai went back to the customer with her findings and suggested a video call to prove the products had actually been damaged.

That's when the customer's story allegedly changed.

"Straight away she goes, 'actually I got this for a client, my client edited [the photos],'" Jai said.

"I actually got annoyed, and I just said, 'with all due respect ... why would you do this to a small business? It's stealing.'"

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But Jai and her two staff can't catch every dodgy photo and she has no doubt some customers have gotten away with it in the past.

And if they're willing to do it to her, an established makeup artist with nearly half a million Instagram followers, Jai's certain they're willing to do it to smaller brands.

Jeannie Paterson, Professor of Law at The University of Melbourne, previously confirmed to nine.com.au that this kind of consumer fraud is a criminal offence.

"Fraud means intentionally deceive someone and you cannot argue it's not intentional. You're trying to operate a fraud on a business," she said.

"We're in this spiral of fakes and frauds. I just feel awful about it."

She suspects some businesses will raise prices to cover the cost of additional shipping insurance or losses due to fraud.

Many are likely to start requiring video proof of faulty or damaged goods.

Jai has taken things one step further.

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She now runs all photos and videos of damaged products through AI detection software and checks metadata for red flags.

She's also started asking customers who claim their products arrived broken to video call her and show the damage in real time.

"It's is terrifying that the only solution that I can see is that we have to do live calls with these customers to verify."

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