Australians lose AUD $275 on fake AI ads, study finds

Auros has published research showing Australians have lost an average of AUD $275 on products falsely advertised using artificial intelligence. The survey found 42% felt duped by AI advertising.

The study of 1,000 Australians also found that 59% do not trust products advertised with AI to match their description, while only 34% feel confident they can tell whether a product shown in an image is real or AI-generated.

The findings point to a wider problem for online retailers and consumer brands as AI-generated and AI-enhanced imagery becomes more common in marketing. Nearly half of respondents said they would be less likely to buy a product if AI had been used in its advertising, and 42% said products marketed with AI appeared lower in quality.

Respondents were often unsure about what they were seeing online. On average, they said they stopped to consider whether an advertisement was real or AI-generated four times a week.

Trust gap

When shown six product images spanning real items, AI-enhanced images and fully AI-generated visuals, many respondents struggled to tell which was which. Real products that had been heavily altered with AI were among the hardest to classify.

Only 20% correctly identified a real car-engine-shaped coffee mug that had been enhanced with AI, while 62% believed it was entirely AI-generated. Just 8% correctly identified a real 3D waterfall rug enhanced with AI, and 74% thought it was fully AI-generated.

A real bedsheet advertisement also caused confusion. Only 37% identified it correctly, while 40% believed the image had been generated by AI.

The broader results showed similar uncertainty. An AI-generated Coca-Cola can was identified correctly by 49% of respondents, while AI-generated jewellery was correctly recognised by 35%. A real stuffed-animal shark performed better, with 56% identifying it as real.

Paul North, General Manager, APAC, at Auros, said the use of AI in advertising was starting to create doubt even around genuine products. "AI is making it easier to create compelling product imagery, but growing consumer scepticism means even genuine products risk being dismissed as fake," he said.

"Brands need to think carefully about how they use AI in their advertising and understand what makes an ad feel credible to customers. That means listening to how consumers respond to AI-generated content, being transparent about AI use, and making sure any enhancements build confidence rather than doubt in the product," North said.

Shopping behaviour

The research suggests trust is becoming a commercial issue as well as a reputational one. Of the 59% of Australians who said they had bought a product advertised with AI, a quarter said the product they received was accurate, while 13% said it was inaccurate.

Among respondents who bought falsely advertised products, 42% said they lost an average of AUD $275. The figure rose to AUD $357 for Gen Z respondents and AUD $310 for Millennials, suggesting younger consumers were more exposed to this kind of loss.

The aftermath of those purchases varied. More than a third of affected buyers sought a refund, 27% gave the product away, 19% threw it out and 10% resold it.

Beauty and cosmetics ranked as the category most likely to use dishonest or AI-led marketing, according to 27% of respondents. Clothing followed at 20%, with supplements and wellness products at 17%.

Generational attitudes also differed. Gen Z respondents were the most likely to say products marketed with AI were lower quality, at 47%, followed by Baby Boomers at 45%.

Acceptable uses

While the findings show scepticism about AI imagery, the survey also suggests some consumers accept narrower uses of the technology in retail. Thirty per cent said they were comfortable with AI being used to visualise products in their home, 27% accepted AI-powered search recommendations, and 25% were comfortable with AI-written product descriptions.

Smaller shares accepted AI-generated backgrounds for real products and virtual try-ons. At the same time, 35% said there was no use of AI by an online retailer they would find acceptable.

Consumers were also prepared to use AI tools themselves while shopping. Nearly half said AI had already helped them shop, most often by finding alternatives, identifying lower prices and locating reviews across websites.

North said brands still had room to use AI if they focused on practical tasks shoppers value.

"There's an opportunity for Australian brands to make Christmas shopping easier with AI, whether that's helping customers compare products or research the right gift. But with consumers still in the experimental stages of AI-assisted shopping, it's important that businesses test these experiences with real consumers to understand what adds value and where AI might undermine the trust they're trying to build," he said.