5 Common PayPal Scams and Why They Work
Author: Nichlaus O.
PayPal is one of the most widely-used platforms for sending and receiving online payments. 71% of ecommerce merchants in the US offer PayPal as a payment method. Due to its popularity and the trust factor, countless scammers use PayPal to dupe consumers.
While PayPal is relatively one of the safest payment methods available for online payments, getting your money back involves a lot of back-and-forth with customer care. In many cases, PayPal may side with the scammers and refuse you a refund because scammers have perfected the tricks to fool PayPal into thinking they have done nothing wrong.
Our advice is to always avoid getting scammed in the first place. PayPal is exploited to scam people out of their money using some common tactics. Here we explore 5 common PayPal scams and how to avoid falling victim to them.
Common PayPal Scams
Fake PayPal email
You get an email that looks like it is from PayPal notifying you of a problem with your PayPal account. The problem may be anything made up by scammers, for example:
- Your account has been suspended
- Your account has weak security
You want to act immediately, right? To secure your funds, you click on the link in the email. But you don’t know that it’s a phishing email. That means that you get redirected to a site that is set up to collect your PayPal login credentials - a little hacking trick called email spoofing.
The link goes to a fake PayPal site. Should you make the mistake of putting in your username and password, you’d have given the scammers total access to your account. They will then withdraw all funds!
Why does it work?
Here the scam works only when you don’t know how to verify legit PayPal emails and website!
A version of this scam involves getting an email that informs you of funds sent to your PayPal account for the purchase of goods. The scammer then follows it up with the address they want the goods sent. Because the email is not from PayPal, simply checking your account balance will show that you’ve not received them.
But the clever scammer will then tell you that it needs a tracking number for the funds to show. So, if you ship the goods that the scammer has apparently paid for, the funds will show in your account. That’s a lie. PayPal does not need a tracking number to show funds have been sent to you.
A tracking number is issued for shipped products to tie a payment made to the corresponding goods.
Why does it work?
This second scam works if you do not understand how your PayPal account works when funds are transferred into it.
How to avoid this scam
Never use an email link from suspicious mail to log in to your account. Just go directly to paypal.com on your browser. Also, don't simply take the buyer's word about funds sent to your account. Confirm it yourself!
Overpayment Refund Scam
A client overpays for a product that you sell, whose price is clearly listed. Well, we’re human and do make mistakes. They then contact you to ask for a refund and for you to ship the product that they have bought.
You don’t immediately sense a scam so, you ship the product and do the refund. As soon as you do, the scammer cancels their initial transaction and gets all their money back. You lose the money you refunded and your product too!
The scammer may even ask you to purchase and include gift cards in the package, as they are supposedly purchasing the item as a surprise gift. As a result, you lose your item and the money you spent on gift cards. The scammer in the chat below is setting up the seller for this.
Why does it work?
This scam works when you don’t know that transactions can be canceled within a specified period and scammers can exploit that.
How to avoid this scam
DO NOT respond to such refund requests for products that have been overpaid. Ask them to cancel the transaction and do it afresh with the correct cash figures first before you ship the goods. You could also cancel the transaction from your end.
Shipping Address Scam or Delivery & Payment Fraud
This is the most elaborate and well-thought-out of all PayPal scams. It is the hardest to spot. It works by exploiting a weakness in the delivery system of shipped goods. A scammer orders something then pays for it. They give you a fake address on PayPal and recommend the delivery service they want, which they say is cheaper for them, or offers discounts. After several failed attempts the delivery company calls to get the right address.
As soon as they get the goods, the scammer then calls PayPal with a complaint that his/her goods were never delivered and files a complaint against you. PayPal checks and sees the address as put down by you to be “undeliverable” and as your fault. The scammer gets their money back and you lose your product.
Why does it work?
This scam succeeds because the seller does not verify the address to know if it is legit. It also works because scammers know how to work around PayPal Seller Protection policies.
How to avoid this scam
Sellers should stay within the protected areas of PayPal's policies.
Charity and Donation Scams
You come across a charity that is involved in some humanitarian cause. This usually happens at times of natural disasters like Tsunami, Earthquakes, Heavy Floods, and Drought. Or refugees, an expensive surgery, or any other heart-wrenching human issue. Being human, you empathize. You are moved to help and support others in need. It is human instinct to support them by donating.
Some will go as far as to confirm your donation once you wire money! All to keep up appearances. You will then find that such charities are inexistent or if they exist, do not engage in the work they claim.
Note that they all only give a PayPal account for sending your donations.
Why does it work?
Scammers take advantage of the news of suffering people to soften your heart and move you to donate. So this scam works because you are human and you have a heart!
How to avoid this scam
DO NOT donate to charities that you do not know. Do your due diligence in checking them up in:
- Charitywatch.org
- Charitynavigator.org
- Better Business Bureau (BBB)
- Give.org
I’ve Been Scammed on PayPal, What Now?
Luckily for you, PayPal has a robust customer support mechanism that allows you to report frauds and get a refund. For more information on how you can apply for a refund from PayPal, visit the page ‘I Paid the Scammer Using PayPal’.
Now that you know about the common PayPal scams, we hope you will have an easier time avoiding them. If still in doubt, Check Scamadviser Before You Buy.
Report a Scam!
Have you fallen for a hoax, bought a fake product? Report the site and warn others!
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