- How the PayPal Overpayment Scam Works
- Red Flags of the PayPal Overpayment Scam
- Are You a Target Of the PayPal Overpayment Scam?
- How to Beat PayPal Overpayment Scams
- Have You Fallen for This PayPal Overpayment Scam?
- Frequently Asked Questions
Beating PayPal overpayment scams is easy as long as you know how they work and what red flags to watch out for. The main thing that should warn you of a scam is someone sending you money for more than the agreed-upon amount. If this happens, you should reject or cancel the PayPal payment and don't ever send them money via wire transfer.
How the PayPal Overpayment Scam Works
In this overpayment scam, the scammer poses as PayPal and deliberately sends you more than the agreed-upon amount (i.e., overpayment) with the ultimate goal of asking you to wire back the amount they “accidentally” overpaid.
Once you’ve refunded their money, they’ll file a reimbursement claim with PayPal, or cancel the credit card they used to pay you via PayPal. You'll then be left without the item you were selling and without payment for the item, plus the additional overpayment you paid the scammer back.
Here's how each step in the scam works:
You Receive Overpayment for Your Item
You're selling a product online and have PayPal as a payment option, either in an online store or a community marketplace. Someone purchases your product but sends you more than the asking price via PayPal.
Buyer Asks for Refund on Overpaid Amount
Once the payment appears in your PayPal account, the buyer will contact you asking to get the overpaid amount back. They'll claim the overpayment was an accident and say they were trying to send you a tip or add in shipping and accidentally sent too much.
The message may sound believable and like a genuine mistake, but this is a red flag. They'll then ask you to wire them the money instead of refunding the purchase through PayPal—this is your second red flag.
Example Message from Scammer
Sorry for the accident. I transfered $50 too much. Can you please give me back the extra money by wire transfer. Thank you.
Buyer Files A PayPal Reimbursement Claim or Cancels the Payment
There are two possible scenarios for how the scammer steals your money:
- They'll file a reimbursement claim with PayPal
- They'll cancel their credit card used to purchase your item
In the first scenario, after you've wired overpaid amount back to them, they may file a reimbursement claim with PayPal, saying they never meant to send you money. They may also ask for a refund on the entire cost of the product. In this case, the scammer can get money from you plus the reimbursement from PayPal, doubling their scam.
It's also possible the scammer used a stolen credit card to transfer you the money via PayPal. In that case, the legit credit cardholder files a report of unauthorized activity. The credit card company then cancels the payment, and the money can be withdrawn from your account, even if you already sent the scammer money and the product.
Red Flags of the PayPal Overpayment Scam
Overpayment scams can be tricky to identify, but some apparent signs include:
- The buyer is eager for you to return the money. If they're using a stolen credit card, they want you to send them money before the credit card company files a report and cancels the payment.
- The buyer doesn't want to cancel their order and insists you wire them money. The scammer doesn't want to cancel the order because then they don't get anything. Their scam only works if you send them money outside of PayPal, so they’ll insist on you doing a wire transfer instead.
- Their messages are vague and contain grammatical errors. Notes from scammers are often not detailed and will say things like, "I tried to buy your item using PayPal and sent too much," instead of being specific about the item they purchased and how much they sent. This is because they’re running multiple scams simultaneously, so they copy and paste the same messages to everyone they’re trying to scam.
In PayPal overpayment scams, the buyer will try to convince you it was an accident or may even ask you to use the extra money to pay a shipping company (of their choice). Regardless of their excuse, you should always cancel the transaction and treat any overpayment as a scam.
The second tell-tale sign of a PayPal overpayment scam after a buyer has overpaid you is requesting a refund via wire transfer. A legit buyer shouldn't have a problem with you refunding them via PayPal. They will only accept a wire transfer because it's faster, and there's little to no chance of you getting your money back from them after the fact (whereas PayPal does offer some protection).
Are You a Target Of the PayPal Overpayment Scam?
Scammers can target anyone who accepts PayPal payments for goods. They're often not looking for you to send them a free product, but instead, want you to send them money.
Scammers may also look for people who provide services. In this scenario, a scammer may reach out first about a project they want you to work on and offer you a fair price for your work. They then offer to pay upfront and send you an overpayment. From there, they'll claim it was an accident or that they meant to tip you and sent too much, asking for the money back.
If you pay the scammer, PayPal or the credit card company could cancel the transaction, which means you'd be out the amount for the overpayment.
How to Beat PayPal Overpayment Scams
Overpayment scams work because many people don't think twice about returning money to someone who didn't mean to pay. They also work well because the scammer makes you feel like you're in the wrong by not returning their money. If you refuse to wire the money to the scammer, they may accuse you of stealing their money in an attempt to get you to do what they want.
You can easily avoid this PayPal scam; however, you won't know you're being scammed until the buyer sends you a payment. You may have wasted your time and effort in trying to sell your item to a scammer, but it's not too late to protect yourself from losing your money (and item).
Cancel the Transaction
If you notice any red flags—such as the buyer sending more than the asking price, or asking you to wire them money—you should:
- Cancel the order (and transaction)
- Don't wire them any money
Cancel Their Order
If someone overpays for a product and asks for you to wire them money, don't do it. Instead, let the buyer know you'll cancel their order, and the charge won't appear on their card or be withdrawn from their account.
You can also encourage them to cancel the transaction on their end by contacting their credit card company. If they're a legitimate buyer, they should be okay with this course of action.
Refuse To Wire Additional Sums Of Money
If you wire money separately, there is no record on PayPal’s end of any refunds taking place. This allows the scammer to file a reimbursement claim and have the money they sent you withdrawn from your PayPal account, even though you already refunded them separately.
Whenever a buyer overpays you for an item, you should proceed with caution and consider canceling the transaction altogether. They will usually say it's an accident, or the extra money is to pay a shipping company or other third-party company, but it's more than likely a scam.
Have You Fallen for This PayPal Overpayment Scam?
If you’ve fallen victim to this PayPal overpayment scam, be sure to notify PayPal immediately. In any situation where you feel scammed, the first step is to stop communicating with the scammer. Don't provide them with any personal information that could put you at risk for other scams.
Report the Scam to PayPal
Report the fraud using PayPal's Resolution Center. Click on "Report a Problem," then select the transaction you want to report. From there, follow the prompts on the screen to notify PayPal of the scam.
If you can, provide detailed information about the conversation and the person who contacted you. Unfortunately, it’s unlikely you’ll get your money back, but there is a chance you’ll be able to recoup some of your missing funds.
File Additional Complaints
You should also file a complaint with the Internet Crime Complaint Center and the Federal Trade Commission. After reporting the scam, you'll receive steps for protecting your personal information. Reporting a fraud won't necessarily get the scammer caught or get you your money back, but it does bring attention to the scam and prevent others from being scammed.
Contact Your Bank
Unfortunately, once you've wired someone money, it's unlikely you'll be able to get it back; however, it's still worth notifying your bank of the fraud in case they offer some protection. If the payment hasn't gone through yet, you may be able to cancel the transaction.