Identified Scam:

PayPal Shipping Scams: Tips to Protect Your Money and Items

Scammers take advantage of PayPal's buyer protection program to scam sellers out of their money and items for sale.


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Updated 24 May 2021
PayPal Shipping Scams: Tips to Protect Your Money and Items
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Identified Scam:

Key Finding

Scammers use different techniques to buy your item for sale, then request a refund for a failed delivery. 


Key Risk

You risk losing your item and money that was paid for it. 

Sections on this page
  1. What are PayPal Shipping Scams?
  2. How to Beat and Avoid PayPal Shipping Scams
  3. PayPal Shipping Scam Examples
  4. Have You Fallen For This Scam?
  5. Frequently Asked Questions

PayPal shipping scams can be avoided as long as you use best practices when selling items and always be on the lookout for red flags of a scam. The most important thing to remember is to never use a prepaid shipping label that the seller provides, even if it means you don't have to pay for shipping. 

What are PayPal Shipping Scams?

There are many different versions of PayPal shipping scams, most of which involve a fraudulent buyer scamming you out of your item/s for sale. Here are how these scams work.

The Buyer Asks You to Use Their Shipping Account

In this scam, the buyer typically promises you a discount on shipping costs because they can ship items at a discounted rate. They may claim they have a long-term relationship with the vendor or shipping service that is more reliable or cheaper. 

Alternatively, the buyer may ask that you use the prepaid shipping label that they will provide.

Soon after you send the item using the buyer’s shipping company or prepaid label, the buyer calls the shipping company and asks them to send it to a different address. Then the buyer files a claim with PayPal saying that you never shipped the item. Even though you may claim you did, there’s no way to prove your case because the buyer never received the item. Then the buyer can win the case and get a refund for the money.

Although it may seem like a nice gesture when the buyer offers to provide you with a shipping label, this is a sign of a scam. If the buyer bought the label, they can also reroute the delivery, claim the delivery never arrived, and claim a refund from PayPal. 

The Buyer Asks You to Wire Money Directly to the Shipping Company

The buyer says that you have to wire money directly to the shipper or a shipping agent to get a better shipping rate. However, the account to which you send the money belongs to the buyer or one of the buyer’s associates. Therefore, the fraudulent buyer gets the money.

Further, once you have sent the money to the fake shipping company, you may find out that the buyer placed the order using a stolen bank account or credit card. If this is the case, as the seller, you may have to give the money back to the owner of the stolen credit card or bank account.

The Buyer Sends You Real Money but from a Different Person’s PayPal Address

Sometimes, people can steal someone’s PayPal login credentials and use their accounts to purchase items. In this scam, you put an item up for sale, a buyer wins it, and then you get paid. You get real money in your account. You then see the money in your account and feel comfortable shipping the item you listed.

However, after you send the item, you learn the account belonged to someone else. Because the money came from an account the buyer hijacked, you may be required to return the money. In the meantime, the buyer has the item, and they can sell it for a profit.

How to Beat and Avoid PayPal Shipping Scams

Although there are different versions of PayPal shipping scams, there are some best practices to follow to ensure you don't fall for them:

  • Only use a shipping company you're comfortable with and trust, such as UPS and FedEx
  • Don't accept a prepaid label from a buyer. 
  • Confirm payment has been made by logging into your PayPal account. 
  • Only ship items to the address you see on the "Transaction Details" page within PayPal.
  • Don't allow the buyer to organize shipment, do it all from your end.

Red Flags of PayPal Shipping Scams

There are several red flags for PayPal shipping scams, and any one of them may mean someone is trying to scam you. If anyone says they want you to use a specific shipping service, you should be careful. It may not be legitimate. Even if the service is genuine, the buyer could call the shipping company and have the order sent to a different address.

If the buyer asks that you use a prepaid label, you should beware. They might have bought the labels using a stolen credit card. Also, if the buyer gives you a fake or incorrect shipping address, this is another red flag. They could then reach out to the shipping company, change the destination address, and claim they never got the item they paid for.

Here are some other common red flags to look out for:

  • Poor grammar or spelling
  • Links that lead to the wrong place
  • Correspondence from non-PayPal emails

PayPal Shipping Scam Examples

Always be on the lookout for red flags when buying or selling items online. Although PayPal is usually a safe way to transfer money, scammers have also found ways to use it to scam you out of your money. 

Example of PayPal shipping scammer
In this example, the red flag of the scam is the buyer saying they have a shipping company they want to use. (Source: HONGKIAT)

Scammers will also come up with a story or reason as to why their address in PayPal is different to the address they want you to ship the item to. 

Example of PayPal shipping scam
This scammer made the address mismatch seem legit, saying she wanted to surprise her mom. (Source: PetaPixel)

Have You Fallen For This Scam?

If you’ve fallen for a PayPal shipping scam, the first thing you should do is reach out to PayPal. You can do this by going to their Resolution Center and clicking “Report a Problem.” After you contact them, they will then launch an investigation. During the investigation, they will collect all digital documents about the transaction.

Keep any emails sent between you and the buyer—as well as anyone else, including any third-party shipping agents involved. In many cases of fraud, PayPal will compensate you. PayPal has a seller protection program that covers sellers who have been the targets of PayPal scams; however, you must meet the requirements to receive compensation. 

Contact Details

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Report the Scam to the Authorities

Once you’ve filed a PayPal complaint, you should also contact the Federal Trade Commission (FTC). The FTC investigates, logs, and follows up on these kinds of shipping scams. They may use the information you provide them to track down the scammer and prosecute them. While PayPal, in many situations, may give you back any money you’ve lost, contacting the FTC can help prevent others from getting scammed in the same way.

For similar reasons, you should also reach out to your local police. Thefts, including digital ones, fall under their jurisdiction. In addition to investigating the situation, they can collect information about your case and use it to identify the activities of thieves who follow similar patterns. In this way, you can help protect others from getting scammed.

Frequently Asked Questions

What are the red flags of PayPal shipping scams?

There are several red flags of PayPal shipping scams to be aware of, including:

  • A request from the buyer to use a shipping company you haven't heard of
  • The buyer supplying a prepaid shipping label
  • A different shipping address to what's in the PayPal transaction details
  • A different recipient name to the buyer

How do I avoid PayPal shipping scams?

To avoid PayPal shipping scams, you should follow these best practices:

  • Only use a shipping company you know and trust. 
  • Don't let the buyer buy the shipping label for you. 
  • Make sure you send the item to the name and address within the PayPal transaction information. 
  • Confirm the payment has been made to your PayPal account before sending the item.

Is PayPal safe to use when buying and selling items?

Yes, PayPal is safe to use as long as you know how to check for signs of scams and use best practices when transferring or accepting payments. 

Does PayPal offer protection against fraud?

Yes, PayPal has both Buyer Protection and Seller Protection programs. Not all transactions are covered, but most are. 

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