How to Beat: Overpayment & Refund Scams

1. How Do Overpayment Scams Work?
2. How To Beat and Avoid Refund and Overpayment Scams
3. Red Flags of Overpayment Scams
4. Examples of Overpayment Scams
5. What To Do If You’ve Fallen for Overpayment Scams

When you sell items online via sites like Facebook Marketplace and Craigslist, you might be a target of a refund or overpayment scam. In this type of scam, you’ll accept an offer to buy from a supposedly legitimate buyer, who then pays you for more than the amount you charged, sometimes even hundreds of thousands of dollars more. The catch? The scammer wants the money returned.

How Do Overpayment Scams Work?

While refund and overpayment scams vary, the general goal and how they work are all very similar. 

A Buyer Pays For an Item

A potential buyer offers to pay for your item via check or PayPal. Even if you request payment via cash or through the site’s payment system, the buyer will refuse, giving you any number of reasons why they can’t.

You Receive a Check for More Than the Sale Price

When you receive payment, it’s for more than the agreed-upon price. The buyer usually comes prepared to explain why they sent through the incorrect amount—sometimes they say it's to cover shipping costs, other times they’ll say it’s simply an accident.

The buyer then asks you to wire back the extra funds after depositing the check. They won’t accept a check or PayPal refund—they will be very specific that they want a wire transfer.

You Wire the Funds, and the Original Payment Doesn’t Go Through

You wire the funds for the difference back to the buyer and send them the item. In the meantime, you’re still waiting for the check or PayPal payment to clear. Since it can take several days for these payments to go through, you won’t realize the payments were fraudulent until it’s too late.

If you receive a check, it will bounce. You’re now responsible for paying back the entire amount of the check to the bank. You’ve also lost the money you wired to the scammer. If the scammer used PayPal, the online payment you received will be denied.

Not only have you lost the money you wired back to the scammer, but you’ve also lost the item you “sold” them. You won’t be able to contact the scammer as they will promptly take off with your money and cease all communications.

How To Beat and Avoid Refund and Overpayment Scams

When you’re selling items online, it can be exciting to receive an offer from a buyer. However, whether you accept payment via check or online service, it’s essential to make sure these payments are legitimate. Here’s how you can beat this scam:

• Confirm the buyer’s information: Do not rely on what the buyer is telling you. Independently confirm the buyer’s details, such as their:
  • Name
  • Address
  • Telephone number
• Do not accept payments for more than the agreed-upon amount: Despite what story the scammer might be telling you, the overpayment isn’t an accident. Walk away from any transaction in which the buyer sends payment for more than your selling price.
• Never wire funds: Legitimate buyers will not ask you to wire the funds. A scammer knows you won’t have much recourse if you wire funds in a fraudulent transaction, which is why they’ve asked you to do so.
• Wait for payments to clear: Before sending any items to the “buyer,” wait for their payments to go through. Although the check amount may appear in your account, it’s not really there until the transaction no longer says “Pending.”

Red Flags of Overpayment Scams

Overpayment scams are one of the most straightforward scams to identify since you’ll be receiving payment for an item that’s more than your selling price. Here are the main red flags to watch out for:

• Receiving payments for more than the agreed amount.
• Requests to wire money.
• Pushy buyers who are unwilling to pay using cash, via the site’s payment system, or through other traceable methods.
• High-pressure tactics.

Examples of Overpayment Scams

Overpayment scams can range from low-tech versions in which you receive a counterfeit check to variants that use technology to dupe sellers.

In this example, the scammer references the extra amount he’s sending via PayPal. The high-pressure language is designed to convince the seller to follow this plan and submit the extra money immediately via wiring service. 

In the below example, the seller received the check for well over the asking price of $10,000 for his item. The fraudulent cashier’s check was designed to look real, but the seller was able to beat this scam by identifying the overpayment red flag.

What To Do If You’ve Fallen for Overpayment Scams

Scammers are banking on your trusting nature, hoping you’ll believe that the overpayment was made by an innocent mistake. If you’ve fallen for this scam, you’ll want to take the following steps to attempt to recover your money and item:

• Contact your financial institution
• Contact

Contact Your Financial Institution

Let your bank know that you have been the victim of an overpayment scam and unwittingly accepted a fraudulent payment. Although you may still be responsible for paying back the amount of the bounced check, the bank will likely take steps, such as issuing you a new card, to protect your identity and financial information.

Contact PayPal

If your transaction occurred via PayPal, your best bet is to contact PayPal and report the fraud. Be sure to forward a copy of the fake payment receipt. PayPal will investigate the complaint and may be able to return the funds.

Contact Details

PayPal

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• General Enquiries
• Report Fraud

Website: https://www.paypal.com/

Email: [email protected]

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Verified Contact Details

It's important to verify links and contact details to beat imposters.

Contact the Shipping Company

If the item is yet to be delivered, there’s a chance you and intercept the delivery and have the item returned to you. Contact the shipping company and try to reroute the package.

Report the Scam

Report the scam to the Federal Trade Commission (FTC). The FTC cannot resolve your complaint but can alert the public and prevent further check overpayment scams from occurring.

You should also report the scam to whichever website you sold the item on. Depending on the site, you may also be able to report the scammer’s profile.