The widespread adoption of PayPal makes it a popular choice for scammers searching for victims. Although these scams aren’t exclusive to PayPal, they flourish in the service due to the ease of use and preference it enjoys among online sellers.
Sellers use phishing techniques to trick victims into giving them their login credentials, usually by creating a fake website that looks identical to the real thing. Since they only need the victim to click on the fake link, scammers typically use email, text messages, and social media.
The goal of these scams is always the same: to get you to use your username and password to log in. You’re better protected against this type of scam if you have two-factor authentication enabled on your account. Remember that even one-time login codes sent via SMS can be intercepted.
Be aware of emails saying something is wrong with your account, that you have won PayPal credit, or that an unexpected payment has been received. You can log in by clicking the link or button accompanying these messages.
Using the PayPal address in the URL bar of your browser or the mobile app on your smartphone prevents you from falling for this scam. Be sure to change your password if you suspect you have fallen victim to a phishing scam (and always use unique passwords for each service).
Advancing Fee Scams (419)
It hasn’t changed much in the last few hundred years since it was first uncovered in the 18th century. You likely have multiple email messages attempting this one in your spam folder right now. Any peer-to-peer payment service can use this feature, not just PayPal.
Victims are told there is a fortune waiting for them via email, text message, or social media. To secure this fortune, a small advance fee is required (usually account fees, shipping costs, or administrative fees). Once you send the payment, you will receive the total amount, and the fortune does not exist.
Although the scam may take a different form, such as informing you that you’ve won a lottery, the goal is to have you surrender a relatively small amount of money in exchange for a much larger prize. In some cases, it may be hundreds of dollars or even thousands. Scammers will attempt to solicit more money the more significant the payout.
A scammer may even ask for another small fee after making the initial payment, preying on victims’ “sunken cost” mentality. For example, “I’ve already invested so much money into this, I don’t want to waste it by not paying a small additional amount.” If you remember one golden rule, you can avoid this scam: if something seems too good to be true, it is almost certainly.
Even though shipping address scams are not new, inexperienced sellers often fall victim to them because they can’t spot the telltale signs. To purchase an item online, scammers either win an auction on a website like eBay or buy directly from sellers.
After that, the scammer provides a fake shipping address to which the item can never be delivered. Since PayPal’s Buyer Protection likely covers the transaction, the buyer contacts PayPal when the item doesn’t arrive and requests a refund.
As a final step, the scammer contacts the shipping company directly and provides a legitimate address to which the item can be delivered. Alternatively, they may try to pick up the item in person. While buyers remain unsatisfied, scammers walk away with a full refund and the object.
In particular, cold callers are the most common perpetrators of overpayment scams. PayPal scams differ from other types in that money is usually exchanged, giving the target a false sense of security. Scammers target online sellers on websites such as Facebook Marketplace and other classified databases. In marketplaces that generate invoices for you, such as eBay, the “buyer” cannot manipulate the price.
Buyers are tricked into sending more money than the items are worth, and the money appears in the seller’s PayPal account after completing the transaction. After ensuring the transaction is genuine, the seller mails the item to the buyer. Scammers ask sellers to return the difference to them by using another PayPal transaction after sending the item.
Scammers contact PayPal and flag the transaction as fraudulent after the seller agrees. The seller’s payment is returned to the scammer’s account if everything goes according to plan. Scammers usually get their money back, a tip in the form of the gap payment, and the item they originally purchased.
As big banks and financial institutions are targeted, scammers capitalize on PayPal’s popularity. Sending out an invoice claiming that your PayPal account will be debited in 24 hours is one way to spread a wide net to catch a few victims. Most people have used PayPal at some point in their lives.
You receive a fake invoice notifying you that a large sum is due to be taken out of your account, which includes a ticking clock. Payment processors can be used, but PayPal is often selected due to its popularity.
To resolve the issue, the scammer calls a phone number. From here, the scam can take several different paths, including getting you to reach a premium number, attempting to gain access to your account to “correct” the problem, or convincing you to settle for a smaller account fee to eliminate the invoice.
You should only pay for items you know you have purchased. An invoice for an eBay auction item, for example, may come in after the auction ends. However, it would be best if you didn’t accept or respond to an unsolicited invoice. PayPal users can request payment from any email address but must do so through their PayPal account (or mobile app).
Avoid PayPal Scams
When you receive an email from PayPal, read it carefully. Beware of phishing URLs and email addresses instructing you to log in to your account. You will see items that require your attention when you log in (such as requests for additional documents). Please beware of messages that rush you into complying with these requests. PayPal usually gives you up to 10 business days to respond to these requests.
Pay attention to red flags such as impatient buyers, buyers who want to split payments among multiple accounts, and buyers who send you more money than you requested. To qualify for Seller Protection, you must ensure your shipping and billing address match.
Be aware of the limits of Seller Protection. Gift cards and software codes are not included, so you’re at risk if you sell them. Ensure the buyer’s address exists before sending items, or you may be scammed. For Seller Protection to cover you when trading within the US, your account address needs to be listed there.
You aren’t covered as well as picking up or shipping goods before payment or receiving multiple payments (for example, from different PayPal accounts). See our complete guide to learn how to avoid PayPal invoice scams.