Try to imagine this scenario: you make a sale through an online marketplace or commercial portal. The buyer contacts you for prompt payment, and actually offers to pay more than you initially asked. The only catch: they ask you to refund the overpayment portion to a third party.
The buyer might claim it’s for a private shipping service, or to cover customs costs. More likely than not, however, it’s a textbook example of an overpayment scam.
Overpayment scams can take many forms, but generally speaking, they exist to rip you off through redirected funds. So, let’s find out how they work, what they entail, and what you can do to avoid them.
An overpayment scam occurs when a fraudster uses a stolen method to make a purchase. When doing so, they intentionally pay more than warranted, and then contact the merchant to ask for a refund. Doing so allows them to receive their refund in cash, which they pocket illicitly.
When the legitimate accountholder regains access to their stolen payment method, they file a dispute, causing the merchant to bear the full cost of the purchase, including the refund issued.
Read MoreThe mechanics of an overpayment scam are fairly straightforward. First, a fraudster finds an item that you’ve listed online. Then, they send you a payment for more than you listed it for.
Later, they ask you to refund the excess, sometimes via check, cash, or a payment method different from the one they used initially. When the actual accountholder discovers the fraud and reports the payment, you lose out on the entire sale, plus the amount you “refunded” the fraudster.
Read MoreIf you’re fraud-aware, you may feel that it’s difficult to fall for an overpayment scam in real life. But these scams can ensnare anyone, even in contexts you might not expect.
For example, overpayment scammers can masquerade as job posters and ask applications to purchase “supplies” using their own money as part of the ruse. Other times, these bad actors may pose as donors who ask for refunds after mailing bad checks with substantial face values to nonprofit organizations.
Read MoreThe best way to spot an overpayment scam is to be on high alert for buyers who insist on paying extra. List prices are there for a reason: they help you establish a firm, non-negotiable price for a good or service.
Accepting nothing more or less as a general policy can ensure that you steer clear of bad actors, no matter how legitimate their reasons for an overpayment (and subsequent refund request) sound. On that note, also be on the lookout for buyers who insist on cash refunds, or those who ask to pay using unconventional payment methods.
Read MorePreventing overpayment scams from happening at all means you get to bypass the headaches that they come with. Refusing overpayments, verifying cardholder details at the point-of-sale, and communicating that you’re unable to forward funds is a good start. Sticking to these rules as a matter of policy or using checkout methods that prohibit overpayments altogether can help you foolproof your prevention tactics.
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Yes. Never accept an overpayment for any product or service, and be extremely wary of anyone attempting to promote one.
An overpayment scam refers to a cash forwarding or advance payment scheme. Fraudsters will use stolen credit card details to initiate a transaction, then offer to overpay the total amount due. Once the overage has been agreed to, the fraudster will request the overage be returned to a different payment account or another third-party source.
Overpayment scams typically involve a seller listing a high-value product or service for sale. The seller then receives a message offering to pay more for the item than the asking price. The overage is often claimed to be meant for shipping or some other charge, and must be made out to a third party or secondary account.
The buyer sends a fake check or money order featuring the overpayment, or pays via a stolen credit card. Once the seller deposits their funds, the bank informs tem that the original payment method was fraudulent. By this point, the scammer has vanished with the goods, as well as the stolen overpaid funds.
Overpayment scams are related to return fraud, but are not the same thing. At its core, an overpayment scam relies on the same tactic of using stolen banking or credit card credentials to funnel false refunds and returns to their personal credit cards or bank accounts. However, refund fraud is usually not intended as a malicious attempt to “scam” anyone.
Anytime you recognize fraud, you should report it to your bank first, then contact the Federal Trade Commission about the scam as soon as possible. While it’s not likely that you’ll be able to recover the funds after such an incident, reporting an overpayment scheme does have a positive effect. You can report fraud on the FTC’s official website.
You can avoid overpayment scams by being wary of any customer offering to overpay. You should also verify cardholder credentials before a purchase, and never forward funds or bend your own rules to accommodate a potential buyer.
