How to Identify Overpayment ScamsIf It’s Too Good To Be True…
How to Identify Overpayment Scams: Red Flags for Overpayment Fraud
Scammers thrive on urgency and confusion.
They want you to panic, ignore your usual sense of good judgement, and overlook the weird email address or their frantic request for a wire transfer. But, if you slow down and look closely, the cracks in their story are usually apparent.
In this chapter, we break down the tell-tale signs that separate a clumsy customer from a calculated thief.
Overpayment Scams
What should you do when a customer wants to pay more than your listed price for goods or services? This question might seem to have a simple answer, but there's a reason why overpayment scams are a favorite method for fraudsters. This guide explores everything you need to know on the topic: what overpayment scams are, why they’re a bad deal, and how best to fight them.
Recognizing Red Flags of Overpayment Scams
While there’s no foolproof way to detect an overpayment scam, be on the lookout for these common red flags if you suspect foul play:
Buyer Insists on Paying More Than the Listed Price
As we stated before, deliberate overpayments among real buyers are rare. If a buyer asks to pay more than what you’re listing an item for, it’s probably not because they’re being generous. Your best course of action is to refuse the transaction and cease contact with the buyer.
Buyer Asks for a Refund Before the Initial Payment Clears
A buyer reaches out and pressures you, demanding a refund from you before the payment even clears. It’s likely a high-pressure tactic preying on your desire to provide a good customer experience. If you receive an urgent refund request like this, wait for the payment to clear — or fail on its own — before doing anything.
Buyer Pays Using an Unconventional or Non-Secure Method
Virtually all of your legitimate customers will pay using a debit, credit, or prepaid card. If a buyer insists on using an unconventional payment method (e.g. via check by mail), politely decline their request and suggest an acceptable alternative instead. If the buyer refuses or continues to insist on a certain payment method, they’re probably not a real customer at all.
Requests to Pay Third-Party Agents
Sometimes, the buyer may claim that the extra funds are meant for a third party, like a shipping agent, and ask you to transfer the overage to them. In effect, asking you to “middle man” the transaction. As a general rule of thumb, never offer to be an intermediary. If a buyer asks you to pay their vendors on their behalf, it’s likely a scam.
Requests For Refunds via a Different Method
Always issue refunds using the payment method provided during the original transaction. If a customer pays with a credit card but insists that the refund be sent via wire transfer, Zelle, or gift cards, don’t proceed. More likely than not, you’re dealing with a scammer who’s trying to secure irreversible cash from you before the bank catches the fraud and reverses the initial payment.
What to Do If You're Targeted by an Overpayment Scam
Contact your financial institution immediately and explain the situation. Cease contact with the buyer until you can sort out what is going on.
If someone has sent you more money than expected and is now asking for a refund, stop and take a breath before doing anything. Your first instinct might be to return the excess amount immediately, but that's exactly what the scammer is counting on.
The most important rule is simple: never refund an overpayment until you’ve confirmed with your bank that the funds have fully cleared and are legitimate. This process can take days or even weeks, despite what your account balance might show. What appears as “available funds” in your account doesn't mean the payment has been verified. Banks often make funds available before completing the verification process, and when a check or payment bounces, you'll be held responsible.
If you receive an overpayment, contact your financial institution immediately and explain the situation. Ask them to verify the payment's legitimacy and wait for their confirmation before taking any action. Don't let the buyer pressure you with urgent requests or emotional appeals about needing the money back quickly.
Meanwhile, cease all communication with the buyer if anything feels suspicious. Legitimate customers will understand the need to verify large or unexpected payments. Keep all documentation, including emails, text messages, payment receipts, and any other correspondence related to the transaction.
Should I Report Overpayment Fraud?
Yes. You should report overpayment fraud to your financial institution, then alert the Federal Trade Commission (FTC).
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.
According to the FTC, they share internet scam reports concerning telemarketing, identity theft, and others through Consumer Sentinel. This is a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
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. When you report fraud incidents like this, it helps the commission compile data. Hopefully, this will enable them to take steps to mitigate these issues in the future.
You can report fraud on the FTC’s official website. The sooner you report it, the better chance authorities have of tracking down the scammer and preventing others from becoming victims.
