Stop scammers in their tracks!
Get tips from Desert Financial’s Fraud Prevention experts.
Don’t Be Fooled by Overpayment Scams
For sellers who sell through digital marketplaces, like Facebook Marketplace and OfferUp, a red flag to watch out for is overpayment—when a buyer offers payment that’s for more than the amount owed and instructs you to refund the difference. This is a major warning sign! You’ll never want to accept this payment and never return the extra money.
Fake Checks & Fraudulent Money Orders
A scammer sends you a check or money order for your item, but it’s for an amount that’s more than what they owe. There’s usually a convincing story or reason for the overpayment, from apologizing for the accident or mistake to saying it’s for shipping, taxes or fees. Then the customer will ask that you send the extra money to them or a third party. Be aware of requests for a money order, wire/international transfer or a prepaid money card, which are unusual and insecure types of payments.
You deposited the check and everything seems OK…
The check’s funds appear to have landed in your account and are made available. You may have even been able to cash the check! But it can take weeks to detect a counterfeit check. By that time, you learn that not only did the check bounce, but you lost the money you paid back to the fraudster, the merchandise and any other expenses like shipping costs. Plus, now you’re liable. It’s your responsibility to pay back the bank for the amount of the bad check (or the legitimate account holder if the check was stolen).
Online Financial Services: The Receipt Looks Legitimate
Another tactic to coerce you into forwarding extra money is for the scammer to send a fake, legitimate-looking receipt or invoice that appears to be from the financial service, such as PayPal. This invoice includes an amount that’s more than the asking price. The swindler will claim that until you pay the difference, that money won’t hit your account. Any time there’s this type of suspicious hold, you’ll want to check with the financial service.
Attention Small Businesses! The Risk of Chargebacks
Small businesses also need to refuse overpayment for a product or service. In one scenario, a scammer will use a stolen credit card and ask to have it run for a price higher than the amount to cover a shipping fee, for example. They’ll ask you to pay back any additional funds by wiring the money or sending a check back to the purchaser or a third party. The legitimate card holder, bank or credit card company may detect the fraudulent transaction—and now you’re held responsible and receive a chargeback. (What is a chargeback?)
The Secret Shopper Ploy
Be wary of job offers for being a secret shopper who’s asked to test a money transfer service (such as Western Union). You’ll receive a check to deposit and after it’s been cleared, your job is to forward a portion of the funds or all of the cash back to them or a third party. Just as expected, the fake check bounces and now you’re liable. Rather than a check, you could even be instructed to load the money onto a gift card and then share the card’s number back to with the fraudster.
Be on the Lookout
How Did I Miss This?
Maybe you were excited to sell your item on Craigslist, for example, or moved too quickly through the retail process, missing the warning signs. Your biggest defense is to immediately end a transaction with anyone who overpays you. Cancel any order requesting a portion to be refunded or ignore any job offer that asks you to forward money.
Seller Protection Tips:
- Wait for the check to clear before sending your merchandise and validate the check by asking for the check to be from a local credit union.
- Use a trusted e-commerce site like eBay that offers a protection plan or Facebook Marketplace where you can check a person’s profile and purchasing/selling activity.
- Question anything that appears too good to be true or suspicious; scammers may also share your personal information to establish trust or pressure you to rush the transaction.
- Sell locally, so you can make a physical transaction with cash only (just use common sense in regard to safety like don’t go alone and meet in a public space during daylight).
Merchant Prevention Tips:
- For physical transactions, contact the payment processor for a Code 10 Authorization Request to verify if the card’s valid.
- Install the Address Verification Service, a fraud prevention system that compares the address the customer provides to the address on file with the financial institution.
- Preauthorize the card by putting a temporary hold on the payment.
- Ask for a photo ID, billing address or CVC code, depending on if it’s an in-person or phone transaction.
Con artists are called “artists” for a reason—they’re masters of their craft. But if you keep this information in mind, you can outsmart the scheme and prevent fraud from happening to you in the future.