In e-commerce, PayPal has almost completely replaced all other payment methods. Instead of having to repeatedly input their credit card information, expiration date, security code, and billing address, customers appreciate being able to make payments with just one login. The majority of e-commerce firms now accept PayPal as one of the available payment options since so many customers want to use it and because it’s reasonably simple to integrate into an existing checkout page.
PayPal still shares one trait with conventional credit card payments, despite its benefits: fraud. PayPal deals with a never-ending barrage of frauds and fraud efforts that aim to steal money from other people’s pockets, just like any other payment processor. Let’s discuss the most prevalent PayPal scams and how online store owners can avoid becoming victims of them.
Table of Contents
- PayPal Shipping Address Scams
- PayPal Overpayment Scams
- PayPal Fake Email Scams
- PayPal Phishing Scams
- Hacked PayPal Scams
- Fake PayPal Accounts
- How Can You Protect Yourself From PayPal Scams?
- How Can You Spot a PayPal Scammer?
- How Does PayPal Deal With Scams?
- What Is a PayPal Business Account?
PayPal Shipping Address Scams
The fraudster requests that the seller ship their purchased item to an invalid delivery address after the transaction has been completed and the money has been deposited into the seller’s PayPal account.
The shipping provider classifies the package as undeliverable in their system after multiple unsuccessful delivery attempts. The con artist then contacts the delivery service and provides them with a new, legitimate mailing address.
When the con artist receives their package, they complain to PayPal, saying that the product was never delivered. Because their transaction data only includes the original, incorrect address, the seller is in possession of no proof of delivery.
PayPal Overpayment Scams
Scammers occasionally transfer funds to a seller’s PayPal account that are greater than the price of the item they are buying. When they realise they overpaid, they will tell the seller and request a refund of the difference.
The scammer complains to PayPal that their account was compromised and that they never intended to submit a payment to the seller in the first place when the seller returns the overpaid amount. Even if the seller hasn’t yet sent the purchased goods, they still lost the “overpaid” money they sent back because PayPal reimburses the whole initial payment to the con artist.
Fortunately, it’s simple to spot this scam. One approach is to flat-out refuse to take any PayPal direct payments and demand that clients use the checkout process. However, even if you do want to accept direct payments, you may still stop this scam by issuing a full refund and asking for a fresh payment for the right amount.
PayPal Fake Email Scams
Sellers may receive fraudulent emails purporting to be from PayPal from scammers, informing them that money has been transferred into their accounts but that PayPal has put a hold on the funds and won’t release them unless the seller provides a shipping tracking number.
PayPal doesn’t truly hold money in this way. In order to get the money, the con artist is counting on the seller to hurry the shipment and provide a tracking number. The fraudster will receive the item they never paid for once it has been shipped, and the seller will ultimately find that PayPal never held the money for them.
PayPal Phishing Scams
Phishing attacks may also target PayPal sellers. The seller may get an email that looks to be from PayPal informing them that money has been sent to their account pending confirmation and providing a link or button to click to access the money.
The link takes users to a bogus PayPal website where they are prompted for their login information. The scammer can access the seller’s actual PayPal account and use it to make payments or withdraw money if the seller inputs their email and password on the bogus website.
Nearly as long as email has existed, there have been traditional phishing scams promising millions of dollars for a modest time and financial investment. These con artists are now preying on PayPal consumers. In exchange for a minor processing charge or paperwork fee, these con artists will promise substantial cash rewards in the form of unclaimed inheritances or other found funds. Of course, they never intend to pay you any money and just take the little sum you sent instead. Even though this scam has gained some notoriety, millions of individuals still fall prey to it each year.
Hacked PayPal Scams
When a con artist successfully gains access to another person’s PayPal account (typically by utilizing a phishing scam), they can use the funds in the account they’ve taken control of to make purchases and send payments.
After receiving notification of a purchase and shipping an item, a seller can later hear from PayPal that the transaction was fraudulent and needs to be reversed. If the transaction qualifies, PayPal’s Seller Protection Program may be able to compensate merchants in these circumstances. In order to safeguard themselves from purchases made with compromised accounts, PayPal-using merchants should make sure they are adhering to all of the program’s rules.
Fake PayPal Accounts
Some PayPal frauds entail creating a new account and making it appear as though it belongs to someone else. Fake charities are a prevalent scam, though they are not unique to PayPal, especially following extensively reported disasters.
Scammers created a PayPal account and one or more social media pages under the guise of a charity dedicated to aiding those affected by the catastrophe. They then promote postings by the bogus charity account urging others to donate through sponsored advertising or automated accounts.
The toughest aspect of this fraud is that the majority of victims never even realize they were duped, believing their money went to charity when it actually ended up in the hands of the con artists.
Another scam involves someone setting up a phony shop under the name of a legitimate company and instructing customers to send money to their PayPal account. Although uncommon, this scam can be particularly damaging to the business whose name was exploited, leaving them with a number of angry clients they never dealt with.
How Can You Protect Yourself From PayPal Scams?
By keeping an eye out for questionable orders, benefiting from the Seller Protection Program, and following basic cybersecurity practices, sellers may prevent PayPal frauds.
Here are a few additional particular pointers to assist you in avoiding falling for PayPal scams:
- Watch out for warning signs before taking a payment. Requests to expedite deliveries, take payments in installments, or accept payments divided among several PayPal accounts are all clear signs of fraud.
- Fraudsters are drawn to items that have a high resale value or are in high demand. Make sure the shipping and billing addresses match before sending out particularly valuable things.
- Even clients with legitimate credentials are capable of friendly fraud if they are impatient or ignorant. Insist on delivery signature confirmation when delivering expensive things.
- If you enroll in the Seller Protection Program offered by PayPal, some types of fraud will be paid for by PayPal.
- Customers who create fraud or dispute claims should be blocked. If no action is taken against a vendor, fraudsters frequently target them repeatedly.
- Check the actual email address rather than the sender name when you receive an email from PayPal to ensure that it is authentic. When in doubt, sign into your account in a new tab to double-check the details.
- Shipments must only be made to the address specified in the transaction details.
Seller ignorance of fraud warning indicators contributes to many cases of fraud. You can exercise caution and defend yourself from con artists, robbers, and hackers if you know what to look for.
How Can You Spot a PayPal Scammer?
Knowing that PayPal will never request you to provide confidential information over the phone or over email will help you spot scammers more easily. Always check the URL in emails from PayPal that contain links. If you’re unsure, contact PayPal immediately.
How Does PayPal Deal With Scams?
PayPal provides dispute and arbitration services for both consumers and merchants, and the PayPal Buyer Protection Program aids in defending buyers against fraud.
What Is a PayPal Business Account?
Businesses can access more effective business controls through a Business Account, including specialized services to safeguard merchants against fraud.