PayPal scams: what to look out for and how to stay safe

PayPal is used around the world to make payments faster and easier, but customers are also a prime target for scammers. Here are the cons you need to avoid.

‘Unusual activity’ on your account

Some PayPal users are targeted by a phishing email saying that somebody unauthorised has been using their account.

It asks the user to log in to their account to rectify the issue by clicking on a link and in some cases, the individual is warned their account will be suspended if they don't act.

The link will take them to what looks like a legitimate website but will harvest the victim’s details as they enter them.

Read more at PayPal "unusual activity on your account" email scam: how to stay safe.

Scammers may also target people via text messages, but you can usually tell whether it’s a fake message by looking at the link.

If you check out the scam texts below, you can clearly see the links are not for PayPal.

There’s another scam email, which works in much the same way but is based on the premise that your PayPal account is about to expire.

Advance fee fraud

One of the oldest Internet cons, advance fee fraud is where scammers ask you to send a smaller amount of money before they send you a larger amount. Of course, it never materialises.

Won a lottery prize despite not buying a ticket? It’s a scam. They’ll ask you to send a handling fee, but your prizes never show in these cases either.

Never transfer money to someone you don’t know.

Overpayment scam

If you're selling an item, say through an auction site, you need to watch out for 'overpayment scammers.'

In this instance, a scammer will agree to buy the item then 'accidentally' send you a PayPal payment that's higher than the agreed purchase price.

To make up the difference, they’ll request that you send some cash to another specified account.

Aside from the additional payment you send, you might also lose the original funds you received as well as the goods you've now shipped.

This is because the scammer may have paid you with a fake bank account number or credit card.

If the fake number actually matches up to a real account holder, they can report unauthorised activity and the money that they’re missing may be taken from your account.

Remember that a legitimate buyer won’t overpay for an order so don’t transfer money to them. If they ask you to transfer money to make up the difference, it’s a good idea to review the order and cancel it as it could be fraudulent. 

Think you might have fallen victim to a scam? Check your credit report for anything unusual.

8 sites that will stop you being ripped off

High profit, no risk investments

We’ve covered these types of scams before as they can also appear in your email or Facebook inbox. Fraudsters will promise a dazzling investment with impossibly high returns, but the reality is that it doesn’t exist.

They'll often disappear once you've paid the cash and it can be difficult to track them down.

Cut off all communication with this ‘investment guru’ and report them to PayPal at spoof@paypal.com right away.

Cold calls, generous returns, pressure tactics: signs you're talking to a scammer

Shipping swindles

Shipping schemes can be worked into a number of PayPal scams, so it pays to be vigilant.

The first is known as the ‘My shipping service’ scam. The buyer will ask you if you can post their package through their shipping provider as they’ve either worked with them for years or their service is cheaper and/or more reliable.

In some cases, they might even ask you to transfer money straight to their shipper.

One of the main problems with using the buyer’s shipper is that they can easily re-route the package. According to PayPal, a buyer might intentionally provide an incorrect shipping address so they can contact the company to send the package to the correct address.

The buyer can then open up a complaint claiming that they didn’t receive said package (even if they did) and ask for a refund

That leaves you in a tough position as you can’t prove that the buyer received their order (at the original address) meaning that you’re missing a product, the shipping cost and ultimately, are out of pocket.

Again, the money will come from an account with a fake number, making you liable in replacing the money of the person who has had money stolen from their account, should they exist.

If a customer asks you to use their shipping account, review their order very carefully. They may have used a stolen account to pay you.

And make sure you ship to the address on the transaction details page so that you're covered under PayPal's Seller Protection scheme.

Similarly, pre-paid shipping label scams are dodgy. In these instances, the fraudster may have insisted that they can get the shipping at a discount.

But by providing a label, the customer has control over the final destination of the package which they could send to another country, a PO Box or some untraceable location.

To avoid this scam, don’t accept shipping labels from customers and if they do use them, comb through the order to make sure it’s not coming from a fake account. 

Fake charities

It makes us sad to say this, but if a country has experienced devastation, be on your guard. Scammers will use events like natural disasters, terror attacks or refugee crises to swindle some cash out of you, via PayPal.

Charities without websites and those littered with spelling and grammatical errors should be treated with suspicion.

Make sure you do a thorough background check on charities before you donate. Organisations like the Charity Commission and Charity Navigator will help you weed out the legitimate charities from the fakes.

6 free ways to give to charity

Fake business and employment opportunities

Fraudsters have been known to contact people about fake business opportunities. 

Often, they'll ask for an employee or partner that will help them sell expensive items, like a laptop. 

The job advert will be looking for people to list items for sale on eBay or on your own website, using money from orders to pay the supplier.  

This is where it gets clever. 

Let's come back to the example of the laptop. The scammer will ask you to update your PayPal account address to their address. They’ll usually give you an address that looks like a regular address but is actually a PO Box.

After you pay the supplier, you’ll start receiving complaints from your buyers stating that they didn't receive their laptop. Instead, they received an empty box, courtesy of the scammer.

Naturally, you contact the supplier. They inform you that your partner said you would be sending money for something that isn't the laptop to your PayPal account address.

You remember that your partner asked you to change your PayPal account address to their address, so they could pick it up. You paid the supplier for the laptop, so you file a complaint against the supplier.

Unfortunately, you learn that you may be liable for the money since the supplier actually delivered merchandise to your PayPal account address – leaving you out of pocket.

The best way to steer clear of these scams is to search for jobs through reputable sources. Never list someone else’s address on your PayPal address, verify any suppliers and never send money to someone you don’t know.

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