eBay Payment Scams

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Common Payment and PayPal Scams on eBay

Anywhere money trades hands, you can bet there will be scammers looking to get an illegitimate piece of your money. These types of scams are also often seen on marketplaces other than eBay, such as CraigsList, Amazon, and so forth. Be wary of anyone making unusual offers that don't fit the norm. Following are two very common scams that fraudsters use to try and separate you from what is rightfully yours.

Promises to Overpay Through PayPal

Awhile back, my daughter listed her iPhone 4 for sale. She received an offer that was a full 33% more than her asking price. Right away, she recognized that this was not normal and came to me for advice. I observed while my daughter communicated with the supposed buyer through text messaging.

The buyer offered to pay via PayPal. Since PayPal offers certain protections to sellers, I was willing to entertain the offer.

In order to receive full protection from PayPal do not ship anything until payment has been received and shows up on your PayPal balance, offer to ship only to a PayPal confirmed shipping address, and always use delivery tracking. Delivery tracking is automatically included with delivery services such as FedEx, UPS, and DHL. Other services, such as the USPS, require that you request tracking and pay an additional fee.

After communicating her requirements to the buyer, my daughter received back a message saying that they agreed and had already sent payment. However, when I went and checked my PayPal balance no payment had been received. I therefore checked my email to see if PayPal had sent me a notification of a pending payment (remember, even if you have a payment pending, do not ship until it has cleared).

After checking my email, this is what I saw:

There are several issues with this notification that should immediately tip you off to it being a scam. First, the email address it was sent from wasn't from PayPal. A smarter scammer would have forged the return email address, so even if the return email looks like it's from PayPal don't automatically assume that it actually is.

Second, the style of the email, the wording, the salutation (PayPal always uses your full first and last name), and closing do not match up with PayPal's typical style. Remember that PayPal always uses your full first and last name in the salutation. They never use "Dear PayPal User", "Dear user@youremail.com", "Dear [first name only]", "Dear YoureBayUsername", or anything else. The entire email is also in a bolded font. PayPal, as well as most professional companies, use this type of formatting very sparingly.

Third is the language – or wording – used. I've worked in corporate marketing for over a decade, and I have yet to see a company the size of PayPal approve such a poorly-worded, unprofessional-looking communication. You know what professional writing looks like. This is definitely not it.

And finally, the largest red flag of all, the shipping address is to Nigeria – the eBay-scam capital of the world.

Fake Money Orders or Cashier's Checks

eBay's current policy no longer allows for payment via money order or cashier's check. However, if you are working with another marketplace that does allow it, then you'll want to be aware of the fake money order, cashier's check, or other form of certified payment.

The scam is fairly straightforward. Typically other aspects of the transaction will send up red flags to tip you off that something isn't quite right. Many of the same issues that cropped up in the deal with my daughter will often appear in a money order scam as well. You'll typically know that something is off right from the start. Don't ignore your instincts.

But how does the scam work if they are sending certified payment? Just as a personal check can be faked, so too can a money order or cashier's check.

Once a seller receives a forged money order or other payment form, they'll typically take it down to their bank and deposit the funds. The bank does not check for forgeries. But because the forged document looks like certified funds, banks will often make the funds available immediately. The seller, believing they've been legitimately paid, will then ship the sold item(s). A couple of weeks later, the payment will get rejected by the supposed distributer of the certified funds once they realize it's a forgery. Your bank will, in turn, immediately reverse the payment and you'll be left out in the cold on the deal.

If you do receive a payment via certified funds, you can confirm the legitimacy of the check or money order by calling the distributing organization (typically another bank) and simply asking if the check or money order your holding was actually cut by them or not.

Use Common Sense

Scammers often count on your greed (thus why they often offer to pay much more than the asking price) and/or excitement of making a sale in order to get you to overlook what normally would be huge red flags. Don't let emotions get in the way of clear thinking. Put yourself in the place of the buyer and ask yourself, "Is this normal? Is this something that normal buyers do? Is this something I would do?"

If the answer is ever "No," then the deal warrants further investigation. And, if using a payment processor like PayPal, become aware of the protections that are offered and be sure to always comply with their policies.

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