Recent Spike in PayPal Chargeback Scams and How to Avoid Them
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 prefer being able to make payments with just one login.
Most e-commerce merchants now accept PayPal as one of the available payment options because so many customers want to use it and because it’s relatively simple to integrate into an existing checkout page.
PayPal Shipping Address Scams
It occurs when a PayPal payment is made to the vendor, but the delivery address given by the scammer is fake. The delivery service keeps making deliveries to the incorrect address.
The scammer gives the delivery company the correct address after the item has been tagged as “undeliverable” and then complains to PayPal that the item has still not been delivered. Because they won’t have a record of shipping to the correct address in their database, the seller will suffer a loss of both the product and the money in this scenario.
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 realize 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 initial payment to the scammer.
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.
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PayPal Fake Gift Scams
The buyer uses PayPal to send a gift using a credit card after the seller requests that the money be paid as a gift. A few days after the vendor provides the item and receives the gift payment, the buyer files a chargeback on their card, falsely alleging that their card was stolen.
After that, PayPal reverses the amount, costing the seller the money while giving the buyer the free item. As a result, the seller cannot claim that the buyer received the item because doing so would suggest that the first payment wasn’t given as a gift. The main issue with a PayPal gift chargeback is that the seller is left defenseless.
Fake PayPal Accounts
Some PayPal frauds entail creating a new account and making it appear like it belongs to someone else. Fake charities are a prevalent scam, though they are not unique to PayPal, especially following extensively reported disasters.
Scammers create 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 fake charity account urging others to donate through sponsored advertising or automated accounts.
The most challenging aspect of this fraud is that most victims never even realize they were duped, believing their money went to charity when it actually ended up in the hands of the scammers.
PayPal Fake Email Scams
Sellers may receive fraudulent emails pretending 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 scammer is counting on the seller to hurry the shipment and provide a tracking number. The scammer 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.
A fraudulent email could result in product shipping because many vendors use the consumer information from these emails to ship the item out immediately. There is nothing PayPal can do to safeguard vendors from this scam because it doesn’t travel through their systems.
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Paypal Phishing Scams
Additionally, merchants can get an email from what seems to be PayPal informing them that money has been deposited into their account and is awaiting confirmation. The email will typically have a button or link that can be clicked asking for confirmation.
A fake PayPal screen that requests your login information appears when you click the link. The scammer can withdraw money or use your PayPal account to pay for goods and services once you input the login information. It worsens if you use the same login information for more services.
If the fraudster decides to use the compromised PayPal account to make purchases, PayPal may subsequently notify the seller that the transaction should be reversed because the purchase was fraudulent. You must learn to safeguard your PayPal account to keep scammers out.
What Can You Do to Avoid 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 clear signs of fraud.
- Fraudsters are drawn to items that have a high resale value or are in high demand. Ensure the shipping and billing addresses match before sending out precious 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 enrol in the Seller Protection Program offered by PayPal, some types of fraud will be reimbursed 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 it is authentic. When in doubt, sign in to your account in a new tab to double-check the details.
· Shipments must only be made to the address specified in the transaction details.
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