Overpayment scams are fairly common, and for the unaware, they can be difficult to spot. Let’s take a look at these scams and what you need to know to avoid falling victim to these ruses. 

What is an overpayment scam?

In an overpayment scam, fraudsters target someone who’s selling a large item online, such as a car. The scammer will reach out to the seller and offer to buy their item for more than the asking price. Then, they’ll send the seller payment in the mail. 

At this point, the seller is thrilled. But, when the check comes, it brings with it a surprise – they’ve been overpaid. Soon after, the alleged buyer contacts the seller, asking them to refund the surplus. The seller will comply, not wanting to keep money that isn’t theirs. The next thing they know, the original check hasn’t cleared and they realize they’ve been scammed. Now they haven’t been paid for the purchase they believed the check writer was buying, and they’ve also lost the money they’ve sent to the scammer. 

Red flags

When selling an item on an online platform, look out for these red flags, which can alert you to a possible overpayment scam:

• You’re offered more than your asking price for an item you’re selling online. 
• You get paid more than you’re owed for an item you’re selling. 
• You’re urged to act quickly and take up a buyer on an offer or risk having them pull the offer.
• You’re asked to refund an overpayment via wire transfer or prepaid debit card. 

How to avoid overpayment scams

• Always know who your buyer is. Confirm the name, street address and telephone number independently.
• Never accept payment for more than your selling price. 
• Never agree to finalize a transaction until the buyer’s check has cleared.
• Never agree to wire funds back to a buyer. 
• Don’t be tempted by offers that urge you to “act now.” 
• Do not accept payment by check from an unknown buyer. 
• If you do accept payment by check, ask for one associated with a local bank, or a bank with a local branch. This way, you can stop in to verify authenticity. 
• If cash is not an option, and you want to avoid checks, consider an alternative method of payment, such as an escrow service or online payment service.

If you’ve been targeted

If you believe you’ve been targeted by an overpayment scam, there are steps you can take to mitigate the damage. 

First, report the scam to your financial institution and the platform where you’re selling from. Next, alert the FTC at ftc.gov so they can do their part in catching the criminals. Finally, let your local law enforcement agencies know about the scam.

Use this guide to avoid falling victim to an overpayment scam.