Refunding an overpayment may seem harmless, but you might be getting scammed.

In today’s interconnected world, scammers continually devise new ways to exploit trust within financial transactions. One common scheme that preys on our kindness is the overpayment scam. Both people and businesses can fall victim, often with devastating financial consequences. In this article, we’ll cover how overpayment scams work, how to spot them, and how to protect yourself and your finances.

What Is an Overpayment Scam?

The overpayment scam is a classic con that targets individuals and businesses alike. Here’s how it works: The scammer poses as a buyer or client and sends a check for an amount greater than the agreed-upon price. They then come up with a plausible excuse for the overpayment, such as a mistake in calculation or covering additional expenses. The scammer then asks the victim to refund the excess amount, often through a wire transfer or prepaid card. Once the victim sends the refund, they discover that the original check bounced, leaving them on the hook for the entire amount.

Example of the Scam

To better understand how these scams operate, let’s look at this example:

Sarah’s sale gone wrong. Sarah lists a piece of furniture for sale online. A fraudster contacts her and agrees to the price. Soon after, Sarah receives a check for an amount significantly higher than the asking price. The fraudster explains it was a mistake by their accountant and asks Sarah to wire the difference back. Sarah, eager to complete the sale, obliges. However, a few days later, her bank tells her that the check was counterfeit, leaving her responsible for the entire amount of the overpayment.

Tips for Protecting Yourself

To avoid falling victim to an overpayment scam, follow these guidelines:

  • Be wary of overpayments. If a payment is higher than the agreed-upon price, proceed with caution. Never send any money back until the original payment has been verified as legitimate and fully cleared.
  • Don’t refund until funds clear. Wait for the check or money order to clear your bank account before sending any goods or refunds. This process can take several days, and if the payment is fraudulent, it will be revealed during this period.
  • Verify buyer/client identity. Before accepting any payment, verify the buyer’s or client’s identity and contact information. Search online, check for reviews, and confirm their legitimacy.
  • Use secure payment methods. Use secure payment methods, like credit cards or escrow services, which offer buyer and seller protection against fraud. Avoid accepting payments by check from someone you don’t know.

If You’ve Been Scammed

If you think you’ve been scammed, act quickly to protect yourself:

  • Contact us. If your account information has been compromised or if you believe you’ve mistakenly paid a scammer, let us know.
  • Report the scam to the FTC. File a report with the Federal Trade Commission at ReportFraud.FTC.gov and your local law enforcement agency.
  • Report the scam to your state attorney general. You can find their contact information at naag.org.
  • Preserve evidence. Keep copies of all emails, messages, and payment records related to the scam. This evidence will be crucial if you need to pursue legal action or dispute the charges.
  • Be cautious of follow-up communication. Scammers may try to contact you again to persuade you to send more money. Ignore these attempts and do not communicate with them further.

Contact us to learn more about safeguarding your financial information and securing your accounts. Our experts are happy to help.

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