Personal Finance 

Overpayment Scams

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Kim Palmer at US News wrote about how Farrah, on MTV’s “Teen Mom” show, fell for a classic overpayment scam.

An overpayment scam is one in which the scammer sends you a check for more than the required amount, then asks you to send the balance back. Online it usually involves the sale of something expensive, a notebook computer or perhaps even a car, to someone in another country. The overpayment is designated for shipping, which the scammer wants wired to a “shipping company.” The check is a fake and, since it’s international, takes some time to cash. In fact, with international checks, banks sometimes will “cash” it before the funds are verified or transferred, then reversing it when they discover the check is fake. In the meanwhile, you send money to the “shipping company,” which you never see back.

Imagine if I say I’ll give you a $100 bill for something that costs $80 and then ask that you mail me back a $20. You’d probably tell me to jump off a cliff. If I gave you a $100 bill and asked you to give $20 to a stranger, you’d again tell me to jump off a cliff. Why am I paying you $100 when I should pay $80? Why don’t I pay you $80 and then pay the other person $20? Why does a single dollar come out of your pocket? Overpayment scams are very easy to spot in the wild. What makes them difficult to identify isn’t the scam itself, it’s usually your frame of mine when you see one. They change a few variables, replacing “friend” with “shipping company,” and replace $100 with a cashier’s check from a bank that may or may not exist, and suddenly we all become suckers.

The lesson of the day is that never:

  • Take more money than the agreed upon sale price,
  • Never pay someone else.

It’s bad enough when a seller rips you off by taking possession of an item and not paying for it, but this overpayment scam takes it another step and actually steals your money, rather than the item. Since most overpayment scams involve international parties, the probability that you’ll get any help tracking down your money is absolutely zero.

Have you ever seen an overpayment scam?

{ 11 comments, please add your thoughts now! }

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11 Responses to “Overpayment Scams”

  1. zapeta says:

    Ok, I’ll admit that we watch Teen Mom and I was practically screaming at the TV that it was a scam. Other than Farrah, I haven’t seen one of these scams but they must work or they wouldn’t bother.

    • billsnider says:

      Company I use to work for was a victim of this scam.

      Unfortunately in a rush to give better customer service, you want to issue refunds as fast a spossible. You always want to service your customers better.

      Well, this type of thinking helped to create a crack in our system which scammers walked in to exploit.

      Bill snider

  2. cubiclegeoff says:

    My brother almost fell for this scam. He was selling his motorcycle online and they wanted him to ship it to Africa somewhere, and they said they’d pay extra. He did bring the check to the bank I think and the bank teller said it was probably fake, so then he called the FBI.

  3. Wilma says:

    I know a guy who bought land in Canada on EBAY. Tried to visit his land and can’t find it. Can’t get a hold of the sellers any more either but he received a nicely framed deed in the mail along with a map that nobody in Canada can follow either.

  4. Peter says:

    In some work I have done for an online automotive classifieds company, they see people falling for this trick all the time.

    They’re usually selling a car for say $4000. The person says they would like to buy the car (sight unseen mind you), and that they’ll be sending a check for $5000 to cover the cost of shipping the car to some far flung locale. Unfortunately far too many people fall for the scam because they’re able to deposit the cashier’s check at first, and it only bounces or comes out as a fraud a couple of weeks later when the bank follows up on it. It’s an extremely common scam.

  5. billsnider says:

    Another scam that people fall for is low balance checks. It goes like this.

    Lets say I am moving from state A to state B. I buy a lot of checks before i move.

    I then go on a buying binge, paying with my checking account which has little to no money in it. I am happy to show my drivers license and other ID at that time. I always keep the purchase under $50 or so.

    The checks begin to bounce. The merchant contacts me at sate A, only to learn I now live in sate B. If they want to go after me to get their money, they have to get their state A lawyer to retain a state B lawyer. In addition they have to go after me in state B small claims court.

    So here is the problem. Is it worth paying sate A & B lawyers, small claims court fees in state B, lost time, transportation costs and someone to cover my store for a day?

    You decide.

    Bill Snider

  6. I worked for an organization that fell prey to this scam because the checks that were being sent out to people had the organization’s bank routing number and account number.

    Fortunately, they were held harmless and refunded all the money garnered from the bogus check. However, I was surprised to see how many people actually attempted to cash the checks. Apparently it was part of some Craigslist job opportunity. They cash the check, purchase supplies and send the remainder back to scammer (minus a 10% commission).

    Since implementing positive pay, most companies don’t have this issue any more.. just higher banking service fees…

  7. jsbrendog says:

    i haven’t sold anything on ebay but when i sell stuff on craigslist it is meet in person only in a crowded area. been good o far.

    i have sold a lot of stuff on and (knock on wood) no issues yet. I think that could be because unlike ebay or craigslist i never deal with the seller and half acts as the middle man. once their payment is verified it is credited to my account so i dont think this could happen there.

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