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Overpayment Scams

Posted By Jim On 10/12/2010 @ 7:06 am In Personal Finance | 11 Comments

Kim Palmer at US News wrote [3] about how Farrah, on MTV’s “Teen Mom” show, fell for a classic overpayment scam [4].

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?


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[2] Email: mailto:?subject=http://www.bargaineering.com/articles/overpayment-scams.html

[3] wrote: http://money.usnews.com/money/blogs/alpha-consumer/2010/9/8/mtvs-teen-mom-victim-of-financial-fraud.html

[4] overpayment scam: http://www.ftc.gov/opa/2004/12/checkoverpayment.shtm

Thank you for reading!