For consumers looking to buy or sell goods online, PayPal is one of the most popular payment options available. PayPal is among one of the many BBB Accredited Businesses, but that doesn’t scammers from targeting people while using the platform.
PayPal offers two options when issuing payments for goods on their platform – friends and family payments and goods and services payments. When you opt to use the “goods and services” payment method, PayPal charges a fee to complete the transaction. Along with this payment option, you are covered by PayPal’s consumer protection policy.
The second option is the “Send Money” or “Friends and Family” option. This payment method allows you to send money to people you know without incurring the fees associated with normal PayPal transactions. While this payment method is ideal for sending money to friends or family, it is not covered by PayPal’s consumer protection policy in the same way purchases are.
How the Scam Works
The scammer will pose as the seller of an item and wait for an unsuspecting consumer to ask to make a purchase. The scammer will then ask the consumer to pay for the item using the “Send Money” or “Friends and Family” claiming that it will be cheaper for them because it avoids the service fee that PayPal usually charges. Often, the scammer will even offer to knock a few bucks off the price of the item for the hassle.
The consumer then sends the money using the “Send Money” or “Friends and Family” service and waits for the seller to send the item. The scammer receives the money, doesn’t send the item, and then cuts all contact with the buyer.
When the consumer goes to file a dispute about the scam, they are left without any recourse because there is no documentation to back it up because the “Send Money” feature was used for payment.
PayPal has an extensive section on their website outlining their consumer protection policy. Consumers should consult this before making any transactions through PayPal. It should also be noted that the “Send Money” or “Friends and Family” feature is not protected by PayPal because there is no buyer or seller protection.
How to Avoid This Scam
- Never agree to do business with someone who asks you to send money through the friends and family option with the promise that they’ll send the item after receiving the payment
- Beware of anyone who seems too eager to sell an item or is offering to discount an item in order to seal the deal – they’re likely trying to tempt you into falling for their scam
- Visit the PayPal website and familiarize yourself with common PayPal scams so that you can spot them more easily.
- Don’t do business with someone without a verified PayPal account. You can check if the person you’re doing business with is verified by plugging their email address into this URL: https://www.paypal.com/us/verified/pal=EmailAddressHere
- Trust your gut. If something seems fishy about the person you’re doing business with, it’s always better to back out and find another seller for the item then lose your money.