Scammers exploit PayPal policy to bilk online shoppers

BBB Consumer Alerts

BERLIN, GERMANY – DECEMBER 14: The Logo of worldwide online payments system PayPal is displayed on a smartphone on December 14, 2018 in Berlin, Germany. (Photo by Thomas Trutschel/Photothek via Getty Images)

BBB Scam Tracker has received many reports of a trick scammers are using to steal from online shoppers. The con artists are exploiting a PayPal policy and deceiving online shoppers into paying for goods that don’t exist. 

How the Scam Works: 

You are shopping online and find a site with amazing deals, often brand name goods at a significant discount. The website and the products look legitimate, so you decide to take a chance and make a purchase. The site instructs you to pay through PayPal, which should provide extra security.

After checkout, you get a confirmation email that contains a tracking number from UPS, FedEx, or another shipping service. After a few days, you log onto the site and see that your package has been delivered. That’s funny, because no box ever arrived! You call the shipping company, and they confirm that the package was delivered… but to the wrong address.

When you try to correct the mistake, you find that the ecommerce site is either unresponsive or unhelpful. In some cases, the site doesn’t provide contact information; in others, they simply don’t respond to your emails or calls. 

Some scam victims report filing a claim with PayPal because their protection promise says you can open a dispute if your order never arrives. But because the scammer technically shipped the package and the tracking number marked it as delivered, PayPal rejected their claims. One consumer reported to BBB Scam Tracker: “PayPal denied my claim because the seller showed the tracking number as being delivered. I even had UPS send PayPal the proof that I didn’t receive my package, but all PayPal required is a tracking number loaded and shows delivered.”  

BBB contacted PayPal about the victim reports being received. PayPal’s investigations revealed that the fraudsters lured victims to a front site that was set up to appear as a high-quality legitimate ecommerce site. Some fraudsters will go an extra step by investing in advertising to drive traffic to these sites. Buyers place orders at this original website which is not linked to a PayPal account. During checkout, buyers are unknowingly redirected to a “shell” low quality website to complete the payment via PayPal. When the buyer files an item not received (“INR”) complaint, PayPal notifies the seller and gives them ten days to respond with proof of delivery. Unfortunately, the fraudsters were able to steal valid tracking data from different carriers with correct date ranges and zip codes. The fraudsters then leveraged this stolen tracking data, providing it to PayPal as proof of delivery evidence. As a result, PayPal denied the claims from the buyers because it appeared that valid proof of delivery had been provided.

PayPal has since advised that: “We notified various shipping carriers of this issue allowing tracking data to be stolen and we believe it has been closed. In addition, we made enhancements to our algorithms to identify and disable these fraudulent bad actors. In fact, we are stopping a significant majority of these fraudulent sellers at first transaction through our detection program and have refunded customers impacted by this fraud scheme even if they did not appeal our decision.”

Protect Yourself from a Package Delivery Scam:  

  • Before paying, know your rights and responsibilities. In everything from check cashing scams to cons involving new peer-to-peer payment systems, scammers often take advantage of what consumers don’t know when it comes to processing payments. Don’t make a purchase from a shady seller assuming you’ll be protected no matter what. 
  • Before buying online, confirm the site has real contact information. Make sure the seller has a working phone number and address on the website, so you can contact them in case of problems.
  • If the price seems too good to be true, there’s probably something wrong. Be wary if the item is selling for significantly lower than what you’ve seen elsewhere.
  • Review BBB online shopping tips. Many online purchase scams use similar tactics. See BBB.org/ShoppingOnline for more advice.

For More Information

Learn more about spotting and reporting PayPal fraud. For more resources on shipping fraud, see FedEx’s website and UPS’s online resource center. To learn more about scams, go to BBB.org/ScamTips.

If you’ve been targeted by this scam, help others avoid the same problem by reporting your experience at BBB.org/ScamTracker

NOTE: PayPal Inc.FedEx Corporation and United Parcel Service are BBB Accredited Businesses.

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