12 Signs of a PayPal Scam: Sellers Beware (2024)

PayPal is a popular online payment processing service, and it’s easy to see why: it’s fast and secure, plus it makes it easy for customers to pay you. But, as a merchant, you need to be aware of some common scams that can happen on PayPal.

PayPal scams are a growing concern for online businesses, and it’s crucial to know the signs of a potential scammer before you fall into their trap.

While PayPal has been trying to crack down on scammers, they’re still out there—and they’re getting sneakier than ever. Heck, they’re even calling people up and getting PayPal verification requests sent to their phones (don’t fall for that one, btw).

If you’re not careful, your products could end up in the wrong hands and you could lose out on sales—and money! Here are some signs you might be dealing with a scammer:

• The Prevalence of Buyer Scams in Online Sales
• Signs of PayPal Scams for Online Sellers
  • 1. Shipping Address is in a High-Risk Location
  • 2. Buyer Overpays for Their Order
  • 3. A Transaction is Higher Than Normal
  • 4. An Order Includes Multiple Requests for One Item
  • 5. Buyer Asks You to Ship to a Different Address Than the One in Their Order
  • 6. Buyer Makes a Request for Overnight or Rush Shipping
  • 7. An Influx of International Orders at One Time
  • 8. Buyer Uses a Suspicious Email Address
  • 9. Buyer Uses a Suspicious Shipping Address
  • 10. You Receive an Abnormal Amount of Orders at an Unusual Time of Day
  • 11. Several Customers Use the Same Shipping Address
  • 12. Multiple Orders From the Same PayPal Account in a Short Time
• Frequently Asked Questions
• Final Thoughts

Read on to learn exactly what to look for and how to know whether you’re dealing with a scam or a legitimate order. 

The Prevalence of Buyer Scams in Online Sales

Consumers aren’t the only ones at risk of online scams. In fact, there’s a whole new breed of scammer out there—the buyer. They’re even doing Instagram PayPal scams now.

Digital fraud is rising in recent years; shipping scams alone increased by almost 800% in 2021 from the previous year.

Yes, you read that right… Plus, we’re talking about people who buy products online for the sole purpose of scamming sellers. These buyers are looking to take advantage of sellers by paying for goods and services but never sending payment or at least making a reasonable effort to do so (like sending an email with a payment request).

If you haven’t run into a fraudulent customer yet, chances are,  you will. In fact… 

This is a big problem for sellers because it can be complicated to find out if you’ve been scammed by a buyer. The best way to protect yourself from this type of scam is by learning what signs point toward it happening and taking steps to protect yourself before it happens.

(For international transactions, get the skinny on PayPal scams from Wise.)

Signs of PayPal Scams for Online Sellers

When you’re in the online sales biz, you’re at risk of PayPal scams disguised as awesome sales days. And, the worst disappointments are the ones that arrive after you’re on a high. Don’t let this happen to you — learn to see the signs as soon as they appear.

1. Shipping Address is in a High-Risk or Nonexistent Location

It’s important to note that not all high-risk shipping locations are indicative of a scam. For example, if you’re selling books on Amazon and shipping them to Germany, then having a German address as the shipping location is perfectly fine. However, if you’re selling luxury watches or expensive clothing items and the buyer requests that they be shipped to Nigeria, then that might be worth looking into further.

If you see a United States address, but it includes countries like Italy or Ireland in between (such as “United States of America – Italy – Ireland”), this is common and indicative of fraud. Scammers often use fake addresses from multiple countries so as not to raise red flags on any one person’s end when they order products online. 

Furthermore, fake addresses will often include misspellings such as “Londan” instead of London or “New York” instead of New York City.”

2. Buyer Overpays for Their Order

If you receive a payment that is significantly higher than the goods or services you sold, you may be dealing with a scammer. It’s important to keep an eye out for these kinds of payments because they can sometimes be difficult to spot—especially if the amount is small.

If a buyer pays too much for their order, that could be cause for concern. A good example would be if someone buys $50 worth of goods and sends over $500 as payment. This could indicate fraud on their part or even a simple mistake on your end like mistakenly charging them twice for the same item (which should have been caught by PayPal).

How do you know it’s not just your mistake? If it seems odd, but there’s no way around it, try contacting your customer directly to ask them what happened and offer to send back the excess funds so they don’t get lost in limbo while you investigate further.

Sometimes scammers will even ask if you’ll accept payment by check or money order in addition to the credit card used for the online transaction—this lets them know your name and address and then they’ll use it later on when they try to steal from you!

PayPal has some pretty strict rules about what constitutes an overpayment, but if you see an order that seems like it might be high-risk (especially if the buyer is requesting overnight or rush shipping), then make sure you check in with your financial institution before accepting the transaction.

3. A Transaction is Higher Than Normal 

It’s always a good idea to keep an eye out for unusual transactions. For example, if the average order price is around $100, then you suddenly have an order that comes in with $2,000 worth of products, it should raise a red flag. 

If this happens, don’t gamble because you see dollar signs. Instead, investigate before you fulfill the order. If you’re not sure upon closer inspection, cancel and refund the order. 

4. An Order Includes Multiple Requests for One Item

If you get an order that contains multiple requests for the same item, it’s probably a scam. In fact, this is one of the most common PayPal scams. 

For example, imagine that you sell shoes, and a new customer orders 20 pairs of the same shoe at once; this could be a legitimate customer who wants to buy a large number of items (perhaps for resale). However, in this case, the odds are pretty high that it’s not genuine—after all, do you really think someone would buy 20 pairs of shoes at the normal MSRP? It happens more often than you think, but rarely with legitimate transactions. 

5. Buyer Asks You to Ship to a Different Address Than the One in Their Order

If a buyer asks you to ship to a different address than the one they ordered from, it could very well be because they are trying to defraud you. They may ask you to ship goods or services overseas, or they might try to get you to send the goods somewhere else in the United States. 

Watch for a buyer who places an order, then asks for it to be shipped anywhere other than the address in the original transaction. This scenario is a nearly sure sign of fraud. 

What’s more, once disputed, the buyer has proof that the item they ordered was shipped to the “wrong address,” decreasing the likelihood that you would prevail in a dispute or chargeback. 

Recommended: Shopify Chargebacks: How to Avoid & Manage Payment Reversals

6. Buyer Makes a Request for Overnight or Rush Shipping

If a buyer requests overnight or rush shipping, that is a sign of a potential scam. This could be an attempt to get the item before you can cancel the order, facilitate a return, or file a dispute for non-payment or insufficient funds.

Especially if you do not offer rush shipping as an option, if a buyer asks for rush shipping after completing a transaction, you’re looking at a red flag. 

You can protect yourself somewhat by outlining your shipping policies clearly and concisely on your website. Take this a step further by adding rush shipping options during checkout if you choose to offer it.  

7. An Influx of International Orders at One Time

As an online merchant, there is nothing more exciting than getting a new order—but keep your cool when you receive several at once unexpectedly. If the customers’ shipping addresses are trending outside of your region, it’s likely that they are not legitimate and someone is trying to steal your money.

If you receive an order from an international address:

• Do not ship the item without verifying the buyer’s identity (with PayPal or on another website).
• Get in touch with PayPal immediately after receiving any suspicious orders, so they can help you get your money back through the Seller Protection Program.

8. Buyer Uses a Suspicious Email Address 

As you know, the internet is the Wild West — cowboys somehow manage to outwit the Sheriffs. 

Anyone can set up an email address. So, how do you know if an email address is suspicious? Obvious typos, unusual characters, and fake words. 

If there are obvious typos in the address., steer clear of fulfilling the order! Scammers often create email addresses by copying and pasting chunks of text from real emails they’ve stolen from other people.

If the email prefix or domain looks like it was made up (like “name@sampk.com” or “kpxyd3r@gmail.com”), expect fraud! Scammers often make up their own domains to make it look like they’re sending you an email from a legitimate source, or create so many free email addresses that they run out of real words to use.

9. Buyer Uses a Suspicious Shipping Address 

If the buyer claims to be shipping from a freight forwarder or vacant property, this is a red flag. A freight forwarder is a company that picks up packages and forwards them on to an address in another country—a process called “forwarding.”

As such, it’s unlikely that someone buying consumer goods would be using a freight company for shipping. 

→ You can use an app like Safeship to automatically validate a buyer’s address.

If you suspect a scam after trying to validate shipping, it’s a good idea to cancel the order and refund the payment to the buyer right away. 

10. You Receive an Abnormal Amount of Orders at an Unusual Time of Day

If you receive an abnormal amount of orders at an unusual time of day, it’s a good idea to tread lightly; this could be a sign you’ve got a scammer trying to overload your system, take unethical advantage of an opportunity, or use your store as part of a larger fraud scheme.

It’s crucial to remember that these are only some general guidelines and there are one-off situations where they may not apply. So, while you can’t know with certainty that orders at weird hours will be indicative of fraud, we can say that if you’ve seen one too many suspicious orders from the same IP address or country today… You might want to reach out to PayPal support for help!

11. Several Customers Use the Same Shipping Address

We’ve already discussed how scammers often use a freight forwarder as an alias. Next, seeing the same shipping address on multiple orders is a red flag to watch out for. If several customers are using the same address as their order destination, it’s likely that they’re receiving packages from multiple scamming companies in bulk. 

This means that if you fulfill the orders, you’ll likely have to deal with many returns at once—and that all of those returns could be fraudulent!

It’s also worth noting that if a customer is paying for an item via PayPal, there have been cases when the fraudulent buyer has kept the products after shipment and chargebacks. 

12. Multiple Orders From the Same PayPal Account in a Short Time

Watch out for a single buyer making multiple orders from the same PayPal account in a short period of time, like a single day or over the course of a week; this is a pretty obvious sign that something fishy is going on. 

If you see two or more orders from one PayPal account come in within a span of 24 hours, that should be enough evidence to suspect some kind of scam. 

It’s possible that it could just have a new customer who likes your products and wants to try them all at once, but there’s also a chance they’re trying to buy as many things as they can before their account gets shut down.

Recommended: The Complete PayPal Shipping Guide: What Merchants Need to Know

Frequently Asked Questions

Recommended: This is How to Prevent PayPal Chargebacks & Safeguard Your Online Sales

Final Thoughts

PayPal scams are a grave issue for online merchants. These scams can be hard to spot. But, recognizing the red flags can help you avoid falling victim to buyer fraud. Remember: If something seems too good to be true, It probably is.

Furthermore, PayPal is a secure, trusted, and safe way to send and receive payments. PayPal does not require you to share personal information like your bank account number or credit card info with anyone outside the platform. So, if anyone asks for this information, you can trust it’s a scam.

Finally, If you think you’ve been scammed by someone posing as PayPal or one of their employees, report it immediately by emailing paypalsecurity@paypal.com.

Are you having a problem with PayPal chargebacks in Shopify? We can help! Download our free guide & PayPal dispute resolution templates today.