Payment platforms like Venmo and Cash App have become convenient tools for transferring money. Unfortunately, they also provide fertile ground for scammers. Among the most common tactics are impersonation and overpayment scams.

These scams can be tricky to spot and confusing, but with a bit of knowledge, you can protect yourself from falling victim. Let's dive into how these scams work, who the scammers are, why they do it, and how to avoid them.

Overpayment Scams: More Isn’t Better

Overpayment scams involve the scammer sending more money than required and then asking for the excess amount to be refunded. These scams typically exploit the reversal process of fraudulent transactions.

Who are these fools?

Overpayment scammers often work individually or in small groups. They exploit the trust and good faith of sellers or service providers. Their primary goal is to trick victims into refunding money that was never legitimately theirs, making a quick profit without delivering any real goods or services.

The Purposeful Overpayment Scam

A scammer might "accidentally" send you $1,000 for an item priced at $700 and ask you to refund the $300 difference. They often use stolen funds, credit cards, or compromised accounts for the initial payment. When the victim or bank notices, the original transaction is flagged as fraudulent and reversed, and you’re out the refunded amount as the payments reverse.

For example: Sarah was selling her old laptop online for $500. A buyer sent her $700 via Venmo, claiming it was a mistake, and asked her to refund the $200 difference. Sarah refunded the money, only to find out later that the original $700 was from a stolen credit card. The transaction was reversed, and she lost both the $200 refund and the laptop.

Prevention Tips:

1. Verify Payments: Wait for payments to clear before refunding any money. Check with your bank or the payment platform to ensure the funds are legitimate.
2. Avoid Shipping Before Verification: Don’t ship items until you’re certain the payment is legitimate and irreversible.

The Prepayment for Non-existent Goods Scam

In this variation, scammers offer to pay upfront for a product or service and then claim they overpaid. They request the excess amount be returned, but their initial payment is later reversed.

For example: Mark offered freelance graphic design services. A client sent him $1,500 as an advance payment for a $1,200 job and then claimed they made an error. The client requested a $300 refund. After Mark returned the $300, the initial payment was also reversed due to fraud, leaving Mark $300 short. Effectively, Mark sent the scammer $300.

How They Do It: These scammers create fake orders or service requests, often overpaying with stolen or compromised funds. They quickly request a refund of the overpaid amount, aiming to receive it before the original transaction is reversed.

Prevention Tips:

1. Use Secure Methods: Use platforms with buyer/seller protection policies.
2. Be Super Wary of Overpayments: Question and verify any overpayment claims before taking action.

Impersonation Scams: When Friends Aren’t Friends

Impersonation scams involve someone pretending to be a person or organization you trust. These scammers can hack accounts or create convincing fake profiles to deceive you. There are two primary forms of impersonation scams: friends or family impersonation and business impersonation.

Who Are the Scammers and Why Do They Do It?

Scammers can range from individual criminals to organized crime groups. They often operate from locations where cybercrime laws are lax or poorly enforced. Their primary motivation is financial gain. By exploiting the trust people have in their friends, family, or trusted institutions, they can quickly and deceptively obtain money.

Friends or Family Impersonation

Imagine getting a message from your best friend saying they’re in trouble and need money for a ticket home. You want to help, so you send money via Venmo or Cash App. Later, you find out it wasn’t your friend but a scammer who hacked their account or created a look-alike profile.

For example: Jane received a Facebook message from her cousin's account asking for $200 to cover an emergency expense. Without thinking twice, Jane sent the money through Venmo. It wasn’t until she spoke to her cousin later that she realized her cousin's account had been hacked. The money was gone, and the scammer had disappeared.

How They Do It: Scammers often use phishing emails or guess weak passwords to gain access to accounts. Once they have control, they send urgent, emotionally charged messages to the victim’s contacts, requesting money.

Prevention Tips:

1. Verify the Request: Before sending money, contact the person through another method (call, text, or in-person) to confirm the request.
2. Be Skeptical of Urgency: Scammers often create a sense of urgency to pressure you into acting quickly. Take your time to verify the situation.
3. Check for Red Flags: Look for inconsistencies in the message or unusual language your friend wouldn’t normally use.

The Business Impersonation Scam

Scammers also pose as representatives of trusted businesses or institutions, like your bank or a service provider, claiming an issue with your account requires immediate payment or verification.

Example: John received a text claiming to be from his bank. It stated that his account had been compromised and that he needed to verify his identity by sending $100 through the Cash App. The email looked legitimate, with the bank’s logo and professional language. John sent the money, only to find out later that the text was a phishing attempt, and his money was gone.

How They Do It: These scammers create emails or messages that mimic the appearance of legitimate companies, often using official logos and language. They may also call or text victims, pretending to be customer service representatives, and request payment through a peer-to-peer app or request a text code to be used in further attacks.

Prevention Tips:

1. Directly Contact the Institution: If you receive such a message, contact the business directly using a known, official phone number or email address.
2. Avoid Unusual Payment Requests: Legitimate businesses will not ask for payment through peer-to-peer apps for account verification.

An Ounce of Prevention is Worth a Pound of Cure

Scammers are becoming more and more sophisticated, but you can protect yourself by understanding their tactics. Always verify requests for money and be cautious of overpayments. Report any suspicious activity to the payment platform and relevant authorities if you need to.

Educating yourself and others about these scams is a powerful tool in preventing financial loss. For more information and tips on protecting yourself from scams, check out resources like the Federal Trade Commission’s What To Do If You Have Been Scammed page and How to Avoid a Scam page.

Staying informed, stay cautious!

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