The overpayment scam tricks you into refunding money to a scammer who has overpaid you with a bogus cheque or a stolen credit card for an item you're selling. Here's how to spot it:
How the scam works
This is how an overpayment scam typically works:
- You place a valid online ad for an item, such as furniture, a car or a wedding dress. These online ads are often key targets for scammers.
- You receive an offer for the item from a "buyer"/scammer, usually by email.
- The “buyer”/scammer will send you a cheque or money order for the item, but for an amount much larger than the asking price. For example, you’re selling your item for $1,500 but the scammer sends you a cheque for $3,000 instead. Sometimes, the "buyer"/scammer may pay with a stolen credit card or with stolen online banking credentials.
- The scammer will claim the extra money is to cover the costs of shipping or customs fees and must be sent to a third party.
- You deposit the cheque or money order into your account and then send the additional funds by e-transfer or wire transfer to the specified third party account.
- Later, once the cheque or money order is processed, you will discover that it was fraudulent. You will not get any of the funds promised by the “buyer” and, worse, you will have handed over some of your own money to the third party account that is actually owned by the scammer.
- In other cases, the “buyer” might claim he or she may have sent a larger cheque by accident. However, the outcome is the same; once you send back the “extra” funds, you’ll discover the cheque was fake.
How can you protect yourself?
This scam could prove to be costly as, in addition to sending the scammer additional funds, you may have already sent the scammer the item that was for sale. Here are a few tips to help ensure you don’t become a victim of this scam:
- Beware of buyers who send more money than you are asking for.
- Instead of a cheque or money order, request a certified cheque.
- If you receive a cheque or money order that is more than the agreed amount of money, refuse the payment and send it back to the buyer.
- Remember to treat a money order like a cheque; these funds are not the same as cash and must be cleared and settled the same way that a cheque clears and settles. Make sure you wait until the cheque, e‑transfer, wire transfer or money order is fully cleared and validated by your financial institution.
- To find out more about recognizing fraudulent cheques and money orders, click here.
A cheque or money order is a payment agreement made between a buyer and seller. The bank processes the payment but they are not involved in the agreement. You are responsible for the items you deposit in your bank account. If the item is returned as fraudulent, you, as the depositor, are liable for the full amount. If you are in doubt, or if the situation seems unusual in any way, find another buyer.