60% Of Merchants Consider PayPal to Be a Primary Avenue for Fraudsters
Nowadays, it’s uncommon to find an e-commerce site that doesn’t integrate with PayPal. Customers like PayPal because they only need to remember one login instead of their credit card number, expiration date, security code, and billing address. However, while PayPal is one of the most widely-used payment methods, it has become a top target for fraudsters. According to MoneyTransfers.com, over 60% of merchants consider PayPal a top fraud method.
Interestingly, the combined percentage of merchants considering Google Pay and Apple Pay as fraud payment methods is much lower than for PayPal. This could be because these digital wallets allow users to take advantage of security features on their mobile devices, such as biometric authentication. So they are often considered to be low-fraud.
MoneyTransfers CEO Jonathan Merry commented on the data,
It’s clear that fraudsters are targeting PayPal because it is so widely used. We need to continue to educate customers about the importance of security and how to protect themselves from fraud. At the same time, we must continue developing and improving fraud prevention technologies so merchants can trust their customers.MoneyTransfers CEO, Jonathan Merry
Common PayPal Payment Scams and Solutions
PayPal credentials are worth more on the dark web than credit card credentials. This means that fraudsters are going after user accounts to gain access to their funds. One of the most common scams related to PayPal is address scams.
PayPal Address Scams
These scams work by the scammer asking the seller to ship their purchased item to an invalid delivery address immediately after the payment has been placed in the seller’s PayPal account. After several failed delivery attempts, the shipping company flags the item as undeliverable. The scammer then contacts the shipping company and gives them a new, valid shipping address. Then, when the scammer gets their shipment, they file a complaint with PayPal, claiming that the item was never delivered.
After the shipping firm declares the package as undelivered, the scammer contacts them to change the address and also requests a refund from PayPal for that particular order.
Therefore, it’s essential for customers to always double-check the shipping address before sending out any items purchased through PayPal, or else the merchant may not have proof of delivery and could end up losing money.
Another scam is the overpayment method. This works when a scammer makes a payment to the seller’s PayPal account that exceeds the cost of the item they are purchasing. The scammer will then reach out to the seller, explain that they have overpaid, and ask for them to return the difference to them.
After receiving the overpayment refund from the seller, the scammer sends a complaint to PayPal, claiming that their account was hacked and they never meant to send money to the original seller. As a result, PayPal reimburses the full payment back to this fraudulent person- even if the item purchased hasn’t been shipped yet. Consequently, the seller loses what they were duped out of and whatever “overpaid” amount.
This type of scam can be easily avoided by simply refusing to accept any direct PayPal payments and insisting that customers use the checkout system. So, merchants must educate themselves on how to spot potential scams and protect their funds from being taken. By taking the necessary security measures, merchants can ensure that their money is safe and secure.