In 2024, the Federal Trade Commission reported that Americans lost over $400 million to overpayment and refund scams alone. That’s millions of dollars slipping away because someone clicked a link, deposited a check too quickly, or trusted an email that looked perfectly legitimate. Overpayment scams can happen to anyone — from small online sellers to everyday consumers expecting a refund. And the tricky part? They’re designed to feel urgent, believable, and harmless until it’s too late.
Related Page: PROTECTING YOURSELF FROM COMMON SCAMS IN 2025
If you’ve ever sold an item online, received an unexpected check, or been promised a refund you didn’t request, this guide is for you. By the end, you’ll understand exactly what overpayment scams look like, how to recognize them, and what steps you can take to protect yourself and your money.
What Exactly Are Overpayment Scams?
Overpayment scams, sometimes called fake refund scams, occur when a fraudster sends you more money than they owe — often via check, online payment, or bank transfer — and then asks you to return the “extra” amount. The problem? The original payment is fake or will bounce, leaving you out the refunded amount once you’ve sent money back.
Here’s a simple example:
- You list an item for sale online, maybe a bike or a phone.
- A buyer sends you a check for $1,500 for an item listed at $500, claiming it was a mistake.
- They ask you to refund the $1,000 difference immediately.
- You deposit the check and send the money back — but the check later bounces.
Suddenly, you’ve lost $1,000. That’s the essence of the scam: exploiting your trust and urgency to get real money from you.
These scams aren’t just limited to online sales. They can appear as unexpected refunds from companies, overpayments from clients or employers, or even accidental transfers to your bank account. Scammers are creative and often study legitimate business and banking practices to make their fraud seem convincing.
Common Signs of Overpayment Scams
Spotting these scams early is key. Here are the most frequent red flags to watch for:
1. Payment Is Higher Than Expected
Any payment that exceeds the agreed-upon amount should raise an eyebrow. Scammers count on your honesty and hope you’ll send back the difference without thinking twice.
2. Requests for Quick Refunds
Scammers often pressure you to act fast. They’ll insist you send the overpaid amount immediately, sometimes using phrases like “urgent” or “please don’t delay.”
3. Unusual Payment Methods
Be cautious if the payment is made via wire transfer, cashier’s check, or a gift card. Legitimate buyers or companies rarely ask for refunds to be returned using these methods.
4. Out-of-Town or Foreign Buyers
While not always suspicious, buyers from another city or country who insist on overpaying and request a refund can signal potential scams, especially if they avoid local verification.
5. Errors or Odd Language in Communication
Emails or messages with poor grammar, generic greetings, or overly formal wording may be a warning. Professional companies usually communicate clearly and consistently.
Overpayment Scams in Different Contexts
Online Marketplaces
Platforms like eBay, Facebook Marketplace, and Craigslist are common targets. Scammers will:
- Offer to pay more than the listed price.
- Claim they need the extra money back immediately.
- Use fake checks or overpayment through payment apps.
Tip: Always confirm that a payment has cleared and is legitimate before sending refunds.
Retail and Service Refunds
Some scams impersonate well-known retailers or services, sending fake refund notifications. They often include links to phishing sites to “verify” your account or request a bank transfer for the extra refund.
Tip: Always log into your account directly through the official website, never through email links.
Job or Contractor Overpayment Scams
Freelancers and small business owners may receive fake client overpayments, with requests to wire the difference. Scammers exploit the business trust relationship to make the request feel legitimate.
Tip: Confirm with the bank or payment processor before returning any overpayment.
How to Protect Yourself
Protection is about vigilance and verification. Here’s a practical checklist:
- Verify Payments Thoroughly: Contact your bank to ensure a check or transfer is legitimate before sending any money back.
- Never Send Money Immediately: Take time to verify. Legitimate buyers or companies won’t pressure you to act in haste.
- Use Secure Platforms: Conduct transactions through reputable platforms that offer buyer/seller protection.
- Check Contact Details: Look up emails, phone numbers, and business addresses independently.
- Trust Your Instincts: If it feels off, it probably is.
- Keep Records: Save all emails, messages, and receipts in case you need to report the scam.
What to Do If You’ve Been Targeted
If you suspect a scam or have sent money in response to a fake overpayment, act quickly:
- Contact Your Bank Immediately: Explain the situation and ask if funds can be frozen or recovered.
- Report the Scam: File a report with the Federal Trade Commission (FTC), Better Business Bureau, or your local law enforcement.
- Notify the Payment Platform: If the scam involved PayPal, Venmo, or another service, report the fraudulent transaction.
- Alert Others: Inform the online marketplace, social media platform, or employer to prevent the scammer from targeting others.
Real-World Examples
- Etsy Seller Alert: A seller received a $500 overpayment for a handmade item. The buyer claimed it was a mistake and requested a refund. The check later bounced, leaving the seller out the overpaid funds.
- Fake Retail Refund Emails: Customers received emails claiming they were due a refund for a recent purchase. Clicking the link directed them to a phishing site asking for bank details. The scammers then drained their accounts.
- Freelancer Fraud: A freelancer was sent a payment over the agreed price and asked to wire the difference to cover “processing fees.” The original payment was fraudulent, resulting in a loss of thousands.
These cases show that overpayment scams can hit anyone, anywhere. Awareness is your first line of defense.
Key Takeaways
Overpayment scams are all about urgency and trust. Scammers rely on human instinct to act quickly and honestly.
To protect yourself:
- Always verify payments before taking action.
- Watch for red flags, such as overpayments and urgent refund requests.
- Use official channels to confirm any unexpected refund.
- Report suspicious activity immediately to authorities and your bank.
With a little vigilance, these scams can be avoided entirely. Remember, protecting your money is easier when you spot the signs early. Stay informed, take your time, and never feel pressured to return funds before verifying their authenticity.
By following these steps and keeping an eye out for suspicious activity, you can confidently navigate refunds and overpayments without falling victim to scams. Safe banking isn’t just about protecting your money — it’s about staying one step ahead of fraudsters who rely on our trust and quick reactions.
