Whether you’re a consumer or a business and someone overpays you by check for goods or services, you should start hearing alarm bells going off in your head because it could very well be a potentially costly ‘overpayment scam.’
The scam generally works like this: You sell something on an internet auction or classified site, or through your business website, and the purchaser sends you a check for more than the agreed-on purchase price and then contacts you to point out their mistake.
“I’m sorry I overpaid. I got confused about the price,” they might say. “Go ahead and cash the check and just send me the difference.” Then they’ll probably suggest returning the money via a wire transfer or something like a prepaid debit card. Don’t. Do. It.
In this scam the check is probably worthless, but you won’t know that until days or weeks after it’s been deposited in your account. While your bank is required by law to make some or all of the amount available to you in a timely manner, it could be multiple days or weeks before it’s discovered that the check is worthless and there never was any money to fund it in the first place.
So, if you’ve already returned the ‘overpayment’ and it turns out the check was fake, you’ll have the full amount you returned deducted from your own funds and very little chance of ever getting it back – meaning the crook wins and you lose.
Here are some tips to avoid getting hit by an overpayment scam:
- Don’t allow payment by check. If you do, make sure the check has officially ‘cleared’ – meaning the money from the check writer’s financial institution has actually been transferred to your account.
- Tell the buyer that you can’t take a check for more than the purchase amount and that you’ll only accept the exact amount. Let them know you’ll wait for the check to clear before shipping the product. Tell them you’ll return the original overpayment check.
- Contact the issuing bank to ensure the check is valid and that there are funds to cover that amount.
If you feel like you’re the victim of an overpayment scam, contact the Federal Trade Commission at www.ftccomplaintassistant.gov/, the U.S. Postal Inspection Service at www.uspis.gov/, or your local or state consumer protection agency.
Just remember that if someone overpays you by check and they want that extra money back, it’s probably a scam and it could be costly to you. Just. Don’t. Do. It.