How To Avoid The Most Common Online Payment Scams

Shopping online comes with its risks. A fact that most consumers know by now. But buyers aren't the only ones who need to keep their guard up to avoid getting scammed. Online sellers are also potential victims. Whether you own a business, an Etsy shop, or are just selling things on a resale site, it's important to stay updated on what the current online payment scams are.

Online Payment Scams - The Phishing Scam

One of the most online payment common scams is known as the "Phishing Scam". This is when a thief sends a fake text or email prompting a seller (or consumer) to go to a third-party site and enter their personal information. Credit card details and passwords are commonly what these thieves ask for. Very often, the third-party site looks like a legitimate business, but it doesn't mean it is.

How To Avoid Getting Scammed: Dennis Pederson, CEO of PayFasto, has advice for how to avoid a Phishing scam. He advises sellers and consumers alike to keep themselves educated on the current red flags that thieves use. And to be on the lookout for unexpected requests for personal information, any spelling and grammar errors in the correspondence, or a sense of threat or urgency in the messages. Pederson also advises people to avoid downloading suspicious attachments and clicking on unknown websites.

Online Payment Scams - The Chargeback Fraud

Another of the more common online payment scams is the "Chargeback Fraud". This is when a buyer makes a legitimate purchase with a credit card and then disputes the charge with their bank. Often claiming they either didn't receive the purchased item or that it was damaged. These thieves, because they're using a credit card that actually belongs to them, often get the payment charge reversed by their financial institution, leaving the seller to absorb the loss.

How to Avoid Getting Scammed: Pederson advises online sellers to make sure they are clear with their communication with customers. This includes putting merchant names and transaction details in banking apps to avoid customer confusion. Pederson also advises sellers to send email confirmations immediately after purchases are made. As well as to enable package tracking and delivery updates to ensure arrival of the purchases. Lastly, Pederson says sellers should enable two-factor authentication for payments and to verify large orders or other suspicious-looking purchases prior to shipping.

Online Payment Scams - The Return Fraud 

Another of the most common online payment scams might actually not seem all that bad, but it is. And is a source of a lot of lost revenue for businesses. "Return Fraud" is when a consumer made a legitimate purchase of an item, but then tries to return it by manipulating the seller's return policy. This can look like a buyer using or wearing an item but claiming they didn't. And when the return is received by the seller, it can't be resold as new. Which loses the business money, since they also have to refund the buyer's payment.

How to Avoid Getting Scammed: Pederson suggests businesses having a very clear, non-negotiable return policy, and never deviating from it. He also advises businesses to implement tracking on returns to ensure they are received. And suggests businesses keep records of customers to look for any suspicious purchase patterns.

Online Payment Scams - The Merchant Fraud

Another one of the online payment scams that hurts both consumer and business is the "Merchant Fraud". This is when a thief poses an existing legitimate business to scam that business's customers. They often offer product for sale online for ridiculously low prices, and then steal the customer's financial information when they make a purchase. This hurts both the consumer's wallet and the business's reputation. A business could even be sued for this if it's found they didn't employ sufficient fraud prevention measures to protect their customers.

How to Avoid Getting Scammed: Companies should always make sure that their name, logo, and transaction details appear on bank statements, Pederson advises. Secure payment methods and multi-factor authentication also goes a long way to protect consumers, and even retain trust in the event of merchant fraud. Pederson finally suggests that businesses should always stay updated on the latest fraud prevention measures and software.

Online Payment Scams - Wire Transfer Fraud

The last of the most common online payment scams is also one of the most recognizable. It's called the "Wire Transfer Fraud". This is the one where the thief pressures the seller into sending money via wire transfer. They often play on the seller's emotions and even pose as suppliers of the business with a legitimate-looking invoice.

How to Avoid Getting Scammed: Pederson advises businesses to avoid sharing any private company information with third parties and to improve their cyber security measures. He also suggests the use of multi-factor authentication when logging into the company’s network. Unexpected invoices should always be a red flag and verification directly through multiple channels should be received before any payment is made.

Business Wire reported that there was a 71% increase payment fraud attempts on U.S. businesses in 2023. So it's important for business as well as consumers to always stay educated on what the latest trending online payment scams are.

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Scams are a scary thing, so you should know these new scams that are trending. It's easy to think that you could never fall for a scam, but the truth is that scammers are getting better and better and what they're doing, so it's getting more difficult to stay safe.

Before we get into the new scams that are trending, it's worth reminding ourselves of some age-old scams. Some scam artists just keep doing the same thing, and they keep getting successful results. The IRS has some good information out about tax-related scams and how to avoid them. On the agency's official website, they warn that seniors are often targeted in scams. This was true years ago and is still true. On their site, they warn taxpayers not to fall for scams targeting older adults. "Scammers pretending to be government officials, aim to steal sensitive personal information and money," they state. "By posing as representatives from agencies such as the IRS, or other government agencies, these fraudsters use fear and deceit to exploit their victims."

Another big scam that's been around forever is scammers claiming their services are needed to settle with the IRS and "that their debts can be settled for 'pennies-on-the-dollar' or that there is a limited window of time to resolve tax debts through the Offer in Compromise (OIC) program." The IRS says "these promoters are often referred to as 'OIC Mills.'" In a release, the IRS adds that an Offer in Compromise "mill" will "usually make outlandish claims, frequently in radio and TV ads, about how they can settle a person's tax debt for cheap. In reality, the promoter fees are often excessive, and taxpayers pay the OIC mill to get the same deal they could have received on their own by working directly with the IRS. This takes unnecessary money out of the taxpayer's wallet."

"Too often, we see some unscrupulous promoters mislead taxpayers into thinking they can magically get rid of a tax debt," IRS Commissioner Danny Werfel said in a statement. "This is a legitimate IRS program, but there are specific requirements for people to qualify. People desperate for help can make a costly mistake if they clearly don't qualify for the program. Before using an aggressive promoter, we encourage people to review readily available IRS resources to help resolve a tax debt on their own without facing hefty fees."

Now, let's move onto the new scams to avoid.

The AARP warns of a new scam called the "check cooking scam." The AARP states, "In check cooking, thieves take a digital picture of a stolen check and then use commercially available software to alter it." It can look super real, but it's fake. So, how do you stay safe? "Consider using a safer payment method, such as a credit card," they suggest.

The AARP states also warns of a new sweepstakes scam where "instead of trying to get you to pay taxes or other fees in advance to collect the nonexistent prize, the scammers will ask for personal information so that they can validate you and set up the payout." Just say no.

These days, AI scams are big. Experian.com says today, scammers use technology to "write more convincing and natural-sounding phishing emails and text messages." They can also "Impersonate the victim's friend or relative and ask for money as part of a grandparent scam." It's scary stuff. Beware of anything that sounds too crazy, as these can often seem far-fetched, but AI makes them look real.

Experian.com says that student loan forgiveness scams are on the rise. They note that, "scammers may contact you via phone or create phony application sites aimed at stealing your Social Security number or your bank account information." Don't give out your information. If it sounds too good to be true, it is.

This one is really wild. With the games on the way, scammers can use the games to scam you. The AARP states, "A scammer hacks someone's email account, and shortly after, all of that person's contacts will receive the same message — something to the effect of, 'Hey guys, I'm over in Paris and my wallet got stolen! Can anyone please help me out by sending gift cards or a Venmo deposit?"

Whether the scam is new or old, the best way to avoid it is to stop and think about what's happening. These scam artists are super good at what they do, but if you just stop for a moment and really think out any actions, you can avoid making a rash decision that could cost you.

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