This scam is usually initiated by someone you sold something to and requested them to pay you on PayPal. Instead of paying for it with Goods and Services, they make a request to you that they pay with Friends and Family.
This is advantageous for them because it decreases the fees involved. There is less for them to pay overall, since they are not required to pay any fee to PayPal for Friends and Family, however, this common scam is bad business for you.
Friends and Family payments should only be made to people you know and trust and only for gifts or to help someone out. This payment method should not be used to pay for products and services purchased online from strangers. That is not how PayPal is designed to work.
Keep in mind that you only get payment protection and fraud protection from PayPal for payments that are issued as Goods and Services. PayPal charges a fee for those kinds of transactions, and then the company can use that fee to help cover any lost, stolen, or unsent goods. The fee can be used to help cover business disputes. There are lots of instances where some help from PayPal can come in useful, whether you are the buyer or the seller.
You should beware of sellers asking for you to pay with Friends and Family, just as you should be wary of buyers asking to use that payment option. You are leaving yourself open to fraud, especially if you do not know the person or you haven’t bought tr sold to them before.
The request to pay with Friends and Family on PayPal rather than Goods and Services is known as an alternate payment request, and you should regard each and every one of these with suspicion.
This kind of transaction may seem cheaper all around, since there are no fees involved, but it could put you in a bad situation if something happens with the transaction. What could go wrong? Let’s list the possibilities for sellers dealing with buyers who ask for this alternate payment method:
- The buyer’s payment method fails to be verified and processed
- There is a dispute between you and the buyer
- There is a delay in the payment
- The buyer is not happy with the product or service
- The buyer claims the product was lost during shipping
- The buyer changes their mind about the product or service
Here are some things that could go wrong if you are the buyer and you are dealing with a seller who wants to use Friends and Family as a payment method on PayPal:
- The seller does not send the item or provide the service requested
- The seller says they did not receive payment even though it shows up on your end
- The seller changes their mind about providing the service or item
- The seller leaves a bad review because of a dispute with you
In any of these scenarios, you will not be able to go to PayPal for help in resolving the issue. It may cost a bit more for one party by using Goods and Services as the payment option, but it can be worth it for the peace of mind you get from having PayPal to back you up in case of a dispute. In many instances of a payment dispute during a transaction, PayPal will refund the money and cancel the transaction.
Keep in mind that PayPal does not allow Friends and Family to be used as a payment method for business transactions and purchases. According to their rules, which you have to agree to use the service, you are not allowed to pay for goods or services using the Friends and Family option. If you violate those rules, you can have your account limited by PayPal or even be banned from the service. You do not want to put yourself at risk of not being able to use your
PayPal account and having to set up a new account.
No matter what kind of service or goods you are getting, whether you are paying for professional cleaning services (see more) or professional editing, or you are paying for an item you found online, you should stick to using Goods and Services as the payment method. Otherwise, you open yourself to risk and to the possibility of having a business dispute that you have to handle on your own and without the help of PayPal.
It’s more than just disputes you have to worry about, though, when you receive an alternate payment request. You also need to be concerned about outright scammers. Many people who are looking to take advantage of others will use this alternate payment method to scam to get money from people as well as free goods and services, and there is little that can be done once you choose this payment option rather than what PayPal recommends. The rules that PayPal has in place are there for a good reason, and you should try to operate within the framework they have laid out, for your own safety.
It can be attractive to eliminate the fee involved in a transaction on PayPal, but that’s how many scammers will get you. They know there is appeal in sidestepping the fees, and they can often get unsuspecting people to forgo their better judgment just for the sake of a deal and the savings of a few dollars.
Once money is transferred in this way, though, you have no way to resolve any dispute, and you have no recourse left to you if things go wrong.
PayPal will protect Goods and Services payments for weeks after the transaction has occurred, so even if there are no red flags right away, if something goes wrong later, you can still enjoy their protection.
Don’t be lured in by this scam that can easily happen when doing business online with people you are not very familiar with. If they request to only be paid in Friends and Family payments or they ask to pay you that way, you should turn them down.
Online Threat Alerts Security Tips
Pay the safest way
Credit cards are the safest way to pay for online purchases because you can dispute the charges if you never get the goods or services or if the offer was misrepresented. Federal law limits your liability to $50 if someone makes unauthorized charges to your account, and most credit card issuers will remove them completely if you report the problem promptly.
Guard your personal information
In any transaction you conduct, make sure to check with your state or local consumer protection agency and the Better Business Bureau (BBB) to see if the seller, charity, company, or organization is credible. Be especially wary if the entity is unfamiliar to you. Always call the number found on a website’s contact information to make sure the number legitimately belongs to the entity you are dealing with.
Be careful of the information you share
Never give out your codes, passwords or personal information, unless you are sure of who you're dealing with
Know who you’re dealing with
Crooks pretending to be from companies you do business with may call or send an email, claiming they need to verify your personal information. Don’t provide your credit card or bank account number unless you are actually paying for something and know who you are sending payment to. Your social security number should not be necessary unless you are applying for credit. Be especially suspicious if someone claiming to be from a company with whom you have an account asks for information that the business already has.
Check your accounts
Regularly check your account transactions and report any suspicious or unauthorised transactions.
Don’t believe promises of easy money
If someone claims that you can earn money with little or no work, get a loan or credit card even if you have bad credit, or make money on an investment with little or no risk, it’s probably a scam. Oftentimes, offers that seem too good to be true, actually are too good to be true.
Do not open email from people you don’t know
If you are unsure whether an email you received is legitimate, try contacting the sender directly via other means. Do not click on any links in an email unless you are sure it is safe.
Think before you click
If an email or text message looks suspicious, don’t open any attachments or click on the links.
Verify urgent requests or unsolicited emails, messages or phone calls before you respond
If you receive a message or a phone call asking for immediate action and don't know the sender, it could be a phishing message.
Be careful with links and new website addresses
Malicious website addresses may appear almost identical to legitimate sites. Scammers often use a slight variation in spelling or logo to lure you. Malicious links can also come from friends whose email has unknowingly been compromised, so be careful.
Secure your personal information
Before providing any personal information, such as your date of birth, Social Security number, account numbers, and passwords, be sure the website is secure.
Stay informed on the latest cyber threats
Keep yourself up to date on current scams by visiting this website daily.
Use Strong Passwords
Strong passwords are critical to online security.
Keep your software up to date and maintain preventative software programs
Keep all of your software applications up to date on your computers and mobile devices. Install software that provides antivirus, firewall, and email filter services.
Update the operating systems on your electronic devices
Make sure your operating systems (OSs) and applications are up to date on all of your electronic devices. Older and unpatched versions of OSs and software are the target of many hacks. Read the CISA security tip on Understanding Patches and Software Updates for more information.
What if You Got Scammed?
Stop Contact With The Scammer
Hang up the phone. Do not reply to emails, messages, or letters that the scammer sends. Do not make any more payments to the scammer. Beware of additional scammers who may contact you claiming they can help you get your lost money back.
Secure Your Finances
- Report potentially compromised bank account, credit or debit card information to your financial institution(s) immediately. They may be able to cancel or reverse fraudulent transactions.
- Notify the three major credit bureaus. They can add a fraud alert to warn potential credit grantors that you may be a victim of identity theft. You may also want to consider placing a free security freeze on your credit report. Doing so prevents lenders and others from accessing your credit report entirely, which will prevent them from extending credit:
- Equifax
- Experian
- TransUnion
Check Your Computer
If your computer was accessed or otherwise affected by a scam, check to make sure that your anti-virus is up-to-date and running and that your system is free of malware and keylogging software. You may also need to seek the help of a computer repair company. Consider utilizing the Better Business Bureau’s website to find a reputable company.
Change Your Account Passwords
Update your bank, credit card, social media, and email account passwords to try to limit further unauthorized access. Make sure to choose strong passwords when changing account passwords.
Report The Scam
Reporting helps protect others. While agencies can’t always track down perpetrators of crimes against scammers, they can utilize the information gathered to record patterns of abuse which may lead to action being taken against a company or industry.
Report your issue to the following agencies based on the nature of the scam:
- Local Law Enforcement: Consumers are encouraged to report scams to their local police department or sheriff’s office, especially if you lost money or property or had your identity compromised.
- Federal Trade Commission: Contact the Federal Trade Commission (FTC) at 1-877-FTC-HELP (1-877-382-4357) or use the Online Complaint Assistant to report various types of fraud, including counterfeit checks, lottery or sweepstakes scams, and more.
- Identitytheft.gov: If someone is using your personal information, like your Social Security, credit card, or bank account number, to open new accounts, make purchases, or get a tax refund, report it at www.identitytheft.gov. This federal government site will also help you create your Identity Theft Report and a personal recovery plan based on your situation. Questions can be directed to 877-ID THEFT.
How To Recognize a Phishing Scam
Scammers use email or text messages to try to steal your passwords, account numbers, or Social Security numbers. If they get that information, they could get access to your email, bank, or other accounts. Or they could sell your information to other scammers. Scammers launch thousands of phishing attacks like these every day — and they’re often successful.
Scammers often update their tactics to keep up with the latest news or trends, but here are some common tactics used in phishing emails or text messages:
Phishing emails and text messages often tell a story to trick you into clicking on a link or opening an attachment. You might get an unexpected email or text message that looks like it’s from a company you know or trust, like a bank or a credit card or utility company. Or maybe it’s from an online payment website or app. The message could be from a scammer, who might
- say they’ve noticed some suspicious activity or log-in attempts — they haven’t
- claim there’s a problem with your account or your payment information — there isn’t
- say you need to confirm some personal or financial information — you don’t
- include an invoice you don’t recognize — it’s fake
- want you to click on a link to make a payment — but the link has malware
- say you’re eligible to register for a government refund — it’s a scam
- offer a coupon for free stuff — it’s not real
About Online Threat Alerts (OTA)
Online Threat Alerts or OTA is an anti-cybercrime community that started in 2012. OTA alerts the public to cyber crimes and other web threats.
By alerting the public, we have prevented a lot of online users from getting scammed or becoming victims of cybercrimes.
With the ever-increasing number of people going online, it important to have a community like OTA that continuously alerts or protects those same people from cyber-criminals, scammers and hackers, who are every day finding new ways of carrying out their malicious activities.
Online users can help by reporting suspicious or malicious messages or websites to OTA. And, if they want to determine if a message or website is a threat or scam, they can use OTA's search engine to search for the website or parts of the message for information.
Help maintain Online Threat Alerts (OTA).