Editor's Note: Michigan State University originally posted this article using a vehicle as the fraud product being sold, but I've changed it to selling a horse to make this post more appropriate for our readership.
You are so excited. You just posted your horse for sale using an online site and you receive an offer via text message in less than 24 hours. You respond to the email the buyer provides in the text message. The buyer asks questions about the horse and tells you that he was just deployed overseas and is buying your horse for his daughter. You agree to pay to ship the horse to the daughter. The buyer asks if you have a PayPal account and if you do not, gives you instructions on how to set one up.
As the conversation continues, you receive an official looking email from PayPal stating the price of the horse plus extra funds for shipping. All you have to do is send the buyer’s shipping company $1,345 via Money Gram so they can come and pick up the horse.
Yes, you can see it all unraveling now. Having just experienced this scam, I was grateful that I contacted PayPal to verify that funds were indeed deposited into my account as I did not see the amount reflected online. PayPal informed me this was fraud and shared some tips on how to avoid fraud. In fact, PayPal advised to never ship an item, pay a shipping fee, send a Western Union Money Transfer or provide a tracking number before the payment received is available in your transaction history.
Editor's note: We now return to the vehicle example, although the fraud contacts remain the same for any Internet fraud scam.
Several car buying and selling web sites along with the Federal Trade Commission, the Federal Bureau of Investigation (FBI) and On Guard Online also provide some excellent tips on avoiding online fraud.
Vivian Washington, Extension educator with Michigan State University Extension, said to always verify the validity of the payment before you transfer ownership and deal with the specific person who is purchasing your vehicle, not someone acting on his/her behalf. It is best to accept cash, a money order or certified check instead of a personal check. Be cautious of buyers and sellers who ask you to set up accounts with online payment services. Legitimate escrow companies do not use person-to-person money transfers like Western Union or MoneyGram or direct you to send your payment to an individual rather than a corporate entity.
Be skeptical if someone wants to buy your vehicle and has never seen it,especially buyers located overseas. Always verify the buyer’s street address and phone number. As my experience shows, this may be part of a common scam where phony buyers make a supposed payment that is more than the cost of the vehicle and request a cash refund from the seller such as asking for a transfer to be done using a money wire service.
If you are a victim of fraud, you should file a complaint with the Internet Crime Complaint Center (IC3). IC3 focuses solely on cyber-crimes and is a partner with the FBI, the National White Collar Crime Center and the Bureau of Justice Assistance.
In addition, contact your local law enforcement. If there was any interaction with a scammer posing as a prospective buyer within their jurisdiction, they should take a report. It will also help their fraud department identify trends for scammers in your area.
Internet Fraud Resources
- Internet Crime Complaint Center (IC3)
Internet Fraud Preventive Measures
- Better Business Bureau (BBB)
Tips to Avoid Online Escrow Fraud
- Federal Trade Commission (FTC)
Practical Tips to Help You Be on Guard Against Internet Fraud
- Securities & Exchange Commission (SEC)
Fake Seals and Phony Numbers: How Fraudsters Try to Look Legit
This article was provided by Michigan State University Extension.