BBB: Tips to avoid overpayment scams

Published on Saturday, 26 July 2014 22:56 - Written by Mechele Agbayani Mills Better Business Bureau

Running a successful business is tough enough without throwing fraud into the mix.

According to the Association of Certified Fraud Examiners, small businesses have a fraud rate of nearly 32 percent. BBB is warning businesses to be suspicious of customers who send checks for amounts much greater than the product or service being purchased and advises them to become familiar with the signs of an overpayment scam to keep from being victimized.

Check overpayment scams are nothing new. They often happen in response to ads or online auction postings. Sellers are contacted by an alleged buyer, who offers to pay for an item with a check. At the last minute, the buyer will often present a reason for having to write the check for more than the purchase price and request the seller to send or wire transfer the excess or place it on a prepaid credit card. When the business’ financial institution attempts to withdraw funds on the original payment, the fraudster’s account is empty. The business or seller does not get paid, and the money wired is gone.

BBB has received calls from contractors who were contacted by individuals who claim they needed work performed on their home. The contractor receives a text for a bid from a “homeowner.” Through email communication, the “homeowner” accepts the bid and even signs the contract. The contractor receives a check for the work to be performed which is more than the agreed upon amount. From here, the scam plays out the same: The contractor receives a request to wire transfer the extra money or place the extra funds on a prepaid card, and the “homeowner” is never heard from again.

Overpayment scams can take form in various ways. However, despite the mode of attack, the end result is the same — the victim is left with an overdrawn account — they might even be held responsible for overdrawn fees and funds and face charges for fraudulent checks.

The BBB offers businesses this advice on accepting checks from unknown parties:

n Know who you’re dealing with. In any transaction, independently confirm the buyer’s name, street address and telephone number.

n Never assume that the check is legitimate, even if it’s a cashier’s check. It may take weeks for the financial institution to learn that it is counterfeit.

n Never accept a check for more than the purchase price of the product or service. Ask the buyer to write the check for the correct amount. If the buyer refuses to send the correct amount, return the check and do not send the merchandise.

Keep in mind, you are the party who is ultimately liable to your financial institution. Be careful.

Verify all checks, as well as certified checks, with the issuing financial institution. Get the financial institution’s phone number from directory assistance or an Internet site that you know to be reputable, never from the party who gave you the check.

For more tips on how to be a savvy business owner, go to bbb.org. To report fraudulent activity or unscrupulous business practices, call the BBB Hotline at 903-581-8373.