Introduction
Today I want to talk about another scam I’ve been seeing happen quite a bit with PayPal.
There was a specific example just recently where somebody reached out to me on my Facebook chat.
I kind of helped them through this live and made sure that they did not fall prey to this scam, so I decided to do a video and make sure everybody can learn from this as well.
Video
How Does this PayPal Scam Work?
This scam is related to the PayPal Friends and Family method of making payments.
To set that up and help understand why this works and how the scammers are able to utilize this, let’s talk about the different types of payments.
With PayPal, you can send or receive a payment for Goods and Services, or you can pick Friends and Family.
When you go into PayPal, if you manually send a payment, it will give you the option of Goods / Services or Friends / Family, and you can choose either one.
Obviously, if you are paying for something like a physical good or digital good, or a service of any kind, then you should choose Goods and Services.
Friends and Family is really used for exactly that; Friends and Family. If you’re just trying to exchange cash between people that you actually know, and you are not really buying anything.
Maybe you’re just splitting dinner or paying somebody back for something that you owe them directly, then you can send cash with PayPal Friends and Family and there won’t be any fees taken.
So that’s where one of the kickers of this whole thing comes in. The scammers like to use that, and we’ll come back to that. First, let’s again split between these two examples.
PayPal Goods and Services
With Goods and Services, if you’re the seller, you’re going to have PayPal Seller Protection.
As long as you follow standard procedures for that (see our other videos) you’re going to have protection as a seller when you receive a payment for Goods and Services.
You’re going to pay a fee for using PayPal to process that payment to generate revenue.
Now if you’re buying something with PayPal, and again, you’re using Goods and Services, you will be covered by Buyer Protection.
If you’re shopping on a website, buy now button, checkout system, etc. it will automatically be processed as Goods and Services.
The only way you can do Friends and Family is to manually send the payment and specifically choose that type.
Again, though, if you’re buying something online or paying for any good or service, you will have this buyer protection in place.
So there are protections on both ends, and the seller would pay a fee for using the system to process those types of funds.
PayPal Friends and Family
Let’s take a closer look at Friends and Family again. The idea is that you are paying people you know for something that is not a business transaction of any kind.
That’s why there are no fees as long as you pay with cash (ie. PayPal funds or bank funds). Along with that, though, there are also no protections for buyers and sellers!
If you send somebody money Friends and Family, and you’re expecting to get something delivered, and that “thing” does not get delivered; there’s nothing you can do about it!
You cannot file a dispute. The policies state this clear. That’s not what this type of payment is intended to be used for.
Even if you did receive your item, and PayPal found out that you’re doing this, they could close your account and kick you off the platform because it’s against their policies and procedures.
How Do Scammers Use this to Their Advantage?
I was talking to somebody just recently telling me they were going to buy a Fortnite account.
I see this a lot, where they were chatting this person online and had even become pretty close friends with them. They offered proof that they owned the account, and were ready to sell it to them.
However, they insist that the person send the payment with Friends and Family. The reason they will give is because it can save them on the fees, so they could potentially sell the account a little bit cheaper.
They also might claim that you’ll get access to the account faster because there will be no hold on the funds.
So this person had this all setup and was about to do it. I kept telling them “no, just don’t do it!”
If you’re going to buy something like that, that person should send you a PayPal invoice. You get the invoice, and on the invoice it says exactly the line items of what you are purchasing. When you pay that invoice, you’ll have Buyer Protection behind that.
You could even pay with a credit card as the funding source, and get some extra protection that way.
But when you pay Friends and Family, you don’t have any protection.
So, in this case I kept telling the person to ask the seller to send an invoice. Have them setup a pay button on the website, or send a basic money request. Or even send the money directly, but make sure to do it with Goods and Services, and type in exactly what you’re buying.
That way if anything goes wrong you can follow the buyer protection procedures, and in most cases you can get your money back.
Conclusion
After a lot of back and forth I was able to get this person to see that with the seller offering to sell the account, but refusing to send an invoice, refusing to do a button, and kept insisting to do Friends and Family…he backed off.
I would highly recommend that for anybody else in a similar situation. If you are EVER buying something, don’t use Friends and Family!
Only use that if you are dealing with actual friends or family and you’re just covering each other funds.
This happens with a lot more than Fortnite accounts, by the way. I see this all the time with general merchandise (ie. watches, shoes, purses, software, etc.)
Basically, anything that somebody tries to sell you, if they insist on using Friends and Family, that is a giant red flag. Don’t do it!
If you follow that rule you’ll be just fine, and you’ll get all of the protections whether you’re on the seller side or the receiver side.
Again, make sure to follow the standards there and you’ll be good to go.
I hope this guide was helpful! If so, please share it with your true friends and family so that we educate everybody.
That’s the best way to fight these fraudsters!
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A Facebook group that I have been a member of is stating they are changing to a subscription based service for the same information that has been free. They state I must pay $20/yr per member via PayPal using Friends and Family. This is for digital access to a group. I believe this violates PayPal standards for Friends and Family payments and should be a Goods and Services payment for a digital good. Isn’t this a scam and/or an abuse of Friends and Family? Thank you.
Hi Craig,
Yes, it is indeed. If you know the group well it may not be a scam, but it’s certainly taking advantage of F&F to try and skip out on the fees, which is against PayPal’s terms. They really shouldn’t be doing that.
Yes, I got scammed under the Groups: Cast Iron Railroad Signs.
I should’ve know a deal to good to be true.
Lesson learned.
This guy had a legit looking Facebook page etc.
I made the mistake of not asking for a invoice through PayPal first.
He made all arrangements for the PayPal account to send the transfer to. I fell for it.
So beware of this type scam.
Ugh, sorry to hear that! Hopefully it wasn’t too expensive of a lesson to learn.
Hi!
seller on facebook. The photo of the item showed me, insists on a fractional payment. Shipping – by FF- way. The item is like a goods. She justifies that the payment will be on hold and she does not want to invest her money on shipping.
I would avoid this type of seller. Sounds like a scammer. Not your problem if the payment gets held on their end.
How is this fair, now? Just because it is a family and friends? So you can get scammed and PayPal is allowing people to get scammed (because obviously look at the comments people have been SCAMMED using this “Friends and Family” Nonsense!) It should be protected, your customers should be protected at all costs for this. You have a duty and an obligation to protect your customers from being scammed; meanwhile YOU ARE PROVIDING A SAFE AND SECURE WAY OF SCAMMING PEOPLE!! My boyfriends mother just got scammed for $650 through this method and there is absolutely nothing that PayPal can do!
I understand your frustration, but I think you should consider seeing this form all perspectives. Using Friends and Family in this fashion is clearly a violation of the terms and conditions of PayPal. This is exactly why. There’s no protection on those payments, and there is too much fraud around such transactions. PayPal offers it as a service to easily exchange money with “friends and family.” Buying a gaming account from some random person online is not a “friend or family member” that you are sending cash to. It’s a sales transaction, and you should be using the standard procedures for such a transaction. Had the rules been followed, the cash would not have been lost.
It’s a shame that fraudsters take advantage of this, but PayPal is not the only area where this sort of thing happens. Fraud happens everywhere. It’s insane the sort of things people do. PayPal just happens to have 400 million accounts so even a small fraction of problems turns into a large number of individual stories.
I’m curious, why exactly did she send the cash using F&F? The “seller” must have said something like “oh I can do it cheaper because I won’t have to pay a fee”, or maybe something like “If you send it that way I’ll get paid immediately and then I can send the account right away”…??
In any case, that should raise a red flag. If somebody is trying to dance around the rules in any way, that’s not good, and I would be surprised if there wasn’t any knowledge at all that you were doing something you really shouldn’t be doing.
$650 sucks to lose, I get it. I’m glad it wasn’t $6k. Use it as a learning experience and now you know it’ll happen to you again on PayPal or anywhere else.
There is person selling on ebay new Samsung galaxy z2 foldable phones for 500gbp or best offer.
The only payment he officially accepts is PayPal family and friends.
It is scam and I don’t understand why ebay does let it to happen.
It’s just hard for them to keep track of so many accounts. Best thing you can do is be careful like you are being, and maybe report them if you want to take to do it.
How do you even report these sort of things to Paypal? Because it feels like certain people are doing this, but they face no consequences.
Here is an article with details about how you can report scammers: https://www.paypal.com/us/smarthelp/article/how-do-i-report-potential-fraud,-spoof-or-unauthorized-transactions-to-paypal-faq2422
Honestly, though, it’s very difficult for them to do anything about. These guys can use different servers all over the world to hide behind. The best thing you can do is educate yourself on their tactics and make sure you never get caught on their hook.
Can i still get scammed if i recieve the money?
So you’re selling your account and you asked them to pay you via Friends and Family?