16 most common PayPal scams and how to avoid them

In PayPal scams, people trick you into making payments, clicking dangerous links, or losing money in various ways, and you may not find out that you’ve been scammed until you’ve already sent the cash. In fact, PayPal was the most-targeted online payment platform for scams in 2022, and it continues to see new kinds of fraud. The good news? These scams can be avoided as long as you learn the signs.

While you can get scammed on PayPal, this online payment platform is completely safe as long as you know how to use it. All you have to do is learn to see the signs and think twice before clicking. It could save you $50, or it could help prevent years of hardship after catastrophic effects of identity theft.

16 common PayPal scams

PayPal fraud often comes in the form of emails, but it can also be text messages, phone calls, websites, and social media accounts. Most of them try to trick you into believing they’re from PayPal support via a technique called social engineering, but it’s actually a scammer. Be especially wary of Bitcoin scams, too. As a rule, only interact with Bitcoin if you’ve researched and set up your own digital wallet.

Read on to learn how to recognize PayPal fraud emails and other scams involving PayPal.

1. PayPal phishing scam

A PayPal phishing scam is where you get an email that asks you to click a link, and it looks like it’s from PayPal, but it’s actually aiming to get you to hand over your information or download malware to your computer.

PayPal scam emails look like invoices for payments you’re allegedly about to receive, but it can take many other forms, too. They may ask you to confirm a payment, log in, give information, or make changes to your account.

They’ll even try to trick you with a link that says, “don’t recognize this transaction? Click here” But do not click the link. If you get an email without having recently done anything on PayPal, it’s probably a PayPal email scam.

To avoid this scam:

• Always go to PayPal by typing the URL manually and logging in there, or opening your mobile app.
• Never click links in emails (unless you requested a password reset or are creating and activating your account).
• Watch out for emails that look just a bit off, with weird formatting, strange greetings, misspellings, or lookalike email addresses.
• Know that scam emails can impersonate real email addresses. Look up the real support address for PayPal to help verify whether an email is legit.

2. PayPal customer service scam

In this scam, PayPal customer service contacts you about a problem with your account, but it’s actually a fake.

They’ll approach you like there’s an urgent problem, or they’ll act like they’re offering you help. They’ll address you impersonally and not by your name. They may ask for unimportant information before escalating to email addresses, phone numbers, and passwords.

In account services scam calls, the scammer may even impersonate authorities or institutions like the IRS.

To avoid this scam:

• Only talk to PayPal customer service by reaching out to them independently via the PayPal website.
• Ignore unsolicited calls, and don’t call a number back that you don’t know or that’s not listed on the official Paypal website.

3. PayPal call scams

PayPal call scams look like real phone calls from numbers, because they often spoof the real customer service numbers. They’ll ask you to verify a transaction, asking for seemingly unimportant information before building up to asking for your password.

In one variation of this form of PayPal fraud, you’ll get an email about a pending payment or other issue, and you’ll be encouraged to call a number. That number will be fake.

To avoid this scam:

• Only correspond with PayPal’s customer service when you’ve reached out to them yourself.
• If you receive a call or email alleging to be from PayPal, hang up or ignore it, then call 1-888-221-1161 — the official PayPal Customer Service number.
• When in doubt, use PayPal’s website to get in touch with them directly.

4. PayPal invoice scam

A PayPal invoice scam notifies you of an invoice that must be paid. Victims tend to fall for it by clicking a button that says something like, “View Invoice,” intending to get more information. Do not click this link.

In some cases, this scam may come from within PayPal itself and the email may be legitimate. You’ll get real money requests that even show up in your PayPal account. But you don’t have to pay them.

To avoid this scam:

• If you’re not expecting an invoice from someone, do not pay it.

5. PayPal advance fee scam

In this scam, also called the “Nigerian Prince Scam,” you’re told that you’re rightfully owed a large sum of money. All you need to do is pay a fee to release the funds.

That money is actually nowhere to be found, you’ll never hear from that person again, and scammers have walked away $50 or $100 richer.

To avoid this scam:

• Always be skeptical of free money and never send any amount to a random person asking for it.

6. PayPal overpayment scam

PayPal overpayment scams typically accompany some time of marketplace scam. For instance, if you’re selling an item on Facebook Marketplace and someone asks to pay you via PayPal instead of in person. The scam involves the buyer “accidentally” sending you more money than your item costs, then asking you to refund the difference.

If the payment was made with a stolen credit card, the damage may already be done. The fraudulent payment will get refunded from your account, leaving you without the payment for the item as well as the item itself (if you’ve already sent it).

To avoid this scam:

• Verify that the payment is complete before sending your item, and cancel the transaction if the buyer overpays.
• When selling items online, stick to the official platform’s built-in payment methods — never go off platform unless you’re transacting in physical cash.

7. PayPal prize money scam

With PayPal prize money scams, you’ll be given the chance to “win” a large sum of money. In fact, it’s already yours — just pay a handler’s fee or the tax and the prize winnings will be sent to you.

These scammers may claim you applied for a sweepstakes or lottery some months ago. You think to yourself, “Wait, did I?” and thus, the power of suggestion has ensnared you; you’ve become a little more inclined to send them what they’re asking for. In some of these scams, like the Publishers Clearing House scam, the end goal may be full-on identity theft.

To avoid this scam:

• Remember that a legitimate prize won’t require you to pay anything.
• Take some time to talk to your family about prize money scams, as they are often part of elderly scams, too.

8. PayPal charity scam

PayPal charity scams have you believing you’re donating to a good cause, when actually you’re just lining the pockets of a scammer. They may persuade you with fake social media accounts that imitate real charities, and they’ll tell you that “time is running out” for you to make a payment.

To avoid this scam:

• Don’t click anything in the email.
• Every time an organization asks you for money, research them independently and see if you can donate directly on their website, if you’re so inclined.
• Beware of lookalikes.
• If you can, donate to charities through an official source, like your company’s corporate giving program or charitable branch.

9. PayPal shipping scam

This type of scam may accompany a larger brushing scam, and aims to trick you into sending your item to a different address so that the buyer can claim they never received it.

The buyer offers the use of a prepaid shipping label because it’s cheaper for you — but that shipping label allows them to change where the item goes.

PayPal includes some buyer protections when used as the official payment type for a transaction. So, when selling or buying via PayPal, use a shipping method that gives you verifiable tracking and delivery confirmation, and make sure the tracking info and delivery address match what’s recorded in the PayPal transaction. That way, you maximize your eligibility for PayPal’s Purchase Protection if something goes wrong.

To avoid this scam:

• Never agree to work with unrelated shipping companies.
• Never agree to send money to a stranger using a “Family and friends” transaction in-app when you’re buying something; these transaction types are not covered by PayPal Purchase Protection.

10. PayPal employment scam

Scammers advertise lucrative jobs and offer to pay via PayPal. Fraudulent employers may also ask you to front the cost of all the equipment you need to work, with promises to reimburse you in your first paycheck. Don’t fall for this.

If anyone asks you to pay any money for a job directly from your PayPal account, receive money on someone else’s behalf, or change the address associated with your PayPal account, it’s like letting a stranger’s hands directly into your wallet. It can even lead to employment-driven identity theft.

PayPal also can’t protect you if you were tricked into consenting to a fraudulent payment.

To avoid this scam:

• While job hunting, only take jobs with legally-binding contracts or that are managed through trusted e-commerce websites like Upwork and Etsy.
• Remember that scammers may also launch employment fraud schemes directly through employment sites like LinkedIn.
• Remember: PayPal is only a payment gateway and not an e-commerce platform.

11. PayPal investment scam

This scam asks you to pay a small amount to get a share of a huge return, but you never actually get any return.

AI-driven scams are a new threat, and are already sophisticated enough to create fairly convincing deepfakes of celebrities endorsing fake investments. Be skeptical of unsolicited claims of high rewards for little up-front costs.

To avoid this scam:

• Never get involved in an investment like this with a stranger, especially if the offer is unsolicited.
• Consult with financial experts before making any investment. They’ll be able to steer you clear of real estate scams and other bad investments too.

12. PayPal package rerouting scam

In this scam, a customer buys your product but deliberately provides the wrong address. They go behind your (and PayPal’s) back, contacting the shipping company and informing them of the correct address. You lack proof that the item was delivered to the address originally listed, voiding your protections as a seller and forcing you to refund the payment.

To avoid this scam:

• Contact UPS or FedEx directly at the time of sending, telling them that you’d like to have sole control of package rerouting.

13. PayPal rental scam

Watch out for scams involving rentals for houses and apartments. Always ask to see the property and get a lease agreement before paying any amount, if possible.

Also, consider using a platform with protections specifically for rental deposits. If they’re willing to use these, it’s probably not a rental scam.

To avoid this scam:

• Do your best to verify the identity of the owner with a background check or via social media.
• Never pay a deposit without viewing the property.

14. PayPal romance scams

If you’ve been chatting with a new romantic interest through a dating app and they ask for money through PayPal, it’s probably a PayPal romance scam. This type of social engineering scheme is a common way that tricksters exploit lonely individuals. These scammers will often refuse to video chat, they’ll tell you they’re having money troubles, and instruct you on how to make payments to them.

To avoid this scam:

• Don’t send funds to people you’ve never met. Romance scammers often request financial help before they agree to video chat or meet in person.

15. PayPal friends and family scams

PayPal has an option to send funds between friends and family, which waives your buyer protections. This option is meant for money given freely, usually as a gift to a family member and without goods or services attached. If the transaction is for buying or selling goods, the scammer may try to persuade you that they can avoid exorbitant fees with this method, but that’s not worth giving up your protections.

To avoid this scam:

• Never send funds using the “friends and family” option unless they’re actually friends and family.

16. PayPal Bitcoin scams

You may get an unsolicited email or text asking you to verify your Bitcoin wallet information. Alternatively, you may be asked to opt into a Bitcoin or other cryptocurrency scheme with a PayPal payment. Don’t touch anything related to Bitcoin or cryptocurrency until you’ve done research on what it really entails.

To avoid this scam:

• Only conduct your cryptocurrency business within a dedicated crypto wallet.

How do you know if someone is scamming you with PayPal?

Here’s a rundown of ways to recognize if someone is scamming you with PayPal. If you see any of these signs, stop engaging with the other person immediately. If you suspect you’re on the phone with a scammer, hang up as soon as you can.

Here’s how to identify a scammer:

Email signs

Red flags to watch out for:

• Comes out of nowhere asking you to do something right away.
• Misspellings and impersonal greetings.
• The email urges you to click on a link.

Text signs

Red flags to watch out for:

• Impersonal greetings like “Dear user.”
• Urgent requests to take action.
• Strange-looking links that impersonate real URLs.

Spoofed website

Red flags to watch out for:

• The URL and text on the site contain misspellings or tricky lookalikes.
• It looks similar to what you expected, but there are just a few little “off” things.
• You reached the site by clicking a link in an email.

Social media signs

Red flags to watch out for:

• You get unsolicited messages about trading or investing.
• An unsolicited “person” starts chatting with you romantically, then asks for money and instructs you on how to send it.
• Your new friend won’t video chat with you.

Phone call signs

Red flags to watch out for:

• Customer service contacts you first.
• They ask you for information and say there’s a problem with your account that requires urgent attention.
• An “old friend” randomly gets in touch and tries to include you in a lucrative scheme or asks for information.

What to do if you've been scammed on PayPal?

If you’ve been scammed on PayPal, you should take different steps depending on what kind of scam it was. If they have your credit card information, it’s a race against the clock to minimize any potential damage by canceling your card, freezing your credit, and placing a fraud alert.

If all you did was make a payment from within PayPal (i.e., you didn’t click any links in an email) and the scammer took off with the money, you’re in better shape: try to get the money back, but also do some credit monitoring, too, just in case.

In all cases, immediately change your PayPal password to something stronger. Keep an eye on your accounts for any suspicious activity, and file a dispute with PayPal.

Report PayPal scam transactions by clicking Report a Problem in the transaction details. Be careful to choose the correct reason for the report. For example, “unauthorized activity” is inappropriate for a payment you consented to make, even if you were duped. It doesn’t matter if you were tricked into making it; you will slow down the process for reporting the scam if you choose the incorrect option.

Just remember, you can’t be too careful when preventing identity theft. Here’s a rundown of what to do if you’ve been scammed on PayPal:

• Change your passwords
• File a dispute with PayPal
• Try to get the money back
• Monitor your credit and bank accounts
• Freeze your credit
• Place a fraud alert
• Report the incident to the FTC

How to avoid PayPal scams

You can avoid PayPal scams by strictly adhering to a few precautions, like never clicking links in emails, always paying by credit card, and avoiding direct contact with strangers. Once you learn these precautions, they’ll become second nature, and you’ll be much safer online.

Here’s a rundown of how to avoid PayPal scams:

• Don’t click on links in emails: Anybody can send you a URL to a fake website that asks for your personal information or downloads malware to your device.
• Don’t overshare on social media: If you publicly post your email address and personal information, someone could hack into an unsecured PayPal account by guessing your password just based on information you share online.
• Only access websites by manually typing the URL: If you type paypal.com directly into the address bar, with no typos, you can be more sure that you’re navigating to the real site.
• Only accept requests from people you know: Never send money to strangers. Only consider requests for direct payments if you trust the other person.
• Use your credit card: It’s much more dangerous if a debit card falls into the wrong hands, because it provides direct access to your bank account.
• Turn on buyer or seller protection: Trusted ecommerce websites like Etsy, Upwork, and eBay protect clients, suppliers, customers, and sellers — as long as all business is kept within those websites. PayPal automatically protects you and assists when items are not received or unauthorized activity is detected.
• Share personal information over secure channels: Protect your personal information at all costs. Only type in your name, address, or other information when you’re on the real website and there’s a graphic of a padlock next to the URL in the address bar.
• Set up two-factor authentication (2FA): Make it so that you can only log in or make a payment with the help of a text message verifying your identity. This dramatically increases the security of your accounts when you turn it on. You can also enable a biometric lock for your PayPal app.

Monitor for signs of identity theft

Monitoring for identity theft can be like a full-time job. So why not get a trusted and reliable service to do it for you?

Subscribe to LifeLock Standard to help protect your identity and stay updated on suspicious account activity. Members get credit monitoring, alerts for potential identity theft or fraud, and up to $25,000 in stolen funds reimbursement. Install LifeLock Standard today to help guard against identity theft.

FAQs

Can someone access your bank account through PayPal?

Yes, PayPal can pay for transactions with funds from your bank account if you don’t have enough balance in your PayPal account.

Has PayPal been hacked lately?

A recent PayPal data breach took place in December 2022 when the personal information (like social security numbers and addresses) of 35,000 users was leaked.

Does PayPal protect against scams?

PayPal is primarily concerned with protecting against unauthorized transactions. In other words, if you authorized a transaction, even if you were tricked into doing it, PayPal has fewer protections. It’s only an online payment platform, and not an e-commerce platform, so it’s up to you to safeguard your PayPal account like it’s your wallet.