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PayPal is quick, convenient, and used by clients worldwide. But this popularity also makes it a juicy target for scammers who know that freelancers often handle multiple transactions from various sources.

As a Cybersecurity Awareness Month Champion, Moonlock has prepared a handbook for freelancers and independent workers on how to spot PayPal scams. Your livelihood often depends on smooth, secure online transactions, and falling victim to a scam can have devastating consequences. But don't worry – Moonlock is here to arm you with the knowledge you need to stay safe.

How PayPal scams work

Scammers are crafty, and they've cooked up several ways to part you from your hard-earned cash. Let's break down some of their favorite tricks.

Phishing emails and texts

You might receive an urgent email claiming there's an issue with your PayPal account, a text message asking you to verify your information, or even a fake invoice for something you never ordered. Some scammers go as far as impersonating government agencies, pressuring you to pay alleged debts through PayPal. They all create a sense of urgency, hoping you'll act quickly without thinking things through.

Remember, if something seems fishy, it probably is. PayPal won't ask for sensitive information via email or text, and government agencies don't typically demand payment through PayPal. If unsure, go directly to the PayPal website by typing the URL into your browser rather than clicking on links in emails or messages. It's always better to be safe than sorry about your hard-earned money and personal information. 

You pay the client

After a few conversations, your client asks you to purchase tools and subscriptions they will reimburse you for later. As a freelancer, you're surely responsible for the materials and tools required to do the job properly, but clients asking you to make big purchases or pay them anything should be a big red flag. 

Keep all the conversations on the freelancer platform for evidence and work on the reimbursement invoice before any purchase on your end. Make sure the invoice is legit, and all expenses are included in your contract.

Overpayments and chargebacks

Here's a sneaky scam that targets freelancers specifically. A client hires you for a project and sends a payment through PayPal. But oops! They've accidentally sent too much. Could you be a dear and return the excess? 

If you do, you might find yourself in a world of hurt. Scammers usually reverse the original payment, leaving you out of pocket for the excess you returned and the payment for your work. This scam exploits the trust and goodwill that's often present in freelancer-client relationships, making it particularly insidious.

Milestone payments via PayPal

Scammers have caught on with freelance platforms that offer milestone payment options. They might ask you to accept payment through PayPal instead of the platform's system, promising to release funds at certain milestones. But once you've done the work, they vanish, leaving you with nothing to show for your efforts. 

How to spot PayPal scams

Staying safe means staying alert. Here are some red flags to watch out for.

First, always check the email address. Legitimate email addresses of PayPal customer service always end with @paypal.com. Anything else is likely a scam attempt. Scammers often use email addresses that look similar at first glance, so take a moment to scrutinize them carefully.

Be wary of messages that use panic-inducing language. Scammers love to light a fire under you, pushing you to act immediately without thinking. Remember, legitimate companies rarely demand instant action under threat of dire consequences.

When it comes to links, hover before you click. If the destination doesn't look right, don't click. Scammers often use URLs that look similar to the real thing but with slight variations. Taking a moment to check can save you a world of trouble.

Pay attention to the quality of writing. Many scammers trip over their own feet when it comes to grammar and spelling. If it reads like a third-grader wrote it, be suspicious. While not all legitimate emails are perfectly written, consistently poor language is a red flag.

Be cautious of generic greetings like "Dear Valued Customer." If they can't be bothered to use your name, they probably don't know you. Legitimate PayPal communications typically use your name or username.

Finally, be extremely wary of any message asking for sensitive information. PayPal won't ask for your social security number or bank details out of the blue. If you need clarification, contact PayPal directly through their official website or app.

Ways to report PayPal scams

Caught a scammer in action? Don't just grumble – report it! 

For suspicious emails, forward them to phishing@paypal.com. PayPal has a dedicated team that investigates these reports, helping to shut down scam operations and protect other users.

If you've fallen victim to a fraudulent transaction, follow the instructions to report it immediately:

1. Log into PayPal, 

2. Go to the Resolution Center, 

3. Follow the "Report a problem" process. 

PayPal will investigate the issue and guide you through, reversing the transaction or compensating you for your loss.

If you stumbled upon a fake PayPal website, send the link to phishing@paypal.com, too. PayPal works with internet service providers and law enforcement to take down these fraudulent sites, preventing others from falling victim.

As a Cybersecurity Month Champion, we at Moonlock also encourage everyone to report phishing scams to the Federal Trade Commission, to email your cases to reportphishing@apwg.org of the Anti-Phishing Working Group, and to call the AARP Fraud Watch Network hotline at 877 908 3360.

Ways to avoid PayPal scams

Treat suspicious notifications from PayPal like leftover sushi in your fridge—approach with extreme caution. If something seems off, it probably is. Trust your instincts and verify independently before taking any action.

Pay attention to slight misspellings or added characters that make a fraudulent address look legitimate at first glance. When in doubt, contact PayPal directly through their official website or app. It's always better to take a few extra minutes to verify than to rush into a potentially costly mistake.

As a rule, don't send money to strangers, no matter how charming their story is. Scammers are expert manipulators and can craft very convincing tales. Remember, legitimate opportunities rarely fall into your lap without effort.

When working through freelance platforms, stick to their official payment channels. While saving on fees by going off-platform to PayPal might be tempting, the protection these systems offer is well worth the cost.

Remember, staying safe online is a lot like freelancing itself—it takes vigilance, common sense, and a healthy dose of skepticism. Follow these tips, and you'll be well-equipped to spot and avoid PayPal scams.