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The Better Business Bureau is warning of scammers using a PayPal policy to trick online shoppers into paying for goods that don’t exist.

The BBB says they have received multiple reports of the con through the company’s Scam Tracker.

How the Scam Works: 

The theft often begins with a website listing brand name goods at fantastic prices, the BBB warns. The site and products will often seem legitimate, and the option to pay via PayPal may feel like an extra layer of security.

Once you buy the items, the site will give you a tracking number from UPS, FedEx or another service. The first sign of trouble usually comes several days later when the tracking number shows the package has been delivered, but there is nothing at your door. A call to the shipping company will inform you that a delivery was made to the wrong address.

The BBB says at this point consumers usually try to contact the seller, but find them unresponsive or unhelpful. Some won’t list any contact information at all.

“Some scam victims report filing a claim with PayPal because their protection promise says you can open a dispute if your order never arrives,” according to the BBB. “But because the scammer technically shipped the package and the tracking number marked it as delivered, PayPal rejected their claims.”

One consumer reported to BBB Scam Tracker: “PayPal denied my claim because the seller showed the tracking number as being delivered. I even had UPS send PayPal the proof that I didn’t receive my package, but all PayPal required is a tracking number loaded and shows delivered.”  

PayPal’s own investigators told the BBB that the websites shoppers see first are often slick, high quality landing pages that aren’t actually linked to a PayPal account. When they try to pay, however, the buyers are unknowingly redirected to a “shell” or low quality site to complete the PayPal transaction.

But what happens when the buyer files an “item not received” complaint with PayPal? The Silicon Valley company notifies the seller that they have ten days to show proof of delivery. Unfortunately, the BBB says, the con artists are able to steal valid tracking information that shows a package was delivered in the correct zip code during the specified date range. After receiving apparently valid proof of delivery, PayPal rejects the user’s claim.

PayPal said in a statement to the BBB:

“We notified various shipping carriers of this issue allowing tracking data to be stolen and we believe it has been closed. In addition, we made enhancements to our algorithms to identify and disable these fraudulent bad actors. In fact, we are stopping a significant majority of these fraudulent sellers at first transaction through our detection program and have refunded customers impacted by this fraud scheme even if they did not appeal our decision.”

The BBB has the following tips for avoiding becoming the victim of online shopping fraud:

  • Before paying, know your rights and responsibilities. In everything from check cashing scams to cons involving new peer-to-peer payment systems, scammers often take advantage of what consumers don’t know when it comes to processing payments. Don’t make a purchase from a shady seller assuming you’ll be protected no matter what. 
  • Before buying online, confirm the site has real contact information. Make sure the seller has a working phone number and address on the website, so you can contact them in case of problems.
  • If the price seems too good to be true, there’s probably something wrong. Be wary if the item is selling for significantly lower than what you’ve seen elsewhere.
  • Review BBB online shopping tips. Many online purchase scams use similar tactics. See BBB.org/ShoppingOnline for more advice.

You can find out more about spotting and reporting PayPal fraud. For more resources on shipping fraud, see FedEx’s website and UPS’s online resource center. To learn more about scams, go to BBB.org/ScamTips.

If you’ve been targeted by this scam, help others avoid the same problem by reporting your experience at BBB.org/ScamTracker. PayPal Inc., FedEx Corporation and United Parcel Service are all BBB Accredited Businesses.