How to avoid chargeback and other scams on venmo, paypal, zelle, etc?
June 4, 2021 1:02 PM   Subscribe

None of these payment apps seem to have a way to decline payments (whether an honest mistake or part of a scam). A stranger paid me by accident on paypal and I couldn't figure out a way to return the money without being charged a fee. I've also heard about chargeback scams on venmo (you return the money in a separate transaction and then they also do a chargeback on the credit card). Is there any way to be safe on these apps? Should I cancel my accounts?

I don't sell things and only use these apps to pay for goods and services or exchange money with friends and family.

A while back, a stranger paid me by accident on Paypal (email address typo). There was no way to decline the payment and it seemed like paypal would charge me a fee if I "refunded" it. We were trying to figure it out with paypal's customer service, but I guess the stranger lost patience and filed a chargeback with their credit card. Paypal then charged me a fee for the chargeback. I was able to get this removed after hours and hours attempting to contact customer service, but it was completely at the customer service person's discretion.

I felt so helpless and frustrated in this situation! Now I've learned about venmo chargeback scams, in which a credit card thief pays you on venmo, pretends it was an accident and asks you to return the money, then the actual credit card owner reverses charges and you're out the money.

I don't think Zelle allows chargebacks (since it's tied to bank account not credit card) but I'm not totally sure or if there's some other similar problem.

After the stressful paypal thing, it seems unnecessarily risky to have all of these accounts where someone could pay me by accident (or purposeful fraud) based on easily mixed up things like email address, phone number, or name, and there's no clear way to resolve it. On the other hand, I've had paypal for many years and only experienced this once.

(I know this could also happen with wire transfer on my bank account (and I have no idea how you deal with that), but that seems much less likely since it's based on bank name and account number, and at least my bank has functioning customer service.)
posted by Gravel to Work & Money (9 answers total) 2 users marked this as a favorite
I'm not sure why you would go out of your way to do anything?

I don't mean that in a grouchy way— but if I paid money to you accidentally, at most I might try to contact you and ask "Hey Gravel, so sorry-- I put 50 to you instead of Pizza Hut, help!" and my expectation would at most be you replying-- "No problem, contact Venmo/PayPal/etc to cancel the transaction and I'll confirm with them if/when they contact me".

I don't see why you would be the person contacting the payment processor?
posted by Static Vagabond at 1:31 PM on June 4 [2 favorites]

Response by poster: As far as I know, you can't cancel payments with any of these services. They all say to contact the other person to request them to send the money back (but don't make clear if there's any fee for this or how to avoid the credit card chargeback scam)
posted by Gravel at 2:01 PM on June 4

You can lock down Venmo so that your transactions aren’t public (they are by default) and allow known contacts only to send you money. I don’t know why on earth this isn’t the default, but it is fixable.

It’s not super intuitive, but it isn’t hard. cnet has a decent overview here.

I’ve never so much as received an errant message or payment on Venmo after locking it down as shown above.
posted by furnace.heart at 2:08 PM on June 4 [4 favorites]

Paypal then charged me a fee for the chargeback. I was able to get this removed after hours and hours attempting to contact customer service, but it was completely at the customer service person's discretion.

I believe this is the issue: that you're being hit with chargeback fees by PayPal etc. when you get an erroneous payment from someone. You can't just ignore the mistake and enjoy the extra money if it's costing you!

Two thoughts:

1. Where's the profit to a scammer if paypal hits you with a chargeback fee? I'm not seeing scam potential in these transactions. You're on the right track when you talk about accidents and mistakes, IMO, and that's good news for often you can expect this problem to recur (i.e. it will be very rare).

2. Given that accidents & mistakes are to be expected in every business transaction and financial relationship you have, I don't believe there is a way for you to completely avoid the possibility of this ever happening to you again unless you close down these accounts.

My personal opinion is: even though it's SUPER ANNOYING that *we* must spend hours on the phone correcting someone else's mistake when this happens, mistakes are rare enough that the benefits of keeping my accounts open more than balance it out. I also try to reduce my personal stress by refusing to seek refunds when the refund amount is lower than minimum wage for the time I'll spend on the phone getting my money back. (In those cases I vent my anger by blasting the company on twitter and shaking my fist at the sky.) But this is a matter of personal tastes and judgement. You might feel that your stress level isn't worth keeping these accounts open.
posted by MiraK at 2:11 PM on June 4

Where's the profit to a scammer if paypal hits you with a chargeback fee?

Not to derail, but the issue is this:

1) scammer uses a stolen CC to "accidentally" send Gravel $50
2) scammer contacts Gravel to say "hey, oops, email typo, can you refund that?"
3) Gravel sends scammer $50
4) actual CC owner issues a chargeback, which comes out of Gravel's pocket

Gravel is now out $100 (or more, if there's an additional fee charged for the chargeback).

Locking accounts (as in furnace.heart's example for Venmo) to only accept payments from known individuals is the way to go to for peace of mind here. Paypal can prevent people from sending you money without an invoice, it looks like, but that may require a business account of some kind.
posted by hanov3r at 3:07 PM on June 4

Lots of email providers allow the use of + extensions on email addresses, so stuff sent to will usually end up in the inbox for without you needing to do anything special.

If your email provider supports this (and I know for sure that both Gmail and Fastmail do) then adding a unique randomly generated + extension to your email address on services like PayPal that insist on using an email address as a user ID will cut your chances of having somebody match it with a typo to nearly nothing, and if you're always logging on to these services using password management software anyway (which you totally should be) then it costs no additional inconvenience.

Plus, if somebody does send you money on this kind of address you can be pretty damn sure they're a scammer and just keep it.
posted by flabdablet at 3:47 PM on June 4 [2 favorites]

Where's the profit to a scammer if paypal hits you with a chargeback fee?

3) Gravel sends scammer $50

Even if Gravel doesn’t send the $50 back, PayPal will still take it back and charge a chargeback fee, so for simply being on the wrong end of a mistaken (or scammed) transaction and doing nothing, they are still out the chargeback fee (not sure how much it is).

I agree locking down your accounts to only accept payments from friends is the way to go.
posted by sillysally at 4:56 PM on June 4 [1 favorite]

I've contacted venmo in the past with success when I've been the target of the scam. File a ticket and ask them to reverse the transaction.
posted by coldbabyshrimp at 6:25 PM on June 4

Someone paid me by accident. I asked for the accurate email address they should have used, for verification, and also checked with Paypal, as it felt so possibly scammy. Paypal said the sender did not have any weird track record. I did not pay any fees and it wasn't a scam.
posted by theora55 at 7:40 PM on June 4

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