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I've been getting tens of ads in Instagram lately, about GPUs and PCs selling at 1/10 the normal price.

The method of payment from is PayPal. I am wondering how would this work in any way for the scammer. I can just pay via PayPal, wait for the package, and when it doesn't show up I can request a refund from PayPal. PayPal has a 180 day refund policy.

Is this a futile attempt from the scammer to make money, or am I missing something?

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    The only reason I can think of, is that scammers do this hundreds of times to loads of people within a short timeframe, and just hope that some of these people don't know how to use PayPal refund option, or just forget about the purchase. However, the prices in the website I linked are always above 90$, which is not a small amount to forget about.
    – Snow
    Jun 29 at 11:40
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    One option for them may be to attempt to have the customer send their money as a Friends and Family transfer rather than a purchase. They may phrase it as not wanting to pay the percentage to Paypal. That ends up bypassing any option of claiming a refund. Jun 29 at 20:09
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    1 / 10th normal price? So MSRP? lol. Jun 29 at 20:49
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    (My concern is how Instagram became a place of almost-obvious scam ads that are fancy and still-not-obvious-enough fot Facebook to take them down. I have the "win a Tesla by donating to African children and participating in a lottery" versions since a long time.)
    – Neinstein
    Jun 29 at 23:36
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    There was something in the news about China banning Bitcoin-mining, leading many former-miners to sell off GPU's for cheap.
    – Nat
    Jul 2 at 8:25
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I’m guessing that the scammers have figured out a way to create new PayPal accounts, make a few bogus sales, and extract the money quickly from PayPal before the PayPal disputes start coming in. PayPal will then refund the buyer’s money and attempt to recover from the merchant/scammer, but will not always be able to do so. The scammer is ultimately stealing from PayPal, not the buyer. At some point, PayPal will figure out a way to detect this and shut it down earlier, and this particular scam will die down.

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    @ceejayoz gives another perspective. I see questions about such scams. Seems like Paypal decides to turn a blind eye when they are to lose money :/ Jun 30 at 7:56
  • Isn't there a fee to recover funds from scams? I remember getting scammed way back on a $20-25 sale, but it was below the fee to dispute it so I couldn't do anything. If these are 1/10 the normal price, they could very easily be less than that fee.
    – rtaft
    Jun 30 at 17:24
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Ben Miller's answer is excellent, but there's an additional possibility here, that they'll fulfill something - a rock in a box, a broken PC/GPU, etc. - with full tracking as evidence that they delivered something to the right address with the right weight. PayPal will tend to side with the seller if enough evidence is provided, and it can be an uphill slog if they decline the first claim.

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    yup, this happened to me. No idea what they sent, but it had a tracking number that worked on the website of a government based institution (Canada Post). I looked into making a claim... but once I saw the crap about delivery notice I gave up. I just swore to never use Paypal again.
    – Michael
    Jun 29 at 21:42
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    @Michael Im not sure if Paypal is really the one to blame there. The problem is just who are they supposed to believe ? The seller who could have shipped a rock instead of the item or the buyer who could be bullshitting about receiving a rock instead of the item to get a refund.
    – GamerGypps
    Jun 30 at 8:15
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    "PayPal will tend to side with the seller " I don't believe PayPal is pro-seller. Some scammers even use this to rip off sellers requesting refunds of delivered items. And the stone in a box is a well-known scam. If multiple people complain against an account, PayPal probably will side with the scam victims. Jun 30 at 9:51
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    @QuoraFeans Therein lies the answer "if multiple buyer". Close down shop after every three or four scams.
    – paulj
    Jun 30 at 11:23
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    PayPal will side with whatever is easiest for PayPal. At best PayPal is a neutral arbiter. I think in reality PayPal is a payment processor whose primary interest is in having payments happen and having money at rest in accounts so they get fees and interest. Don't try to guess or rationalize how or why PayPal might make a decision in any given case or a general set of circumstances.
    – Freiheit
    Jun 30 at 12:42
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The scammers may be using PayPal but they may not using their own PayPal accounts. Skim the scams tag and you'll see many of the scams or fraud are trying to get access to accounts to act as mules or launderers.

The scammer will use someone else's account, sometimes even with that persons knowledge and assistance, get the money, take the money out via some irreversible means (gift cards or money order), then be long gone when the refund hits the actual account owner and reduces their balance.

The advantage to the scammer is that none of their own money is at risk and they can still get buyers because of the PayPal protection for buyers.

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One possibility is that this is a type of triangulation fraud. This is a kind of fraud where the fraudster uses a stolen credit card to purchase goods at full price and them ship them to you. The scam goes something like this:

  • You buy the goods from the fraudster and send money to their Paypal account
  • The fraudster buys the goods at a normal price from a third-party retailer using a stolen credit card
  • The fraudster gives your shipping information to the third-party retailer & has the goods shipped directly to you

This is great for the fraudster because:

  • You have actually received the goods you paid for so are unlikely to complain to Paypal, allowing the fraudster time to withdraw their money
  • The fraudster never had to disclose their physical address to anybody as the goods were shipped directly to you
  • The charges appearing on the stolen credit card come from a legitimate retailer, making them harder to detect

There was a great presentation given by Nina Kollars at DEF CON 27 about triangulation fraud that covers triangulation fraud in detail: (link).

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Another possibility besides those already mentioned, is that the scammers might start making recurring charges to your paypal account, as some sort of "subscription" service and still not send you anything.

My mother was a victim of such a scam, she ordered some items from a seemingly legitimate looking company's site. But the item didn't arrive on time, and the package "tracking" feature, was no help as it only showed that the package had "left China" with no more updates after that.

After emailing the company multiple times about it, they eventually sent her a "Google Translated" email, telling her to be patient because international shipping can have unexpected delays. So she waited. Almost 3 months. Further emails to them got no response at all.

Meanwhile, she started getting a monthly charge from the company. For a "subscription", that she did not remember subscribing too.

She'd had 2 of these monthly charges before she even told me what was happening, & asked me what to do.

A quick look at their site & I saw what they were up to: on the checkout page was a generic looking "sign up for our email list" option, and it was ticked "on" by default.

That was the "subscription". They conveniently left out that there was a monthly fee for being on their "email list", but also never said that it was free either. Interesting little loophole, eh?

And she was not receiving any sort of newsletter from them either. So I assume this subscription "email list" was exactly that, just a list of their customer's emails, probably collected to sell to other scammers/spammers.

On Paypal we were able to disallow the "subcription" and put a stop to that BS. I didn't bother with asking the company to cancel it, since they'd already gone silent. But I did some more investigating, discovering a trail of fraudulent behavior.

We opened a case to Paypal, including links from my investigation showing the fraudulent behavior, and immediately escalated it, explaining that we had already contacted the company & they had stopped responding months earlier.

Fortunately, Paypal refunded the item purchase, but each "subscription" fee was a separate charge & would've needed to be disputed individually. I told Mom she could do that for each one, or let them go, be glad she got the main purchase refunded, and consider it all a lesson.

And, oh yeah... Mom never received any items, just charges ... what a shocker there...

So why would a scammer want to use Paypal?

It gives many people a false sense of security -- "this guy must be legit, he wants me to use Paypal, I can't get scammed through Paypal"

Wrong! A scammer might not be able to pull the old "get their credit card number & run it up to the max" scam through Paypal, but they still come up with other ways to scam through Paypal. Paypal is not a magical, perfect, scam-proof payment method.

Even if Paypal is doing their damnedest to stop scammers & frauds, they aren't perfect.

The scammers are already working some angle within Paypal to defraud people.

Others have suggested how it might be done. Make an account (with false id/credentials) grab as much money as they can from victims, shut down the account, make a new account (with another false id) & repeat. They could be using stolen accounts or looking for accounts to steal. They could send you something that "gets lost in the mail" and try to dissuade you from opening a dispute, until the deadline is passed.

And alongside all those possible scams, they could make recurring charges to your account, too.

My bet is that they're doing a "mass marketing" scam, and they're counting on the majority of victims to: A) not be paying attention, B) not know how to open a dispute, or C) be too lazy/fed up to bother with a dispute.

For example: @Michael's comment.

I looked into making a claim... but once I saw the crap about delivery notice I gave up. I just swore to never use Paypal again.

That is exactly the attitude scammers count on. -- "they won't bother reporting me for scamming, they'll just give up & blame Paypal"

Given that they're "selling" items at "1/10" normal price, they're likely counting on most victims deciding "oh well I got scammed, but it's too hard to file a complaint, it isn't worth it to fight over a petty amount".

Except the scammer is scamming from how many people? Dozens? Hundreds? Thousands? So even if they only get a "petty" amount from each victim, that money adds up for the scammers.

ETA:

Another possibility that occurred to me is it might be a phishing scam instead of a Paypal scam. The scammers running these ads might have a "pay through Paypal" button on their site that actually opens a fake page that steals account logins, & the "super discount" items are just the bait.

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