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What's the best way to avoid scams when being paid by strangers on the internet?
Ugh. Scammers are everywhere, and I know I'm getting them in my inbox and junkmail, but I need a way to know who I am wasting my time on and who is a real client.
My current client doesn't seem to speak in the usual way (for example saying "you have replied to me perfectly" in response to me asking "Please let me know if this works for you or if you wish to negotiate"). They want to pay me via a cashier's check. I just now told them I only accept PayPal payments (that is what I've always used). Waiting for a response now.
So my question is, which of these would be the most secure method of payment to use over the internet, with strangers, where contact is via email?
PayPal
Wire transfer
Cashier's check
Other (write in comments)
The only way that a cashier check from a stranger is safe is to have your bank completely verify the deposit, which may take a few days, before shipping the item to the buyer. The common scam for that is to send you a cashiers check that is fake, take the product, disappear. Another is to send you one, accidentally "overpay", and then ask for a refund for the overpaid amount. I would avoid this method. I feel like there is almost no reason to pay in this manner, unless the purchaser just straight up doesn't have a bank account, which in itself is a red flag.
Yeah. And it's a digital product. A logo I'm supposed to design. They'd see it multiple times throughout the creation process so I have to guess that if they were going to scam me via the check, it'd be the second method where they send too much and ask for some back before the check is cleared.
I've only ever been mailed checks from family members for special occasions. So this correspondence struck me as weird af.
You may already have been scammed as well.
If they've seen the design, they've probably screen captured your design and can easily replicate it.
If you balk at their preferred payment menthod, they might just ghost you, knowing they've already got a screenshot or 3 if they need it.
Oh, I haven't started the project yet.
You could ask for a US Post Office money order. The only way to get one of those is to go to a post office and get one. Moreover, you can't buy one with a credit card. The Post Office makes sure you have the money before they give you the money order, so you know it's good.
Fraudulent money orders are always a possibility. But faking a Post Office money order is a serious federal offense and would require an elaborate act of physical forgery. And if you're still paranoid, you can always take the money order directly to your local Post Office instead of depositing it in your bank account. Go to the Post Office and cash the money order, then deposit the cash in your bank. The problem with banks and money orders/checks is they'll often not actually be fully "cleared" by the time the money pops into your account. It actually takes weeks to clear checks. If you're a customer in good standing with a bank, they'll usually just take your word for it that the check is good and credit your account immediately. Then, weeks later, the money is removed from your account when the check turns out to be bad.
Wire transfers aren't necessarily a bad option either, as those are irreversible. Or at least that's often the case internationally. There's a reason the scammers all want wire transfers. A payment by regular check can be reversed, an international wire transfer can't. While that helps scammers looking to steal grandma's retirement, it also helps you trying to get assuredly paid for your work.
Another possibility is Venmo. I believe their payments are irreversible. Finally, there are other more primitive and exotic options like literal cash in the mail or crypto.
Finally, one other option you might look into is formal escrow services. I found escrow.com via a quick search, though I have no idea how good or legit it is. The idea of an escrow service is that they serve as middle men who protect both buyer and seller in a transaction. There's a reason escrow services are used for big-ticket items like real estate. You don't generally buy a house just by handing the seller a cashier's check and asking them to sign a quit-claim deed. You use an escrow service. The seller assigns the title to the escrow service. The buyer hands them the money. The escrow services verifies that the funds are good and that the property deed is valid. Then the escrow service gives the buyer the deed and the seller the cash. They serve as a neutral and reliable middle-man. And typically they assume the liability. So if the payment does in fact turn bad, they're on the hook for it, not you. They in turn have far greater resources than the average person to look into and verify the authenticity of payments.
I wouldn't recommend receiving wire transfers for most people, especially international transfers. For international transfers you need to give the sending party your full name or business name, name and branch address of your bank, your banks swift code, and your bank account number. Unless you have a dedicated receiving account under the name of your small business LLC, that is a lot of private information to give out to scammers.
Even for domestic, giving out your banks routing number and your account number makes me leery.
Edit: I would also second the suggestion for venmo or other cashless app that doesn't allow transaction reversals.
Why is that?
My bank details aren't private information. Because I'm technically a small trader and I don't want to pay for business banking, I have my personal current account number and sort code printed on my invoices, so even people who use paypal or revolut (aka 95% of my customers) get to see them. This has been going on for years with no issue.
I was under the impression that the only thing someone can do with your account number and sort code is give you money. Plus of course I'm protected against fraudulent direct debits anyway. Also I don't have much money to steal, so good luck robbing my current account. If anything I'd expect the thieves to take pity on me and drop a few hundred quid in.
Bank transfers aren't reversible by the sender - except in very unusual circumstances - so they're a good safe way to receive money.
A lot of the harm has been reduced by changes in bank practices, but everything from initiating withdrawals, to opening accounts under your name, to general Identity theft is made easier with your account information.
Here is a good light summary.
Anything that might be considered private, and thus a potential security answer to verify identity is particularly valuable. In a prior role I saw people get their direct deposit hijacked and accounts drained that stemmed from an initial leaking of their bank details. Once those details were compromised the attackers spidered through their life looking for ways to use the information.
Ah, that all sounds a lot like America problems, and from what I understand their banking system is very.. um.. let's say retro.
I have discussed this with my bank and there is no way to get money out of my account with only the sort code and account number. Even if there was, all unexpected payments need 2FA, which requires both biometric and a passphrase authentication. Someone can't just type my account number into something and move money around.
That's fair, there are a lot of differences in domestic banking country to country, and I was thinking in US domestic terms. Though I would be careful with SWIFT transactions as well. Many countries have improved their banking quite a bit, while the US banks have more or less congealed around cashless apps for any enhanced features.
I would only opt for wire transfers if there is no other choice. I've seen both domestic and international wire transfers "get lost" and its a headache to un-lost them.
I’ve run into this several times, and absolutely the minute something smells funny I lose all hope of having the job and immediately start raising the bar on their ability to do business with me. Meaning I start treating them as a scam, but professionally. I start with requiring a deposit. It’s refundable, but I do it over Venmo or PayPal or some way it’s known and safe for me. Then I stop communicating. If they actually want me to do the job, they’ll make the deposit, otherwise I’m out. Saves me time and energy, and I’ve done it probably a half dozen times and never felt I lost an actual job. - only one made the deposit, and they turned out to be a great client.
FWIW, ymmv.
Edit: part of doing it professionally for me includes a bit of transparency in that I usually say something along the lines of “unfortunately, because I’ve had work stolen in the past, I’ve had to institute this policy…” if they’re not a scam, they’ll understand.
This is great advice. Is is also why pre-internet businesses asked for deposits to begin with. Assurances for the business and low risk for the customer. Both sides can see it as a sign of trust.
A third option is credit cards- it's not terribly difficult to set up payments using Stripe (though this does come at a cost), and you can generate a link to a hosted checkout/payment page from the dashboard that you can send to the client.
You do run the risk of a chargeback, but I don't think that's a common practice of scammers.
On PayPal, a common scam is to forge a "payment received" email and send it to your address, either just to trick you into sending the product or it'll include something like "your account has been locked, please send $400 to support at notactuallypaypal.com to unlock your account." Other than that, it's a pretty solid way to pay for things online. Venmo and Cashapp also work and support non-reversible transactions (though buyers on Venmo can mark it as "for a purchase" which allows them to reverse it like on PayPal and has fees for you).
In addition to payment security, you should come up with a good contract and require a signature before starting work. If you're doing graphic design or similar, IAGA has some great resources.
Zoho has a free plan and you can send a certain number of docs out for e-signature that way.
And for the payment part, I'm echoing what other people have said about taking half as a deposit before you start. Consider a payment processor (helsim is probably my favorite) that allows your customers to pay via ACH or credit card. You will pay some fees, but you can adjust your pricing to account for that - it's a standard business practice these days. These processors will charge an additional fee for things like chargebacks, but you can CYA in your contract and make it clear you will go after them if they try to pull anything like that.
Get paid real money in advance.
That means cash, wire transfer, or cashier's check. You can take personal checks if it's something where they're OK to wait until it clears before you invest time or effort into it.
Credit cards and paypal can both be charged back, so don't use those unless they are particularly trustworthy (which is to say you probably shouldn't do it at all unless it's a personal favor).
Newer transfer methods will depend on the service. I believe that Venmo and Cash App both don't do chargebacks, but you'll want to look into them.
I have sold thousands of things to untrusted strangers over the internet using paypal and never once had a chargeback. It's still my main way of taking money although I do have other methods these days. No bugger ever has them installed though, so it's usually still paypal.
In my experience the wannabe scammers tend to vanish the second you require payment before doing any work, and I don't even unlock my workshop until full payment has cleared into my actual bank account.
I wouldn't know what to do with a cheque and I would likely not accept one. They seem shady.
I think this is good advice towards the person who is running on reputation. OP sounds like they have no reputation right now since this is their first time doing this with an online buyer. If you're a buyer, you'd never take this advice to pay in advance unless the seller is reputable. There are some supply/demand side elements that come into play, but a transaction should be balanced in risk to an extent for both the seller and buyer, meaning it'd be unfair for a seller to expect to get paid real money in advance because you'd never give advice to a buyer to pay in advance in that same scenario.
If I'm one off selling things online and have no reputation and won't really build a reputation, then it'd be fairly unreasonable for me to expect someone to pay me in advance. Just as I'm worried about them scamming me, they should be worried about me scamming them. If every buyer I interact with is given the good advice not to pay me in advance, then I'm never going to sell whatever it is I'm trying to sell if that's my sticking point.
Since OP is designing a logo, it's possible there's a compromise that payment in advance comes after proof of OPs logo designing skill exists, such as OP making a sketch or such, so it sort of serves as an element of reputation, which protects OP from delivering the final product and not getting paid while also demonstrating potentially good faith to the buyer that the labor and talent OP is selling actually exists. If OP is going to start doing it more often then they'll have a longer standing reputation after doing this a few times and will gradually be able to rely on that more than doing free sketch work.
OP says this is their current client and "I just now told them I only accept PayPal payments (that is what I've always used)." This isn't their first time.
Oh you're right. I misread/misunderstood or something along those lines the other statement OP said about only accepting checks from family members before.
But upon rereading it clearly they just meant they haven't accepted any form of checks from random online strangers before, not that they haven't done other transactions.
You could go the cryptocurrency route. Part of what crypto is good for is allowing for transferring funds between untrusted parties.
There is a learning curve though. If you have to get into crypto just for this one transaction, it might not be worth your time.
Yeah, I've never used crypto or invested in it before. I think I'll stick with PayPal for now.
PayPal also has their own stablecoin now, PYUSD.
If easier for both parties, they can send PYUSD to your PayPal account.
https://www.paypal.com/us/digital-wallet/manage-money/crypto/pyusd
I've never really understood why crypto or any kind of currency like that is more useful than dollars. It's never clicked in my head. Can you explain why paypal crypto is more secure online than using money through paypal?
The security advantage is likely more on the payers side, they can confirm to the exact timestamp when their funds were confirmed at the PayPal USD address you provided them.
The receiver of funds is still trusting PayPal as the counterparty so the security model on that side doesn't change much.
My initial is to ask for an advance payment, half to begin and half on completion, which is quite normal. Second suggestion is to use one of the services like Fiverr that keep the money in escrow and take on the risk of fraud. Maybe there's something in-between.
Honestly I would straight-up say to them something like, "A few of your answers have seemed a bit atypical to me and I want to make sure nothing weird is going on with this case. Could you explain what technologies you're using to reply to me?"
An actual person will probably find this a bit amusing and apply accordingly. If they get upset they probably aren't someone you want as a client anyway. If the reply also seems weird then I'd assume you're talking to an LLM or something and bail.
If I were a real person (who had replied in a strange way) I’d actually be annoyed at the situation and think twice before doing business with someone who has assumed I was using “technologies” to reply.
The first sentence is fine though. Maybe a question like: are you using a translation software of any kind? Then again, there is still that insinuation.
Yeah, that's valid. Maybe just, "Could you explain what's going on? I'm pretty wary of LLM scams etc when doing online business."
I have hired graphic designers and artists from various countries and once we have established that we are going to work together I have us both go through guru.com. They have a step-by-step process that protects both parties with a contract, escrow of payments that only allows the contract to move ahead to the next step when the financial and contractual goals have been met, and lots of support and conflict resolution.
Just sign up for that service. They’ve been around forever. If your client won’t do it, drop them.