You really won't believe the latest scam that has criminals making money hand over fist.
PayPal, the sister company of eBay, is all about covering the customer in case of online seller fraud. It's a great service for buyers who get scammed by sellers that take the payment and never ship the goods.
Unfortunately, there's a loophole in PayPal's Terms of Service that criminals have exploited to double their money. It's tricky, devious, and should not be attempted under any circumstances.
Here's how it works.
The person defrauding PayPal uses three different accounts: A buyer account, a seller account, and a mule account. The disposable seller account and the mule account both link to traceable virtual credit cards.
The "buyer" starts with a legitimate amount of money in the account, say $100. The "seller" is selling an iPhone for $100. The "buyer" buys the non-existent iPhone for $100, and the "seller" immediately transfers the $100 to the mule account in a gift payment.
The "buyer" then contacts PayPal after 24 hours and says that they never received the iPhone they paid $100 for. PayPal will see that the money was delivered, but no product was sent, so it will credit the "buyer" with a $100 refund or chargeback.
What does PayPal have to say about this crazy money-making scheme?
"PayPal is aware of reports being made by a security researcher about a way to potentially commit fraud on the PayPal system. This report is not related to a bug or vulnerability in the PayPal system, but is a claim to have found a means to commit fraud, which is a crime. PayPal employs multiple fraud prevention measures, so in the majority of cases attempts to commit fraud are usually caught before the money ever leaves the PayPal system. PayPal also dedicates significant resources to combat the use of our secure payment platform for illegal activities and works collaboratively with law enforcement agencies around the world to support both the detection of crime and the conviction of criminals."