The Refund Scam: How to Spot and Avoid Fraudulent Schemes

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By : David G. Patterson
Blog

Introduction

Unmasking the Refund Scam: Imagine receiving a robocall from someone claiming to be from a well-known company like Amazon, McAfee, or Norton, or even the Tax Revenue Agency. Alternatively, you might get a PayPal notification or an email invoice from a seemingly legitimate business offering you a refund for a purchase you don’t remember making. Sounds suspicious? That’s because it is. Welcome to the world of refund scams—a growing and deceptive tactic, especially prevalent among the elderly and often traced back to cyber criminals in India. In this post, we’ll explore what refund scams are, how they operate, and, most importantly, how you can protect yourself from these crafty fraudsters.

What is a refund Scam?

A refund scam, also known as a “refund fraud” or “overpayment scam,” is a type of confidence trick where scammers manipulate victims into believing they’re owed a refund.

Crazy as this may sound, people always will ask, how do people fall for this? From a bystander’s point of view, it might sound too far-fetched, but the reality is, that with billions of robocalls and emails being blasted out to potential victims every day, even a tiny 0.1% response rate will still yield millions of potential victims. The end goal is to gain access to the victim’s personal information or financial accounts.

How a Refund Scam Typically Unfolds

Initial Contact:

The scammer reaches out, often via phone or email, posing as a representative from a legitimate company. The dark truth about this scam is not just the technological facade that’s put on by these scammers, but the mental manipulation that goes with it. They convince these victims oftentimes non-tech savvy elderly people, that this mystery charge is because of hackers in their system.

Refund Claim:

They inform you of an alleged overpayment or entitlement to a refund. They may have you fill out a bogus cancellation form to gather your banking details.

The Deception:

These scammers will oftentimes seem quite helpful, polite and understanding of the victim’s eagerness to reverse these fictitious charges. They may tell the victim that a hacker has gained access to their computer and they need access to block that hacker or stop them from having illegal access to the victim’s computer.

Remote Access to your Computer:

Scammers often request remote access to your computer to process a fake refund. Next, they will invite you to open a browser on your computer. By doing this, the scammer’s goal is to connect to the victim’s computer so they can set up the scam. And they do this by telling the victim to go to a website. The particular website they’ll use may vary. Sometimes they’ll send the victims directly to some kind of remote connection software download, like TeamViewer, or AnyDesk or sometimes they have a custom website set up and ready for the victim.

Bank Details:

Once they have access, they ask for your bank account information to “deposit” the refund. With remote access gained, they will be blocking your view with a fake software or money transfer update window, while gathering your details in the background. They have an answer to anything you may find from their actions to be suspicious – such as telling you that they are removing the hackers details from your computer, But in fact what they are really doing while so doing is usually manipulating your bank account interface to make it appear as if they’ve accidentally transferred too much money to your account.

The Daring Refund Scam:

Once this is done, they pretend that a mistake was made in refunding you and an excessive amount was deposited in error into your account for example, $20,000 instead of $200, and turn the tide of pressure on you to return the overpayment amount back to them privately without their “company” knowing about the mistake! What they had done was to manipulate the HTML of your browser to show a false balance increase, tricking you into believing the overpayment is real. They often will have you to check your balance to convince you of the transfer!

Urgency:

They create a sense of urgency, insisting you need to return the “excess” funds immediately.

At that moment, the scammer usually puts the victim on a guilt trip, sometimes even blaming the victim of causing the error. These guys have no sympathy on their victims, sometimes playing on their emotions by telling the victims that they have to return the money immediately or that they will lose their jobs, or by selling some sick stories that act on the victim’s conscience in an effort for the refund for the overpayment to be done immediately!!.

They’ll say anything. To get the money from you, they usually prefer wire transfers.

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How Do They Get Your Money From A Refund Scam

Wire Transfers:

Offer a quick payment method and not an overly huge risk for them. So usually, their first attempt to get the money out of the victim’s hands will include them giving the victim some wire transfer instructions to a bank account overseas. The instruction is to go down to your bank and just do the wire and preferably not to share that information with family, friends, or even the details with the bank.

Because Banks are usually suspicious of huge money transfers, these guys usually let their victims know that they should not discuss the truth about the transfer with the bank so they instruct their victims to tell the bank only just mention to them like they’re doing a personal transaction to a friend, that is the purpose why they’re sending this money.

Cash Mules:

If a wire transfer for some reason is not feasible, they want the victim to get the cash to be shipped or picked up in person by using paid cash mules.

These criminals have a network and a single phone call can access a cash mule in almost every country where they operate their refund scams They usually ask the victim to package the cash in foil paper. For supposedly avoiding scan detection. Or place cash evenly between the pages of books, and magazines to conceal it and place it in a box if it’s convenient.

Courier:

The scammer may insist that the packaged and concealed money be sent by overnight delivery, but without a signature required by doing so, no in-person interaction is involved if law enforcement gets involved. Upon further investigation, if it turns out that a preferred house drop or location is vacant, then without signature required, this is very indicative of a situation where a local money mule will watch the house or location from the outside, wait for the package to be dropped off, and then scoop it right up off the porch.

“Scammers are master manipulators, using urgency and fear to cloud your judgment. Always take a step back and think critically before acting on any unexpected refund offers.” – One Cybersecurity Expert quoted.

Gift Cards:

Another alternative for these scammers, they ask for the money to be returned via gift cards or other non-traceable methods.

Bitcoins:

Scammers increasingly are also using Bitcoin for payments to take advantage of its anonymity and difficulty to trace. They receive illicit payments through Bitcoin to hide the origins of their funds, making it challenging for authorities to track their activities. By converting stolen money into cryptocurrency, scammers can move large sums across borders quickly and covertly.

Red Flags To Look Out For

Unsolicited Contact:

Legitimate companies rarely reach out about refunds without prior communication from you. Be wary of unexpected calls or emails regarding refunds.

Pressure Tactics:

Scammers often use high-pressure tactics to rush you into making decisions. They might claim the offer is time-sensitive or that your account will be penalized if you don’t act quickly.

Unusual Payment Methods:

Be extremely cautious if asked to pay using gift cards, wire transfers, concealing money in packages to be shipped, in-person pickup, or cryptocurrency. These methods are often preferred by scammers due to their irreversible nature.

Requests for Remote Access:

Legitimate companies will never ask for remote access to your computer to process a refund. This is a major red flag.

Inconsistencies in Communication

Pay attention to the quality of communication. Poor grammar, spelling errors, or inconsistent branding can be indicators of a scam.

How To Protect Yourself From Refund Scam

Verify the caller’s identity: If you receive an unexpected call about a refund, hang up and call the company directly using a number from their official website.
Never share personal information: Legitimate companies won’t ask for sensitive information like passwords or full credit card numbers over the phone or email.
Use strong, unique passwords: Ensure each of your online accounts has a different, complex password.
Enable two-factor authentication: This adds an extra layer of security to your accounts.
Keep your software updated: Regular updates often include security patches that protect against the latest threats.
Educate yourself and others: Stay informed about the latest scam tactics and share this knowledge with friends and family, especially those who might be more vulnerable to such schemes.

What To Do If You Are A Victim Of A Refund Scam

If you suspect you’ve fallen victim to a refund scam:

Contact your bank immediately to freeze your accounts and report the fraud.
File a report with your local law enforcement.
Report the scam to relevant consumer protection agencies.
Change passwords for all your online accounts, especially if you’ve given remote access to your computer.
Run a thorough antivirus scan on your devices.

Conclusion:

Refund scams are a sophisticated form of fraud that prey on our trust and desire for unexpected windfalls. By staying informed, skeptical of unsolicited offers, and following best practices for online security, you can significantly reduce your risk of falling victim to these schemes. Remember, if an offer sounds too good to be true, it probably is. Stay vigilant, trust your instincts, and always verify before you act.