Overpayment fraud: be wary of new customers that are too good to be true

The pandemic has seen a surge in scams targeting UK businesses. Our fraud prevention specialist outlines the threats and shares some tips on how you could keep your business safe.

  • Latest figures from UK Finance show that in the first half of 2021, criminals stole a total of £754m through fraud, an increase of 30% compared with the same period in 2020. 
  •  Life-changing sums are being lost – it’s important to know what to look out for.
  • Authorised push payment (APP) fraud is where a person is tricked into authorising a payment to an account controlled by a criminal. 

What is overpayment fraud?

Overpayment fraud is when a criminal poses as a customer to order goods or services. They use a cheque or draft to ‘pay’, often more than the required amount, then get in contact to reduce or cancel the order, or advise that an error’s been made – and request an urgent refund in full or for the amount overpaid. The business processes the refund quickly and returns it using an electronic payment method. 

In due course, the original cheque or draft will bounce, leaving the business out of pocket. The cheque could be counterfeit – i.e. a fake designed by the fraudster to look real – or forged, i.e. genuine but stolen from somebody else with the signature faked.

Alternatively, the cheque may have been altered in some way, for example the security features may have been tampered with. It might look fine to the untrained eye but would be rejected by the bank.

You can also be targeted by an overpayment scam when selling something online. 

Warning signs to look out for

  • Easy sales: is the sale too good to be true? Is the value much higher than your usual price? Does this person act like your regular type of customer?
  • Soon after placing their order, the customer says a mistake has been made and asks to reduce or cancel it, demanding an urgent refund. 
  • You receive an email from the buyer claiming they have made payment but the funds are being held until you send them back the amount overpaid.
  • You are asked to refund the overpaid amount or forward it on to a specific bank account or through a wire transfer. 

Ways to protect your business

  • Be wary of customers who offer to pay more than you’re asking, or are not even interested in the price or details about the goods.
  • Never forward money to a third party. If a customer pays for a purchase using a credit card, any refund should only be returned to the original card used for the transaction. 
  • Before making a refund, make sure the original payment has cleared and any funds paid into your account are irreversible.
  • Don’t feel pressured to release the goods or return any of the funds.

Fraud poses a serious risk to us all in both our professional and private lives, but the best way to fight it is to share knowledge and raise awareness. That’s why we hold regular fraud awareness webinars – visit our upcoming events page  for more information. 

Find out more about overpayment fraud

This material is published by NatWest Group plc (“NatWest Group”), for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. This material should not be reproduced or disclosed without our consent. It is not intended for distribution in any jurisdiction in which this would be prohibited. Whilst this information is believed to be reliable, it has not been independently verified by NatWest Group and NatWest Group makes no representation or warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Unless otherwise stated, any views, forecasts, or estimates are solely those of NatWest Group, as of this date and are subject to change without notice. Copyright © NatWest Group. All rights reserved.

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