In an ideal world, cash on delivery can be a valuable marketing tool. It allows a buyer to pay on receipt rather than upfront, and it opens up avenues for sellers they might not otherwise have. However, COD scams are prevalent. The one characteristic they all rely on is the buyer paying for the merchandise before he opens the package. If the contents of the package are junk, he has fallen prey to a COD scam.

Work-at-Home Business Scams

What might seem like a great opportunity for a work-at-home business transaction can turn out to be a classic game of bait and switch. A typical scam might go something like this: Someone contacts you and offers brand-name products at below-retail prices. The caller knows your name, your business and community. He explains he is responsible for unloading excess inventory and you can pay for the order COD. After forking over your cash or money order, you realize the contents of the shipment are worthless and the unscrupulous delivery person is long gone with your cash.

Do Your Homework

Before entering into a COD agreement with any company, verify its legitimacy. Start with an online search of the company name to make sure it actually exists. Look for any negative comments associated with the company. If you have any questions about the reputation of the company, contact your local Better Business Bureau or state consumer protection agency to see if they have recorded any complaints.

Buying Merchandise Online

In today's digital marketplace, most scams take place online. If you are an individual buying merchandise online, the best way to avoid fraud is to use a credit card or a service such as PayPal that allows you to dispute bogus shipments. If those options are not available or you prefer to pay COD, make sure you are doing business with an established service such as eBay that takes great pains to monitor and weed out unscrupulous sellers.

Red Flags

If you decide to accept merchandise COD, look for telltale signs of mail fraud. Verify the return address is correct. Make sure the package has been processed and stamped. If the package appears to be over-wrapped to the point of being difficult to open or it appears damaged, do not accept it. Most importantly, verify the identity of the delivery company and the person making the delivery by asking for official identification. All reputable delivery services arm personnel with the appropriate identification. If merchandise you didn't order arrives COD, send it back.