There are multiple methods to buy bitcoin using SEPA, so If this user is willing to pay an extra 20% then there is definitely something wrong because it's clearly too good to be true. I can't tell you about the methods being used as I don't know how the exchange work in the first place but I've seen people getting scammed in LB before. Also, don't pay too much attention to the reputation system, some of them are bought accounts.
A Golden Rule should be: never send any BTC out if you FIRST didn't get the FIAT from the buyer. As for the exact ways this scam (if it's a scam) would be carried on, nobody will know until the go down the bitter way.