There are many ways that you can challenge a party of low level adventurers without resorting to dire rats and centipedes. One of those is using a con to relieve the PC's of some of their hard earned gp.
Adventurers, by nature, are greedy. The easiest mark in the world is a greedy one. Offer something valuable to lure them in and there are many ways you can close that trap. My favorite way to run a con is with a mid level magic user NPC. There are a number of low level magic user spells that could be utilized to make a con more effective. From the AD&D magic user lists there are: Nystul's Magic Aura, Friends, Fool's Gold, Charm Person and Forget. If your antagonist is a 5th level MU, she could have Phantasmal Force and Suggestion. Throw in a useful magic device, say a Hat of Disguise and you've got a very effective con man. The AD&D illusionist have some fun spells for this application. You might even say the illusionist, as a class, is built as a magical con man.
Be careful using the confidence scheme as an adventure seed. You can annoy your players with this. The occasional scam that robs them of a minor resource, complicates their situation or puts them in danger can be a lot of fun for everyone. If you are not careful the player's will feel like you've scammed them unfairly. The key is to make sure to have several points where the PC's can avoid the con. Give them clues that what they are seeing is a con. Make the proffered bait too good to be true, make something about the grifter just a little off, the grifter is desperate so he sweats a lot.
The con is a tool in the DM's bag of tricks that you can put to these and many other uses:
-Providing clues to the activities of a larger or more powerful organization.
-Introducing a villain or group of villains.
-Putting the characters in a situation where they need to get a lot of coin fast.
-Putting the characters in a situation where they owe someone powerful a favor.
-A random city encounter.
Here is a simple con you can run on your players. They will need to have just come from a successful adventure and have plenty of coin to spend. The basic idea is that you offer them a way to make a lot of money fast without much work and a minor amount of financial risk to themselves. Its a simple investment scheme. You sell them a worthless object that they think is valuable and don't figure out is a fake until afterwards.
A well dressed fellow walks into an inn frequented by adventurers and other types of folks with lots of coin to spend. He's carrying what appears to be a beautiful and probably magic sword. The man is a 5th level MU who has hired or charmed a weapon smith into dressing up an average sword to make it look like something special. The wizard has used various spells like "fools gold" spell to make cheap mountings on the scabbard look like awesome ones and has disguised himself using a magic device of some sort. A wealthy merchant known for buying magic items or weapons is in the common room eating his meal already. The merchant immediately approaches the wizard, offers to make amends for his previous insult and wants to buy the sword at a fair price agreeable to the wizard. The wizard refuses, he makes it clear that he does intend to sell the item but will not, under any circumstances sell it to that merchant. The merchant pleads and begs. He offers a considerable amount of money for the object and the wizard again refuses. Earlier in the day, the wizard used the third level spell "suggestion" to plant the urge to buy the sword because the merchant could get a fabulous return at resale. The merchant makes such a fuss, the inn keeper throws him out.
The PC's witness this event and if they ignore it, it is just a colorful encounter at an inn. This may pique their interest and cause them to ask about the sword and perhaps try to purchase it themselves. You can make up whatever story you want about the sword. The wizard will weave a fabulous tale about how it was the famed sword of the hero who slew the horrible dragon that would have consumed the town but with a single mighty blow struck off the head of the dragon, blah blah. Talk it up. This can be a great way to pass on a rumor or confirm a rumor the party has already heard. The sword being described actually exists and it exists in the place the wizard says it came from. The wizard's story is that some adventurers cleaned out a dungeon/tomb etc. and one of them rolled badly on the carousing table loosing this particular item in a dice game with the wizard. Obviously, no one has cleaned out the dungeon and the wizard didn't win it in the dice game, he doctored it up. The sword looks like the real deal, that can be researched by consulting the sage on the other side of town and that guy even has a drawing of it.
The wizard makes it clear he wants to sell it and the PC's might get it for cheap. He might even sell it just to spite the merchant. The wizard says he took the sword into the shop and the greedy merchant offered such a low ball price that the wizard was insulted. The merchant seeing his error tried to recant, but a wizard mush have his dignity after all and refuses to sell to the merchant. If the players check out the story with the merchant, who is hovering around outside the inn waiting for the wizard to come out, he will confirm the truth of the story.
Again, play up the too good to be true thing. If the players haven't taken the bait at this point, you can up the stakes a bit by giving the wizard a pretext to leave the room (he has to use the privy, pay his tab etc.) Not long after the wizard leaves, the merchant sneaks back in but finding the wizard gone looks around the room. He sees the PC's and looks suddenly happy like he has gotten a great idea. He offers the PC's a deal. The PC's buy the sword, and whatever they pay for the sword- the merchant will double the price. The party gets a nice profit and the merchant gets the sword. If the party wants him to kick in a bigger price, the guy will haggle with the party.
The wizard returns and appears to be getting ready to leave. He has his gear and staff. If the PC's don't approach him, The wizard will ask the PC's straight out if they would like to buy the sword. He's in a hurry to meet someone in another city and needs the coin. He knows what the sword is worth but because he's in hurry he'll take less for it since he doesn't have the time to find a buyer who will pay its full value. Because he didn't have a lot in it to begin with and he's an honest fellow, he'll give the player's a fantastic deal. He appears to be very up front. He'll answer any questions the party asks about it, elaborate on the made up story of how he got it, what it does and how much its worth if they take the time to find the right buyer. If the party try to test the blade, the subterfuge won't last and the jig is up for the wizard. Your party may react to that in a number of ways so you'll want to have an escape plan for the wizard.
If they buy the sword, the con man takes the coin and leaves town as fast as he can or changes his disguise to throw the PC's off the scent. The wizard, is of course not going where he said he was going. If the party sell the sword to the merchant, he pays them the agreed amount. If they hang on to it and test it out, it proves to be a forgery. Not long after the merchant buys the sword, he to figures out he's been swindled and things start getting interesting… Maybe the merchant is a frontman for the local thieves guild and when they find out the party sold them a fake, they don't like it very much. The merchant may go to the local powers that be and file a complaint. The constable, of course, is not buying the story and the party have to perform some community service to get off the hook. That community service just happens to be helping the constable deal with some problem that is out of his wheelhouse and you know have a new adventure in place for the players to go on, in addition to a new NPC they've become acquainted with and all kinds of directions you can take it from there.
There are a few contingencies you may want to plan for. The PC's figure the scam out before the net closes and get angry at the con man. They may reply with violence or magic of their own. You know your players and how they would likely act in this situation. The way I would play it is that the magic user/con man just bugs out at the first sign that his con has been busted. Your players may do something that brings them on the wrong side of the law. Maybe they go, "What a good idea," and try to pass off the item in a similar fashion. Who knows what shenanigans the PC's will pull?
There are a lot of less complex variations of this scam you could pull for smaller amounts of gold. Sell the players fake potions, fake scrolls etc. Check out the wiki page for more ideas.