Escrow Scams Walkthrough: What You See is NOT Necessarily What You Get

Escrow scams are one of the most prevailing forms of auction scams. Every year, billions of dollars are lost due to Escrow scams. If you have been victimized by an Escrow scam, contact Reporting Economic Crime Online (RECOL) at www. recol.ca if you are located in Canada and contact Internet Crime Complaint Center (IC3) at www. ic3.gov if you are located in the United States.

1. What is an Escrow?

Sometimes, when a huge sum of money is involved, an escrow will be set up to protect the interests of both the seller and the buyer. The Buyer will transfer possession of the money owed to the Seller in the form of a trust fund to the escrow service provider. Once the escrow service provider secures the money, the Seller will be informed to ship merchandise and submit tracking information. The escrow service provider will verify that the Buyer receives the shipment. The Buyer has a set number of days for an inspection and the option to accept or to reject the merchandise. The escrow service provider will transfer the money to the Seller if the Buyer accepts the merchandise. If the Buyer rejects the merchandise, the money will transfer back to the Buyer only after the escrow service provider verifies that the merchandise reaches the Seller in good condition.

Sounds pretty safe, right? However, DO read through this guide before you decide whether to accept escrow payment. It is NOT as safe as it set out to be.

2. A typical Escrow Scam

You listed a gorgeous Rolex Daytona on eBay for sale in auction format. Within a day, you are contacted by an eBayer through eBay "contact a member" service. The eBayer asked about the "buy it now" price for that watch with shipping cost included to Spain. You offer to sell the watch at a ridiculously high price. The eBayer contacted you through a personal email that he agreed with the selling price but insisted on using a particular escrow company to put his mind at ease.

The eBay gives you the web address of an escrow site that he said he had used many times before. You visit the professional-looking site and are impressed. You email the company's accounting department directly and are convinced that the escrow company is safe. Two weeks after you delivered the watch using FedEx, you received an email from that escrow company claiming that the eBayer has accepted the watch and the money would be released in two weeks.

But a month went by and you receive no money. you log onto that escrow company and find out that the money is still not transferred to your personal bank account yet. You are confused and asked for help from an anti escrow fraud forum, forum.escrow-fraud.com. With the helf of people on that forum, you realize that the escrow site is a fraud, and you realize that you will never see your watch again.

3. How to Avoid It?

ONLY use an escrow company endorsed by eBay for major security. Here is the complete list of escrow companies endorsed by eBay:

www .escrow.com (for www .ebay.com users)

 www .escrowaustralia.com.au (for www. ebay.au users)

www. escrow-europa.com (for www. ebay.it and www. ebay.es users)

www. iloxx.de/ebay (for www. ebay.de users)

http:// corporate.tripledeal.com (for www. ebay.fr, www. ebay.nl and www. ebay.be users)

But if you are compelled to use another escrow company, please DO read the following advices.

When you are in doubt of whether an escrow company is legitimate, there are three great resources. http:// forum.escrow-fraud.com, http:// answers.google.com/answers and www. allwhois.com. Escrow-fraud.com is dedicated to fighting escrow fraud. People on that forum are usually very helpful and very supportive. So every time when you are in doubt, forum.escrow-fraud.com should be the first stop in your inquiry. Google Answers is yet another great resource. At google answer, you post your inquiry (such as whether a particular escrow company is legitimate) and usually within the same day, someone will answer the question for you.

A quick way to check whether an escrow company is legitimate is to log onto allwhois.com and then type in the domain name and run a search. A domain name is the name of the website. Simple enough, the domain name of allwhois.com is allwhois.com. When you see the search result, or so-called the DNS report, you want to check for the following things:

1. When the domain was registered

2. Whether the domain was registered for personal or for commercial purpose

3. Whether the personal information of the registrant checks out

First of all, you want to know whether the domain of the escrow site is registered recently. If a buyer tells you that he or hse has used a particular escrow company a few times in past few year, and it turns out that the domain of the escrow site was registered only a month ago, you know something is wrong.

You also want to know whether the domain was registered for personal or for commercial purpose. All commercial domains are created on a five year term, and all personal domains are for a one year term. This means that if you see a domain created on 1st October, 2006 and expires on 1st October, 2007, you know you are looking at a domain for personal purpose. The implication is that if you see an escrow company registered for a one year term only, you are almost certain that it's a fake escrow site as no commerical site will be of one year term.

The most important information to check is the personal information of the registrant. For example, if you go to yellowpage.com and the address and phone number of the registrant allegedly located in United States does not match, you know something fishy is going on.

Also, the information in the "about us" and "contact us" chapter on an escrow site provides very important clues in determining whether or not an escrow site is legitimate. you want to verify the physical address fo the escrow company. If that address is non-existence, you know something is wrong. You want to see whether the escrow site provides a customer service hotline toll-free number. All legitimate escrow companies have customer support toll-free numbers. If an escrow site doesn't then it can't be legitimate. Even if the site has a customer service hotline toll-free number, you want to verify the business registration number with the local Commerical Chamber where the escrow site is located.

At anytime after you ship the item using a courier, as long as the item hasn't reached its destination yet, you can recall the item or put the shipment on hold. Yes there might be an additional fee, but it's much better than losing the item.