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How to Avoid Escrow Scams

Using an Escrow service is a secure payment method that you need to consider when making bulk purchases or truckload quantities of wholesale products for your new business or Ebay auction. It can also be used when buying high priced retail items or services. Escrow services protect the seller by verifying that the funds have been successfully transferred into the Escrow account.

The buyer (in most cases) is allowed to inspect the merchandise and certify that the product they bought is legitimate. Once the transaction is complete, and the customer is satisfied with the product they purchased, then the Escrow service releases the money to the seller.

However, not all Escrow services are alike. You must be aware that there are Internet criminals who generate fraudulent product offers and fake escrow websites designed to separate you from your money. For a more in-depth perspective on Escrow services, see the web links below.

National Fraud Information Center

Risks and benefits to using escrow services in international trade

Let me give you an example of my own personal experience with Escrow fraud. More than a few years ago, I use to visit an online auction that specialized in computer sales. It was filled with what seemed like wonderful deals on brand new Sony VAIOs and Dell Inspiron Notebooks. The featured prices were about one half, to a third, of the going retail price. I thought they would be perfect for reselling on Ebay.

I had been watching these particular auctions for a few months. While I did not dig up any negative feedback about the sellers, I couldn’t find anything on the positive side of the aisle either. Most of the auction sellers did not list a business address or phone number. The only contact information I could find was an e-mail address.

Out of curiosity, I e-mailed the the seller in order to find out how payment was handled should I win the auction. Within hours I received a response. It turns out that these great laptop deals were located in Romania. The seller told me that I didn’t have to wait for the auction to end, since he had many in stock.

He then proceeded to inform me that the only way I could pay him was in the form of a wire transfer, preferably through Western Union. If you are not familiar with what a wire transfer is, let me provide a brief explanation.

When you agree to send money via Wire Transfer, or Telegraphic Transfer (T/T), it is basically an agreement between a transfer agent such as Western Union to send money directly to another individual’s account anywhere in the world. Simply put, it is the equivalent of walking up to a stranger and handing him cash.

Once that stranger walks away, he is gone forever with your money unless he decides to find you and give you your money back. You basically have no legal recourse if you send money to an account outside the United States.

With that being said, I contacted my new friend in Romania and told him that I would not wire any money to him at all. I would only work through a company called Escrow.com. I received a response telling me that Escrow.com does not work in his country. He then proceeded to send me a link to an Escrow service that was, as he put it, “Internationally recognized”.

The spelling and grammar on the site was bad, and the security lock that usually gives you the indication that you are viewing an encrypted webpage was missing. It was clear that the purpose of this site was to extract money from my account.

Needless to say I did not go through with the deal. I have to say, that up until that point, I was very tempted to take this guy up on his offer. I thought for sure that since he was living in a foreign country, that somehow, Laptops just might be a lot cheaper. If it were not for some of my common sense taking over, and recognizing the signs of this type of Escrow scam, I would have been out five hundred dollars or more.

Escrow and other online scams work so well, because there are enough people out there (including myself at the time) who think that it is possible to purchase popular retail products for below wholesale prices. People that are involved in criminal and Internet fraud know that while they may not be able to con everyone, the odds are in their favor that a good percentage of people will fall into their trap. That is why the Nigerian scam has been around for more than 20 years.

If you ever feel the urge to purchase any product over 500 dollars, then using a service like Escrow.com is a must. You can almost eliminate fraud when using an escrow service, because you actually receive and inspect the product before you release the funds to the seller.

Never wire money to any company or person you are not familiar with. Don’t let anyone tell you that Escrow is too expensive. Don’t let anyone tell you that they have had bad experiences with Escrow services. Offer to pay the fees associated with using Escrow.

Make sure that you call any Escrow service you plan on doing business with and talk to their customer service. Follow all of these rules, and you will, as they say, be healthy, wealthy, and wise.