New Tips For Choosing and Using Online Escrow Services

New- Tips for Choosing and Using Online Escrow Services


Online auction fraud has skyrocketed: in 2002, auctions made up 90 percent of complaints made to the Internet Fraud Watch program.
(www.fraud.org)


Using an online escrow service gives you more protection. For a small fee, an online escrow service holds your payment until you confirm that you got what you were promised within an agreed upon inspection period. Only then does it forward the payment to the seller. If there is a dispute about the item, the escrow service may be willing to act as a referee.
Know the difference between escrow services and other online payment services. With an escrow service, the seller doesn’t get paid until you’re satisfied. This is very important in online auction purchases, where there is no way of knowing in advance whether the goods really exist or they were described truthfully. Other types of online payment services may cost less, but since they transmit your payment to the seller immediately, you may have no protection if the goods are never delivered or were misrepresented.
Determine how much you can afford to lose. If the item is relatively inexpensive, it may not be important to use an escrow service. Or you may be covered by insurance offered by the online auction site, the payment service you use, or both; check the limits and terms of insurance carefully. If you can’t afford to lose the amount of your purchase and there isn’t insurance to cover it, use an escrow service.
Make sure your money is secure. Because you’re giving money to the escrow service to hold in trust, you want to make sure it’s safe. Look for information about whether the service is licensed and bonded and find out how you can confirm that with the appropriate agency. An escrow service is usually licensed in the state in which it is physically located. Generally, licensing requires employee background checks, training, supervision, and bonding to ensure that consumers won’t lose their money.

Beware of bogus online escrow services. Fake escrow services simply pocket your money and disappear. Sometimes they operate in connection with fraudulent sellers; in other cases both buyers and sellers may be victimized by bogus escrow services.
Don’t always believe what you see. One common practice of fraudulent escrow services is to copy information from legitimate Web sites onto theirs. If the wording is identical to that of another escrow service, it’s a danger sign of fraud. Another danger sign is using the name of a well-known auction site as part of the escrow service’s name. Bogus escrow services may also forge graphics from trustmark programs such as “VeriSign” and “Trust-e” to make their sites seem safe. Click on these symbols to see whether they link to a fully operational site of the trustmark organization and check to confirm that the escrow service is listed as a member of that program.
Be suspicious of references to U.S. codes. Though escrow services are not regulated by federal law, some claim to comply with the “U.S. Financial and Business Code” in order to appear legitimate. There is no such code.
Unprofessional looking Web sites can be a tip-off. Spelling and grammatical errors are commonly found on fraudulent sites.
Get the business’ physical address. Be wary of escrow service sites that only provide an email address and offer no phone number and address. Without the address, you have no way of checking with state authorities to determine if the service is licensed.
Get references for which escrow services to use. Some online auction sites have links to escrow services that they recommend. There are also private anti-fraud Web sites that list what they believe to be legitimate and fraudulent sites. Simply type the phrase “list of fraudulent escrow sites” into any popular search engine to find these references.
Be wary of escrow recommendations from sellers. They may have ulterior motives for steering you to certain fraudulent sites. Always check the escrow service out yourself.