An escrow agreement is an arrangement where a third party (an Escrow agent) will hold an asset being sold until the buyer sends the funds to or meets any other pre-specified conditions. Once the terms of the contract are met both parties, the agent will release the relevant funds or assets to each party.
Choosing an Escrow Agent
While the concept of Escrow is a simple one, unfortunately like most things, scammers have found a way to abuse the system. You should be particularly cautious if making a deal through an online auction site. Tricksters will commonly advertise a high value item with a low “Buy It Now” price, and when a buyer bites, will request they use Escrow services to ensure a smooth transaction. He will also name the company he wants to use.
The unsuspecting buyer will accept and complete his part of the agreement and sent funds to the Escrow agent only to find a few days later the website is down and the seller is not responding to his calls; or the seller responds, claiming he too, also sent the item at the to the company and is now out of pocket as they have disappeared.
In reality, the Escrow agent never actually existed – it was a fake site set up by the buyer to get the money from the buyer when the seller had no intention of sending anything. This scam can also be performed in reverse – a buyer buys an item form a legitimate seller, then request they use the escrow services of his choosing.
It is also that a scammer will suggest a genuine well known escrow service, then send fake emails from the service detailing where the payment or items should be sent, which is directly to him.
Therefore when choosing an Escrow agent, it is very important if your seller or buyer suggests a service you should be extremely careful and make sure the suggested agent is legitimate, and also check that any emails from the serves are not spoofed. You can do this by passing your mouse over the sent email address or a link inserted in an email. What appears should be exactly the same as the address you float over. If something different shows up, the email is spoofed and you should forget all about the transaction and also inform eBay or whichever site you used.
Any genuine escrow service in the UK will be registered with the FCA (Financial Conduct Authority) so when doing your due diligence, make sure the Escrow service you use is listed there.
Note: Please do not regard this article as a substitute for legal advice, as it is intended for informational purposes only.