How To Avoid Escrow Scams - Part One
By Robert C. Potter

    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

Ebay Forum: Escrow & Insurance Discussion Board

Ebay: Using Escrow Services

   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.

Click here to go to part two of “How To Avoid Escrow Scams" By Robert C. Potter.