Thankfully, online auction scams dont happen very often. But when they do, it causes distress, anger and serious concern amongst the eBay community.
But before we all panic, lets just remind ourselves that the vast majority of eBay users are polite, honest and reliable people. However, one area, that has caused some concern recently, is that of fake escrow accounts.
For those of you unfamiliar with the escrow arrangement, the following brief explanation might help. But if youre already an escrow expert then please bear with me at this point.
A reputable escrow agent acts as an intermediary between buyer and seller. Such an agent is normally used only in high value transactions. From the buyers viewpoint, he doesnt want to send a large payment and then find that his purchase never arrives. The seller, on the other hand, is concerned about being tricked into sending his valuable item and then not receiving payment. The solution is to use an escrow service and this arrangement satisfies both parties.
So the buyer pays his money into the escrow account. The seller, having been notified that the escrow agent has received the funds, can then ship the goods, happy in the knowledge that the agent will soon send him the buyers payment. The escrow service providers will make a charge and this is usually added to the buyers total payment in the same way as a shipping cost.
So where does it all go wrong? Unfortunately, a dishonest buyer simply sets up a fake escrow account.
The auction will end in the normal way. The buyer then tells the seller that theyve set up the escrow arrangement and transferred funds to the escrow account ready for payment. The seller then visits the escrow site, sees that everything appears to be in order and is happy to send the goods.
Time passes but no payment is deposited into the sellers bank account. The worried seller now sends an email to the escrow service to find out the problem. But no response is received.
Now realising that something has definitely gone wrong, the seller visits the escrow services website only to discover that the site has disappeared. The buyer had simply set up a bogus escrow service that was so convincing that it looked totally genuine.
Intelligent crooks can now create a fake escrow site that looks sophisticated and professional. They may even feature a Verisign Secure, TRUSTe or BBB logo. To the innocent observer, such a site is very convincing.
So how do sellers protect themselves when selling their expensive items? The following suggestions should ensure that you never fall victim to the escrow scammers.
1. Make sure that YOU choose the escrow service. Dont leave this decision to your buyer. You can, of course, choose any escrow agent you wish but eBay have a recommended list (see below). I have always followed these recommendations and never experienced any problems.
– www.tradesecure.com.au (for Australian users)
– www.iloxx.de (for German users)
– www.escrow-europa.com (for Italian and Spanish users)
2. If you think its necessary, make your own checks on the escrow company to confirm that its legitimate, fully licensed and well established. You could telephone them and ask to speak to the individual responsible for account administration. If youre not completely satisfied then steer well clear!
3. Todays scamsters can give you the impression that youre dealing with a legitimate escrow website, when in fact its a fraudulent trick. So satisfy yourself that the site youre using is the one you think it is.
You can check out the sites domain registration using such tools as WHOIS (www.whois.sc) or try Network Solutions look-up tool (www.networksolutions.com). These will tell you when the domain name was registered. If its a recent registration, say just days or weeks old, then probably the site is not legitimate. Also, if the registrant is based in a different location to where the escrow company purports to be, then BEWARE!
4. Never be tempted to wire money to the escrow company to make a payment. Escrow.com states clearly on its website that it does not accept payment through Western Union or Money Gram.
5. Although an escrow service obviously adds additional expense and effort to your auction transaction, dont be persuaded by your trading partner into not using one.
Also, NEVER decide to conclude your transaction outside of eBay. If something did go wrong, you would then have no protection whatsoever.
Its my view that the legitimate escrow agent provides an extremely useful and essential service. Remember that eBay recommends the use of an escrow agent for purchases over ?250 but you can use it for any level of purchase. Its your decision.
But, like everything else in the trading world, do your homework and be prudent.
For more information on escrow services visit eBays own excellent information page at:
Finally, another very useful site, which is a database of fraudulent escrow sites, can be found at: www.sos4auctions.com.
Safe trading until the next time.