Escrow fraud can be avoided by using reputable escrow companies with a good reputation, being wary of sellers who insist on using a particular escrow service, and using shipping services that provide proof of delivery. Buyers can commit fraud by canceling payment for an item after receiving it, so sellers should use shipping services that provide proof of delivery.
Escrowing money generally works to keep both parties in a transaction safe and ensure that the terms of the sale are met before the money is released to the seller. Unfortunately, however, some people commit escrow fraud and use bogus escrow businesses or arrangements to steal money from unsuspecting parties. You can avoid escrow fraud by patronizing escrow companies that have been in business for years and have built a strong reputation. Walking away from agreements where one party insists on using a particular escrow company can also work, especially if the escrow company is unknown. Additionally, you can avoid escrow scams on transactions where you are the seller by using shipping services that provide proof of delivery.
One of the most effective ways to avoid escrow fraud is to choose a reputable escrow company. Scam escrow companies are often quite new, but they usually do a good job of making themselves look legitimate. Oftentimes, scammers who commit escrow fraud create professional-looking websites and obtain toll-free numbers in an effort to mislead consumers. If a consumer calls the toll-free number to verify service, the scammer may answer the phone and behave in a way that misleads the consumer into thinking the service is legitimate. To avoid being duped in this way, you may do well to use an escrow service that has been in business for years and has a verifiably good reputation.
Another way to avoid escrow fraud is to be wary of sellers who insist on using a particular escrow service. For example, you can suggest a reputable service that you’ve researched and are sure is legitimate. If the seller insists on using a different service, especially one you’ve never heard of, this can be a red flag that the seller is trying to commit escrow fraud. In such a case, you may do well to walk away from the transaction and find a new seller.
Sometimes it is the buyer who tries to commit escrow fraud instead of the seller. For example, a buyer may agree to purchase an item and send money to the escrow company before receiving the item. However, once he receives the item, he cannot report the receipt to the escrow company. Instead, he can cancel payment for the item through his banking institution. By doing so, you ensure that you get to keep both the item you received and the money you were supposed to pay for it.
One of the most reliable ways for a seller to avoid escrow fraud is to use a shipping service that provides proof of delivery. For example, you can ask the shipping company to obtain a signed receipt for each item delivered. This way, the buyer can’t get away with claiming they never received the item, and you have a better chance of getting the funds that have been put into escrow.
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