Escrow fraud can be avoided by using reputable escrow companies with good reputations, avoiding unknown companies, and being wary of sellers insisting on a particular service. Using shipping services with proof of delivery can help sellers avoid scams.
Putting money in escrow usually works to keep both parties to a transaction secure 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 fake escrow business or arrangements to steal money from unsuspecting parties. You can avoid escrow fraud by protecting escrow companies that have been in the industry for years and have built strong reputations. Moving away from agreements where one party insists on using a particular escrow company can also work, especially if the escrow company is not well known. Additionally, you can avoid escrow scams in 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. Fraudulent escrow companies are often quite new, but they generally do a good job of making themselves look legitimate. Oftentimes, scam artists who commit escrow fraud create professional-looking websites and obtain toll-free numbers in an attempt to trick consumers. If a consumer calls the toll-free number to check out the service, the scam artist may answer the phone and behave in a way that tricks the consumer into thinking the service is legitimate. To avoid being duped in this way, it may be wise to use an escrow service that has been in business for years and has a good, verifiable reputation.
Another way to avoid escrow fraud is to be wary of sellers who insist on using a particular escrow service. For example, you could suggest a reliable 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, it could be a red flag that the seller is attempting to commit escrow fraud. In that case you might do well to abandon the transaction and look for a new seller.
Sometimes it is the buyer attempting to commit escrow fraud rather than the seller. For example, a buyer may agree to purchase an item and send money to the escrow company before receiving the item. Once he receives the item, however, he cannot report the receipt to the escrow company. Instead, he can cancel the payment for the item through his bank. This way, he makes sure that he can keep both the item he received and the money he was 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 cannot get away with claiming they never received the item and you have a better chance of getting back the funds that were put into escrow.
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