How Escrow Fraud work

What is Escrow?

 

Escrow is a term applied to any 'honest broker' service that offers to hold money or goods until all parties in a transaction are satisfied that terms and conditions have been met, whereupon the goods/services/monies are released.

Escrow services have existed for many years but have recently come to prominence in the online world because of buyers and sellers both worried about getting scammed in an Internet auction or sale. A seller does not want the goods to vanish with no payment. A buyer does not want to send money with no goods (or faulty goods) in return.

A genuine Escrow Service allows sellers to send goods safe in the knowledge that funds exist and are being held safely until the goods have been delivered. In turn, the buyer can feel secure in that the goods can be received, checked for suitability/condition and the money will only be paid over when this is confirmed to the Escrow Service.

In many auctions "just use an escrow service, " is the customary advice for both buyers or sellers. Escrow companies act as a third-party referee, taking payment from buyers but not releasing the money to sellers until the goods are delivered. Escrow companies are supposed to be the safest way to avoid fraud on the Internet, particularly when dealing with Internet auction sales of expensive items such as jewellery or cars.

How do the frauds work?

To initiate the scam, the criminals firstly build elaborate fake escrow Web sites, with convincing names like Simple-Escrow.net and WhyEscrow.com. The Web sites are often set up to imitate legitimate escrow services. To an untrained eye or on casual inspection it can be very difficult or nearly impossible to tell the difference.

The criminals then set up a trap auction (or auctions) on a popular auction site like eBay. The price quoted is 'keen' if not downright cheap. Not unnaturally the item is snapped up. When a winner asks how to make payment, the 'seller' suggests the use of an escrow service because of the 'value' of the item. It is also suggested that this is safer for the buyer as well because they will be able to inspect the goods before the money is released.

The winner of the auction is then requested to use one particular (fake) service. Sometimes there is a choice of two equally false sites. Once the money is transferred to the fake escrow site it is immediately transferred out to another location and 'vanishes'.

The fraudsters will wish to make as much money as possible from the site so there is often a period when the 'seller' and the 'escrow site' stay in contact trying to explain the delays in delivery. This is so that they can complete any further scams they may be running using this fake site. When they have done as much as they can or have completed collecting money from their ongoing scams, all accounts will be closed and the website will no longer respond.

The fraud can work both ways. A fraudulent seller can suggest that a buyer use an escrow site he or she controls, then simply grab the buyer's cash without ever sending the merchandise (which usually never existed.) Alternatively a fraudulent buyer can trick a seller into shipping items that haven't been paid for by simply sending an official-looking e-mail from a fake escrow service stating that funds have been received and to go ahead and with shipment of the items.

Over time the fraud artists are getting better at what they do. In the early days of auction fraud many fake auction adverts were riddled with typographical errors and poor graphics. Today, they take very much greater care to make the offer seem valid and often include legitimate information intermingled with fake addresses and phone numbers.

Source: http://netcred.co.uk

How does Online Escrow Process work

Guiding Buyers and Sellers Safely Through the Online Escrow Process

How does it work?

1. Buyer and Seller Agree to Terms
Both parties agree to terms of the transaction, which includes a description of the merchandise, sale price, number of days for the Buyer's inspection, and any shipping information.

2. Buyer Pays Escrow.com
The Buyer submits an available payment option. Escrow.com verifies the payment. Processing time varies by payment method.

3. Seller Ships Merchandise
Upon payment verification, the Seller is authorized to ship merchandise and submit tracking information. Escrow.com verifies that the Buyer receives the shipment.

4. Buyer Accepts the Merchandise
The Buyer has a set number of days for an inspection and the option to accept or reject the merchandise. For more information, FAQs - Return Questions.

5. Escrow.com Pays the Seller
Escrow.com pays the Seller by the method selected by the Seller. The transaction is complete.

What are the benefits?

Escrow.com, an accredited escrow company, acts as a secure third party to protect the Buyer and Seller.

How Buyers are protected:

• Escrow.com tracks the shipped merchandise and verifies it was delivered.
• The Seller isn't paid until the Buyer accepts the merchandise, or the inspection period expires.

How Sellers are protected:

• Escrow.com confirms when the Buyer receives merchandise.
• The Seller is authorized to ship only after Escrow.com verifies good funds.

How the fake escrow scammers do it

The Big 5 Scam Puzzle:

Scam 1:
Steal Identities: They send out fake "account suspension" eBay "phishing emails" telling you to "login to your eBay account now".

Scam 2:
Reserve A New Domain Name: If they get your credit card number, or steal one from a porn site, they go online and use it to pay for reserving the domain name (.com, .net, .biz, etc.) for their escrow scam site using a domain name registrar such as Register.com, MelbourneIT or 1stdomain.net. They usually steal one or more person's name and address out of public record or from phishing emails to create their bogus patsy "owner" that displays on the domain name record when you perform a WHOIS lookup. This way, nothing could possibly lead back to the scammers.

Scam 3:
Open A Web Hosting Account With Stolen Credit Card Numbers: Once the domain name is reserved, they must open a web hosting account to host their escrow site. Web hosting companies popular with scammers are Yahoo, HE.net, Netfirms, Aplus.net, Powweb and others. The scammers then copy the previous version of their fake escrow site that we had shut down, change the logos and site names, and load up all the files to their new web hosting company server. Sometimes on Yahoo web hosting, the scammers just reserve a new domain name from a registrar, and copy the same files right back onto Yahoo web hosting servers under this new name! We often see Yahoo stupidly hosting 2 or 3 copies of the same fake escrow site simultaneously, and despite our alerts with iron clad evidence lists to their abuse team, they do nothing to stop it. We've even alerted Yahoo to fake escrows on their servers claiming to be Yahoo partners, complete with Yahoo Auction logos, and Yahoo still did nothing.

Scam 4:
Get a gullible patsy's checking account for the scammers to receive money from victims: This is a scary shocker. The checking account owner is an innocent job seeker using Monster, or CareerBuilder. They answer a bogus job posting on careerBuilder telling them they are perfect for a "National Accounts Manager" job for some European company "selling electronics", and now they want to enter the U.S. market. The naive job seeker is duped into using their bank account or PayPal account for what they think is a legitimate company seeking a reliable U.S. citizen to setup a U.S. presence to wire proceeds from "large equipment sales to the company headquarters” overseas, usually in Latvia, Estonia, Romania, or Cyprus. The patsy is told to keep 8% of the transfer as his commission. These foolish middleman patsies are the core of the whole scam, and have no idea they are illegally laundering money overseas which was stolen from escrow fraud victims. For still other job seekers, they are duped into becoming postal forwarding patsies to receive cameras, computers, cell phones, and jewelry from seller victims on eBay.

The sellers think they are selling their item to a "buyer", but they end up sending it to the moron patsy who, thinking he is getting paid to do a legitimate job, forwards the packages usually to Austria, Romania, or Russia.

Hey Stupid! Don't you think it's suspicious that a stranger you've never met wants to use YOUR account to wire money to Russia, and you're getting 8% for sales that you never made? Why would some large foreign company trust little old you with all their money?

Why can't they setup their own bank account? Are you really that gullible? Give me a break! If this happens to you, just start singing, I'm not fool no siree!

Scam 5:
Final step, setup a phony auction or classified ad, rip off some victims: Scammers then use hijacked eBay accounts harvested from their phishing emails in Scam #1 to create fake auctions of non-existent cars, ATVs, motorcycles, cameras, jewelry, computers, plasma TVs, musical instruments, industrial ovens. Using eBay IDs with hundreds of good feedback, you foolishly trust them. They make you use an escrow site that they are "registered on already." Once scammers rope you in, the fake escrow tells you to wire payment to them through Western Union or a bank account. You think you are wiring your money to a legitimate escrow bank account using wiring instructions they email you. It is not the bank account of a legitimate escrow, it is the account of that job seeking patsy from scam #4 above. Your funds land in his bank account, he sees it, thinking it's more legitimate sales for that "European company" he is hooked up with. He wires your money to a bank account in Russia, keeping 8% commission. Do you see the shell game?

The scammers know that you would never knowingly wire money to Russia if you are dealing with a U.S. based escrow, so they have you wire it to the patsy middleman's U.S. bank account. Victims will think the patsy is the scammer, when in fact he is just another scam victim, although he did not lose any money. He then gets in trouble for money laundering when it all hits the fan later, but he had no idea he was an unknowing participant in a foreign money laundering scam. Many patsies are shocked, violated, feel stupid when we track them down to alert them. Once we tell them about what's happening, many have forwarded money right back to the victims as it comes in, so we have saved victims tens of thousands of dollars in this fashion. We have stepped right into the vortex many times and interrupted the scammer's money stream, at the same time that we get their fake escrow site shut down. Their house of cards begins to collapse on them, and all their work goes to waste! LOL!

Exclusive Tips for Avoiding Fraudulent Escrow Scams

• NEVER EVER use an escrow site recommended by the seller or buyer no matter what lie they give you about how many times they used it.

• Consider every escrow company to be fraudulent until you have proven them to be real.

• Do not use a seller's feedback to gauge their honesty! Nearly all scam on eBay are run through hijacked accounts that show ID changed within 30 days.

• Avoid sellers who end auctions early, yet continue to strike a deal with you via email outside the protection of eBay. No legit seller ends an auction early.

• A legitimate escrows NEVER send you email transaction updates or wiring instructions. You login to see secure transactions in your account online.

• If you get an email "from eBay" telling you to send money via Western Union, it is a fraud. The real eBay warns you against it, and does not warehouse items.

• You can easily tell an escrow site is a scam when they ask you to make payment to a person instead of a corporation.

• Search the escrow site on Google. Legit escrows have lots of results. New fake escrow sites have no search results, maybe one if you see them listed here!

• If they address you as "Dear Sir", instead of Dear John, or Dear Kathy, it's probably a scam, they are using automated response templates.

• DO NOT deal with a "Seller" who contacts you after seeing you bid on another auction! That's one way they troll for victims.

• If you are the seller in an auction and send an expensive product through an escrow, you should ALWAYS require a signature for delivery.

• Do not deal with an escrow unless you verify they are at least 4 years old through Division Of Corporation lookup. Don't believe the Company Info page.

• Always trust your gut feeling. If you get a bad feeling, trust you instincts, don't do the deal. Others will come along later.

• Be suspicious about any car that is priced well below similar models for sale, or has free shipping. It could be a phony low price scam sale to reel you in.

• The person you are dealing with offers to pay shipping and insurance. Come on, use your head! When was the last time any seller paid shipping for you?

• Find the eBay "Changed ID" icon next to the seller's ID name. If they changed ID in the last 30 days, could be fraud. Few legit people change their ID on eBay.

• If a seller tells you "I used this escrow service many times!" You should be skeptical. How often does someone need escrow?

• Fake escrow sites don't have HTTPS: in the URL or "SSL secure padlock icon" at the bottom of your browser, meaning it's not a secure site, they are lying.

• Real escrow companies don't tell you to wire payment via Western Union, e-Gold, VUpay, etc.

• The only time you should use Western Union is to bail your drunk loser of a brother out of jail, NEVER purchase items online with Western Union.

• Remember that the odds are 99 to 1 against you finding a legitimate online escrow service.

• Don't let scammers bait you into thinking Western Union is an escrow, protected by a password. These scammers are in Romania, UK, Italy, and Nigeria.

• Try to close your deal in person if possible. For example, if you just saved $5,000 on the car, spend $300 on a plane ticket to go see it.

• Don't buy a car from a foreign "seller", this is for seasoned veterans. There are too many complicated import laws and DOT regulations for you to deal with.

• Avoid any escrow company that has a dash in the name, like secure-escrow.com. We saw maybe 1 out of 3000 sites that were legit.

• Avoid escrow companies that claim to be licensed in all 50 states, it's a lie. Even top escrow services refuse to license themselves in Arizona, too expensive.

• Some phony escrow sites list a license # of: 963-1867. Be alert for this, it was cut and pasted from the legitimate Escrow.com.

• Do a "whois" lookup on Register.com for the escrow's site domain name. If the domain name was registered only weeks before, consider them to be fraudulent.

• Avoid escrow companies with eBay's name in it, like Ebay-Escrow.com. They are all frauds. eBay uses the legitimate Escrow.com.

• Don't think you're safe using Autotrader.com, Cars.com, CycleTrader.com or eBay.com. Those sites are highly targeted by scammers. Just use common sense.

• Don't get suckered in by the professional look of an escrow company website. I can do that with Microsoft Front Page in 2 hours.

• If the escrow company is located outside the U.S., don't use them. Are you nuts? They are not governed by any U.S. Laws.

• If escrow site has a Verisign Secure Site, or TRUSTe logos, it is most likely a fraud. VERIFY licensees at Verisign or TRUSTe sites. Fraud sites steal logos.

• Avoid escrow companies that appear to be a well known company, but are not, i.e., WellsFargoEscrow.com, WesternUnion-Escrow.com.

• Assume that just about any escrow service with the word "Safe" or Secure" in their name are neither safe, nor secure.

• Avoid any escrow that has a ".ORG" as part of their name. Legitimate companies are .com, never try to pass themselves off as a non-profit.

• Avoid escrows that end with .BIZ, .CC, .INFO, .US, you get the picture. That's sleaze territory, inhabited by cyber squatters.

• If buying a used car, ask seller for a VIN#. If you don't here back, it's a fraud. But, some scammers respond with VIN#s copied from another online ad.

• If the seller changes email addresses, stop dealing with him. This means his previous scamming email account was shut down for spam or fraud.

• If the escrow company has the BBB logo on their site, but the link does not go to a BBB report of their business, then it is a fraud.

• Verify with the Better Business Bureau if they have a "Satisfactory" reliability report on your escrow company. It takes 5 seconds.

• Avoid dealing with an escrow that does not list BOTH address AND phone number. Always call the phone number to talk to a human, no bogus voicemails.

• Once you send money using Western union or E-Gold through an escrow company, you will never ever see that money again if picked up by the "seller".

• PayPal is not an escrow service. Once they get the money, the scammers close the checking account.

• No law enforcement agency, no court, and no lawyer will help you if you get scammed. No one cares about your little problem.

• Before you sign up, send the escrow an email question. If they don't respond then consider them to be fraudulent.

*Protect Your Used Car Purchase With An Extended Auto Warranty.

When you buy a used car, you should get an extended warranty to cover your repairs and minimize your losses. Read our online guide How To Buy A Warranty And Avoid Scams. Warranty Direct has one of the best used car warranties. I would not recommend buying a used car without one, you can't afford expensive repairs. Most used vehicle warranties begin 30 days or 1,000 miles from the date on the contract, so be careful about timing your first claim. You can buy a Warranty Direct contract for vehicles as old as 8 years and up to 60,000 miles.

How you might be able to get your stolen money back

Here's the different scenarios:

If you sent payment via Western Union or Moneygram:

- You can't get your money once cash is picked up. WU cannot recover it, so don't email me asking how do you get your money back after from Western Union, because you don't get it back.

- Tell me the date and time you wired the money, I'll punch those numbers into my time machine, and for $50, I'll go back in time and warn you NOT to do it! Call the Western Union Fraud Department at 800-325-6000 and at least try to determine where your money was picked up and if there was a camera at that location that caught it. You'll have to contact the police in the area where the money was picked up, usually in Europe.

If you sent payment via Bank To Bank Wire Transfer:

- If you wired your money to a bank there is a small glimmer of hope, but time is working against you so move fast. We had success recovering victims' money. Try to reverse the bank wire through your bank, and alert the receiving bank their account is being used for money laundering outside the U.S. and they are required to investigate it. Tell them the account owner wiring money to Europe and they may see other transfers from other victims. Sometimes scammers give false wiring instruction names as a smoke screen. The only data that must be true in wiring instructions is bank routing numbers and account numbers.

- The rest can say Bill Clinton, and the money still gets there. Fraud investigators won't give you info about the account, and there is only a 20% chance you will get your money back.

- Don't wait for them to work for you.

- The bank wiring instructions often give the name of the patsy account holder.

- Look that person up on WhitePages.com and contact them. We have had success getting these patsies to wire money back to victims before they were about to wire it off to Europe. If they wired it off to Europe already, have them reverse it and give you the bank wiring info to where they wired your money.

- Then contact the bank in Europe through their web site and see if they will wire your money back to the patsy account holder in the U.S., who should wire it back to you. If you lost a lot of money, use the phone book to find a PI specializing in financial crimes real quick. You must act quickly.

If you paid via E-Gold, E-Bullion, EvoCash, Islamic e-Dinar, other currency converting services:

- Some scammers make you think you're wiring money to an escrow's bank account, but it may really be the account of an E-Gold merchant. The scammers open an account on the gold networks using info you provided when registering at the fake escrow. Then they log in after you wire the money and pretend to be you, telling the E-Gold merchant what country to convert the currency to and wire it to somewhere in Europe. A similar abuse occurs on other cash transfer and affiliate payment services. E-Gold is well aware their system is often abused so you should have no problem getting them to cooperate with you and at least shut down the scammer's account. Your goal is to get the gold service to wire your funds back to you, or let you into "your" account to do it yourself.

- You must stay focused on the money trail. If they wired your money off, get account numbers to where it went and keep emailing banks to get your funds released. These services concern me because they are easily abused by scammers. I think AL Qaida and other terrorists can use these services to fund their activities world wide. They don't need Osama Bin Laden to fund their efforts. They could be screwing us with our own money. This sort of cash transfer mis-use has been going one right under our noses for years, beneath the radar of federal scrutiny.

*Western union warns you on their own Fraud Page NEVER use Western Union to pay for online purchases. It's fraud if a seller tells you to pay via Western Union.

Call the Western Union Fraud Department: 1-800-325-6000 if you have doubts about a Western Union transfer. They will tell you where the money was picked up. You'll be surprised to find the money you thought was being wired to an American is really a scammer in Romania, UK, Spain, Italy.

Where to report Escrow Fraud

Internet Crime Complaint Center recommended the following consumer protections when buying and selling on the Internet:

- Don't assume a check is valid just because it looks legitimate.

- Know whom you're dealing with - independently confirm your buyer's name, street address, and telephone number, if possible. Be especially wary of selling something to a person who appears to be in a foreign country.

- If you're selling something over the Internet or through a newspaper ad, say "no" to a check for more than your selling price, no matter how tempting the plea or convincing the story.

- Don't wire money back to anyone. There is no legitimate reason for someone who is paying you or giving you money to ask you to wire money back.

- Consumers victimized by such scams should report it to Blumenthal's office at Attorney.General@po.state.ct.us


For further assistance, consumers should also contact:

- The National Fraud Information Center/Internet Fraud Watch, a service of the National Consumers League (NCL) or telephone them at 1-800-876-7060 .

- The Federal Trade Commission at 1-877-FTC-HELP

- The Internet Crime Complaint Center (IC3). The IC3 is an alliance between the National White Collar Crime Center (NW3C) and the Federal Bureau of Investigation (FBI). IC3's mission is to address crime committed over the Internet. For victims of Internet crime, IC3 provides a convenient and easy way to alert authorities of a suspected violation. For law enforcement and regulatory agencies, IC3 offers a central repository for complaints related to Internet crime, uses the information to quantify patterns, and provides timely statistical data of current trends.

- If you have lost money to a fraud or scam on the Internet, it is highly unlikely that you will be able to recover any money lost. However, it is important that you report the fraud or scam to the authorities in an attempt to shut the scam down.

- File a Complaint with the Internet Crime Complaint Center (IC3) or

- If you think your life is in danger, please contact your local and/or state police immediately!

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