Is there any danger in using escrow service providers?
I mean, since escrow payment is being touted as the safest way to pay for goods and services online, how can there be any danger associated with its escrow companies or escrow service providers?
Well, the answer to that would be a resounding YES, unfortunately.
But the danger in using escrow payment is not necessary about the payment method in itself but about the integrity of the escrow service provider being used.
Use a fake escrow service provider and you are done with!
Fake Escrow Service Providers or Companies
Sadly, there has been a surge in the number of websites parading as “trusted”, “reliable” or “secure” escrow companies.
Most of those websites are run by individuals who could close down the website at any time and disappear with payment from buyers without trace.
While escrow payment exists as a method to check against the activities of fraudulent vendors or buyers, scammers have begun to set up online escrow websites which cost just a few hundred or thousand dollars.
How to Spot A Fake or Suspicious Escrow Website
There are various ways that one can spot a suspicious or fake escrow website, but we’d just highlight three:
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They only Exist Online With Little Or No Traction.
Fake escrow websites usually have little or no traction outside the website that they have created or in the online space. A little search on the internet might help with insights as to how known they are.
Of course, this does not mean that any escrow company with a physical presence is genuine or should be trusted with your money
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The Website Name is Markedly Different From the Name of the Company (if registered).
The name of the website “offering” the escrow payment service is markedly different from the name of the registered company through which the website collects payment or holds bank account.
This suggests that the escrow service thing is an afterthought and may have hurriedly begun in order to join the band wagon or for other sinister purpose.
It is true that, due to limitations associated with finding suitable domain name that will match exactly with the name of the registered company, an exact match of the name of the website with that of the registered company may not always be obtainable.
Notwithstanding, a very obvious mismatch in both names should be cause for concern. -
They Have No Regulatory License to Operate
This is a more reliable way to know if an Escrow service company is to be trusted.
You should find out if they have obtained the necessary license to operate the escrow payment service.
However, especially in emerging economies where the idea of escrow payment is still taking roots, some governments may not have any special regulation yet regarding escrow service (beyond business registration and tax requirements) while other governments may already be in the process of establishing one.
In Nigeria, for example, it is learnt that the government has granted a special 5-year license to EscrowLock, which will enable the government work with EscrowLock to come up with a more thorough regulation that new escrow service providers can sign up to.
Should I Trust An Escrow Service Provider Recommended By My Client or Customer?
The answer to this will be “Yes” and “No”.
YES if the escrow service company recommended is well known and have a license to operate, and NO if otherwise.
It is possible that fraudulent people who pose as buyers or sellers can still connive with or even set up an escrow website to help them further their evil cause.
The best thing to do is to research any escrow company recommended by the other party in your transaction.
What Escrow Company Should I Use?
If you ask for our opinion, we would recommend EscrowLock as the best and most reliable escrow service provider that sellers, vendors, brokers and buyers can use. This is particularly important if you are transacting with someone in an emerging economy like Nigeria.
EscrowLock does not only have the necessary regulatory license from the government, but also has a more affordable pricing as well as an easy to use escrow platform.