An online escrow, just like its brick and mortar counterpart, should be used whenever the transaction involves a high-ticket item and/or you would like a good night's sleep.
When we think of an escrow company, we almost automatically think of real estate. And for good reason, properties are high-ticket items.
The word escrow comes from Old French escroe and actually means “scroll.” You can picture a Dickensian scribe pouring over and painstakingly filling the scroll with every last inky detail. Thoroughness personified; something that still characterized the escrow company today, for as you know, the amount of paper involved in a property transaction can be intimidating.
Definition
But escrow is a function that serves a much-needed purpose in areas other than real estate.
By definition, an escrow company is a third party operation that holds money or property granted to someone else for release once certain conditions have been met, and it is now used in most transfers of high value personal and business properties—such as websites and businesses—and in the completion of person-to-person remote auctions (such as eBay).
An online escrow company serves the exact functions as its brick and mortar counterpart and is subject to the same stringent legal and regulatory requirements.
Cyber Crime
It is not that every buyer or seller online is out to defraud you, far from it. However, non-delivery of items purchased, and Internet auction fraud combine to make up the most reported cyber crime in the nation for 2008, constituting 58.4% of all reported cyber crimes.
That adds up to over 160,000 reported instances of non-delivery and Internet auction fraud. And considering that conventional wisdom holds that only one in seven cyber crimes are actually reported, the total instances of non-delivery and Internet auction fraud could be as high as 1,120,000.
This is still a low percentage of all transactions occurring on the Internet – eBay for one, boasts over 4 million transactions a day—but the number is certainly large enough to make you stand up and take notice. Chances are you will run into a fraudster.
Confidence
It is not only the fraud aspect of online transactions that speaks for the use of an escrow service.
Whenever buyers and sellers do not know each other—for the sake of a good night’s sleep alone— they should turn to a third party they can trust. The online escrow company serves precisely that function.
A bona fide escrow company must be licensed to conduct business by its home state, and in order to operate nationwide, must also be licensed in the states of Idaho and Arizona.
It serves as the single point of contact to track and manage all aspects of a transaction, including third-party suppliers.
Such a company reduces the potential risk of fraud by acting as a trusted third party that collects, holds and disburses funds according to buyer and seller instructions.
When to Use an Online Escrow
The short answer is that you should use an online escrow whenever you want the confidence that the transaction will be completed according to buyer and seller instructions.
The longer answer is that you should weigh the cost of the service against the value of the item, and your own peace of mind.
$500+ Value
Consider using an online escrow for any item worth over $500. The math alone speaks for this since the fee is only a small percentage of the total cost. For less expensive items, the cost of the service grows proportionately, and may not be worth the expense. Up to you.
Automobiles
Consider using an escrow service whenever your purchase an automobile online. Not only do you want to circumvent fraud, but you also want to ensure that the automobile is in fact as described. A full service escrow will offer vehicle inspection services to ensure that it meets seller description, and will also handle transfer of title.
Domain Name Transfers
No domain name should be transferred without an escrow service.
Before releasing payment to the seller, an online escrow service will verify that the domain registrant information now reflects the buyer. If the registrant information does not do that, the service should ask the buyer to confirm control of the domain before releasing money to seller.
If such transfer does not take place, the buyer can request the transaction to be cancelled and his money returned from the escrow company.
Art and Jewelry
From the standpoint of being high-ticket items, no art or jewelry should be sold online without the safety net of a licensed online escrow service.
Services
Whenever a service is purchased online, there is always the question of whether or not the service performed met the buyer’s expectations or requirements. An escrow service can hold all funds in abeyance until both parties have agreed that the service has been performed satisfactorily.
Used Equipment
Used equipment normally never come with intact manufacturer warranties, and may or may not meet seller expectation or requirements. In such instances, for the sake of both buyer and seller, an escrow service should hold all funds until the equipment has been inspected and accepted by buyer. Especially if it is a high-ticket item.
Peace of Mind
The bottom line—and one of those very valuable, though intangible, products a good escrow service provides—is peace of mind. Using a trusted third-party service, you do not have to worry about fraud, about missing pieces to the equipment purchased, or that there might be something wrong with the automobile title.
Peace of mind can add years to your life. Well worth the investment.
Escrow.com
Licensed by the state of California—as well as by the States of Idaho and Arizona, who require separate licenses—Escrow.com is the only on-line escrow company credentialed to serve every state of the Union, and who indeed does so 24/7.
To quote eBay: “Pay safely - beware of fake escrow services when you consider using them to pay for your eBay item.
“For eBay transactions, you should use eBay's only approved Escrow Company: www.escrow.com.”
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