Escrow Service Scam: BBB warns of phony car dealers
Photo by: Tyler Howarth
Better Business Bureau, in a press release, has asked online buyers to beware of fake car dealers who are, as a new tactic, presenting escrow services to gain credibility for their scam. In the midst of a deal, fraudsters are now referring buyers to fraudulent escrow services in the guise of protecting their best interest.
An escrow service is essentially a legal arrangement in a commercial transaction where the items exchanged (i.e. money and goods) are deposited with a middleman to ensure a fair deal. The service is particularly valuable and popular in online markets where buying and selling often takes place without one-to-one personal contact.
Yet recently, BBB has noticed several instances where fraudulent car dealers sporting fake escrow services are scamming online buyers of their money.
Fraudsters are taking great pains to make their scams look legitimate, it warns:
- They are presenting their scams through websites, often impersonating trusted online companies like Global Payments Inc. If not mimicking popular sites, they use names like ‘Best Auto Trades’ and ‘USA-Transports’ for the scam. Also, they sprinkle well-known banners and logos liberally on these websites.
- As a symbol of their “professionalism”, the sites prominently feature an intricate process through which the company promises to deliver its “service” to you.
- They assign an official from the company to service your deal and give you his contact numbers which, when need arises, are revealed as useless.
- They give you a transaction number for your deal.
- They insist you “register” at the site for dealing with them.
There are also some things patent about such scams:
- In a common ploy, this fraud asks you to send money only through wire transfer. This is important to them as it gets impossible for investigators later on to track them down. Legitimate escrow companies do not accept payments through wire transfer services like Western Union or Money Gram.
- They present deals that instantly come across as too good to be true.
- They may also strike an emotional chord by telling touching stories.
Once you wire the money, there would be no trace of them or the car.
Speaking on the occasion, a BBB spokesperson said:
“Perpetrators of escrow fraud have learned that every detail they provide and every step they require the buyer to take creates a greater sense of trust in the company. These scammers know that the more intricate and complicated the process, the more legitimate it will seem.”
In the press release, BBB also offered the following tips to online buyers to help stay away from these scams:
- Buyers should be leery if the seller pressures them into using a particular escrow service and should always check the company out first at www.bbb.org.
- While escrow scammers might devise a company name and set up their own Web site to back up their fraudulent activities, many are resorting to simply stealing the identity of a legitimate company. After checking with BBB, buyers should contact the supposed escrow company directly to ensure it has not been a victim of corporate identity theft.
- A legitimate escrow site will not ask to do a person-to-person money transfer using Western Union. Legitimate escrow companies ask that buyers wire money from their bank account to the company’s bank, and will provide a routing number and account number for their financial institution.
- A buyer should confirm that the escrow service is licensed and bonded with the appropriate state agency (usually the state in which the escrow service is located) and avoid using an offshore escrow company.
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August 19th, 2010 at 5:35 am
It’s a shame that such scams are being done quite regularly now and no law seems to be effective to tackle them.