Dayton, OH – June 18, 2008 – Your Better Business Bureau warns you of scammers posing as phony escrow services and defrauding online car shoppers out of thousands of dollars.
Internet thieves are now using escrow service fronts with some new twists to steal money and personal identities. The scope and cost of Internet fraud is stunning. For 2007, the Internet Crime Complaint Center processed 219,553 complaints and the Federal Trade Commission (FTC) reported nearly $526 million was lost via Internet fraud. The FTC also reports 28 percent of online fraud victims sent funds to scammers via hard to track wire transfer services – a favorite tactic of fake escrow services.
“The purpose of an escrow service is to create a safe environment where both the buyer and seller feel comfortable exchanging money and goods knowing they can’t be taken advantage of,” said John North, BBB President and CEO. “Unfortunately, scammers have realized they can cash in on these types of transactions by creating facades of trustworthiness as escrow companies.”
Escrow fraud is typically perpetrated through online auctions or classified Web sites. Both eBay and Craigslist have posted warnings to people about escrow fraud on their Web sites, but BBB notes shoppers continue to fall for the scams as the cons become more sophisticated.
Escrow fraud victims are often shopping online for big-ticket items, such as used cars, when they come across deals that are often too-good-to-be-true – perhaps several thousand dollars below Blue Book costs. When the buyer and seller make contact, the seller recommends using a specific third-party escrow company to protect both of their interests. The escrow company contacts the victims and requires they wire the payment for the item through Western Union or MoneyGram and then it’ll be delivered. After wiring the money, buyers don’t receive the cars and usually never hear from the sellers or the phony escrow services again.
Recent complaints to the Golden Gate BBB serving the San Francisco Bay area show escrow fraud scammers taking increasingly sophisticated steps to instill a sense of trust in their victims. Scammers, using the name “Best Auto Trades,” created a complete Web site explaining the escrow process in detail, required the buyer to register through the Web site and even provided a transaction number and the supposed escrow officer’s contact information.
Fraudsters are also not above appealing to your emotions. Your BBB serving Chicago and BBB in Louisville, serving Western Kentucky and Southern Indiana were contacted in late 2007 after people saw ads on Craigslist offering cars – such as a 2007 Audi – for between $2,900 and $3,500. The seller justified the low cost by claiming it was his son’s, who was recently killed in Iraq. Victims were told the car was in the possession of USA-Transports – a fake, supposedly Chicago-based service - and they needed to work with the company to arrange payment and delivery. Some victims thought they were wiring money to USA-Transports to cover shipping fees and other victims were told by USA-Transports to wire payment to third parties that would serve as escrow services. Despite the fact USA-Transports provided tracking number and even called to confirm the scheduled deliveries, the cars never arrived.
Escrow fraudsters are even resorting to stealing the identity of legitimate companies to rip you off. Global Payments, Inc. an Atlanta-based business providing electronic transaction processing, but doesn’t provide escrow services for person-to-person transactions, recently discovered their identity – including their logo - was being used to perpetuate escrow fraud through Craigslist. The real Global Payments, Inc., has received more than fifty e-mail inquiries from people who responded to the Craigslist ad wanting to know why they hadn’t received the cars they paid for or wanting to make sure the company provided escrow service.
“Perpetrators of escrow fraud have learned every detail they provide and step they require to take creates a greater sense of trust in the company,” added North. “These scammers know that the more intricate and complicated the process, the more legitimate it will seem.”
BBB Advice on Avoiding Escrow Fraud
- Be leery if the seller pressures you into using a particular escrow service and always check the company out 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 legitimate companies. After checking with BBB, contact the supposed escrow company directly to ensure it hasn’t 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 you to wire money from your bank account to the company’s bank, and will provide a routing number and account number for their financial institution.
- 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.
For more information on avoiding escrow fraud, contact your BBB by visiting www.bbb.org or calling (937) 222-5825 or (800) 776-5301.
Your Better Business Bureau is a private, nonprofit association that has been promoting integrity in the marketplace for more than 80 years. It services the Miami Valley, including Montgomery, Greene, Clark, Darke, Miami, Preble, Shelby, and northern Warren counties.
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