Beware Of Pop-Up Escrow Companies

  
     
April 15, 2017

A local consumer contacted the BBB about a company named, Net Spend Escrow. He spotted an out-of-state, online listing for a truck and was considering purchasing the vehicle. The seller of the car suggested he use Net Spend Escrow to make the payment. He was concerned about turning his money over to this company to complete the transaction for the car and contacted the BBB for more is information on this company.

 After further investigation, the BBB found the following details about this company: 

  • According to BetterWhiIs.com, the website was created on 3/29/2017 and the creator is in Panama.
  • The company website displays the BBB logo even though this company is not BBB accredited.
  • The business address is 132 San Antonio Circle, Mountain View, CA 94040 –an apartment building.

 All evidence points to a classic scam set up that tricks many who make high value online purchases. While escrow services are not illegal, there are a growing number of fake companies established to lure consumers to send payment to the company for an item that does not exist. 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 that the transaction is secure. Unfortunately, scammers have realized they can cash in on this type of transaction by creating a facade of trustworthiness as an escrow company.

Escrow fraud is typically perpetrated through online auctions or classified Web sites. Both eBay and Craigslist have posted warnings to consumers about escrow fraud on their Web sites, but BBB notes, shoppers continue to fall for the scam as the cons become more sophisticated.

Victims of escrow fraud are often shopping online for big-ticket items such as a used car when they come across a deal that is often too-good-to-be-true – perhaps several thousand dollars below the Blue Book cost. When the buyer and seller make contact, the seller recommends using a specific third-party escrow company in order to protect both of their interests. The escrow company contacts the consumers and requires that they wire the payment for the item through Western Union or MoneyGram and then the car will be delivered. After wiring the money, buyers don’t receive the car and usually never hear from the seller or the phony escrow service again.

 How Do You Avoid Escrow Fraud? 

  1. Buyers should be leery if the seller pressures them into using a particular escrow service and should always check the company out first at bbb.org.
  2. If the escrow company asks a buyer to use a third party wire service to send money to the company, walk away. 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.
  3. 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. If you call the company and get no answer or a recorded message, avoid this company altogether.
  4. 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.

Source: BBB North Alabama

 If you have questions about this scam or would like to report another scam, please call your BBB at 256-533-1640 or go to the BBB Scam Tracker. To find trustworthy businesses, go to bbb.org.