An escrow service mediates between a buyer and seller, and they operate like this:
- First, the buyer transfers the payment to the escrow service
- Then, the buyer takes delivery of the goods
- Finally, the escrow service releases the payment to the seller
Some are entirely above board; however, others are fraudulent services which appear legitimate, but are run by fake ‘sellers’ who target unwitting buyers
In a typical example, the ‘seller’ places a fake advert with an unusually low price to grab the buyer’s attention. When the buyer enquiries about the vehicle, they’re sent a standard reply, promising to waiver the shipping costs and suggesting payment is made via a particular escrow service. After the money is sent, the buyer becomes impossible to contact and untraceable.
If you are concerned you are in such a position, look for signs it may be a fake escrow service. These include false licence numbers, logos and copyright details, as well as a mobile phone number disguised as a foreign landline.
On the other hand, there are also ways to spot a legitimate escrow service:
- A legitimate service will never ask you to wire the funds directly to another party
- Look for sites which have a padlock icon at the bottom of your screen and ‘https://’ at the start of the website address – this means the site is secure. Avoid ones that don't.
- If you’re suspicious, type the company’s name into a search engine. A legitimate escrow service will have a number of results listed, whereas a fake escrow site will have very few
Finally, remember that Auto Trader will never recommend escrow, payment services or payment protection as a means to send or receive funds for a vehicle.
However you take payment, always take care:
- When receiving cash, ask for the money to be handed to you in a bank, where the notes can be checked for forgeries and paid in immediately
- If you take a cheque, never let the buyer have your vehicle until the funds have appeared in your bank account, as the cheque could be forged, cancelled or stolen
- Bank drafts, contrary to common belief, are not as good as cash, so treat them just as you would a personal cheque
- An online bank transfer is one of the safest ways to pay, as it avoids having to handle large amounts of cash and the problems associated with cheques