Phony escrow companies defraud car-buyers
LAFAYETTE – Better Business Bureau (BBB) is issuing an alert to warn online car shoppers that scammers are posing as phony escrow services in order to defraud consumers 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 that nearly $526 million was lost via Internet fraud. FTC also reports that 28 percent of online fraud victims sent funds to scammers via hard to track wire transfer services – a favorite tactic of fake escrow services.
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.
Recent complaints to the BBB serving the San Francisco Bay area show that escrow fraud scammers are taking increasingly sophisticated steps to instill a sense trust in their victims. Scammers created a complete Web site that explained 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 info.
Fraudsters are also not above appealing to car buyers’ emotions. BBB serving Ch on offering a car such as a 2007 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, and that they needed to work with the company to arrange payment and delivery. Some victims thought they were wiring money to the company to cover shipping fees and other victims were told to wire payment to a third party that would serve as an escrow service. Despite the fact that they were provided a tracking number and even called to confirm the scheduled delivery, the car never arrived.
Escrow fraudsters are even resorting to stealing the identity of legitimate companies in order to rip off consumers.
BBB Advice on Avoiding Escrow Fraud
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
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.
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.