With more and more consumers buying items online, there are multiple benefits to transactions being done this way. For instance, due to the pandemic, many people can’t leave their homes so online purchases are a way to protect their health.
However, it’s imperative that you are alert of possible scammers and know the ways to avoid them!
We will be answering three of the most commonly asked questions regarding this topic:
- What is legitimate escrow?
- How does escrow scamming happen?
- How can you avoid escrow scams?
What Is Legitimate Escrow?
Firstly, it’s key to note that legitimate escrow services are meant to shield consumers from fraudulent behavior and can be beneficial for online or long-distance purchasers.
Usually, escrow services hold the funds of the one or more parties to a transaction until said parties have received the item purchased and verified that its condition is as promised. The escrow service will refund the buyer’s money if the buyer has an issue with the item or never receives it.
While escrow is not a required service, it is very beneficial to new home buyers who want to make sure they are getting the most out of their closing agreement. And now people are adopting a newer, more tech friendly, process of digital escrow.
How Do Escrow Scams Happen?
Essentially, criminals who commit escrow fraud convince homebuyers that their money will be covered and they ask customers to submit money using unusual means.
How is this done?
Well, while escrow scam artists often set up their own fake escrow services by creating a false website, social media platform etc, they also often scam consumers by exploiting the names of well-known businesses to perpetuate the scam, such as eBay, PayPal, Amazon.com, or Apple.
So they create a legitimate-looking website either made entirely by themselves, or they use a well-known online payment method service to ease the buyer into a false sense of security so that they can have the money wired to them.
How to Avoid Escrow Scams
If any of the aforementioned worries you and you want to know the ways to avoid being scammed, here are a few tips on how to stay alert!
1. Identify Malicious Websites
If an email includes links that seem to go to the website of the organization, double-check that they are not redirected to a fake site that could contain malware.
Normally at the beginning of the website link in the web address bar, there is a lock symbol that shows that the website is secure. If it’s not there or it reads “not secure,” it’s best to reconsider the legitimacy of the site.
With your cursor, hover over the connection and check the destination address. Do not click on the link if it is not the company’s website. Scam artists can adjust the connection to make it look like the destination is trustworthy when it isn’t. It’s always best to look and see if the website has a contact us page and go from there!
2. Check the Legitimacy of the Business
In other words, are you interacting with real humans who work for a real company or bots?
At the bottom of most websites, there should be a contact us page with a phone number or email address to contact.
In addition, you can check to see if there are any reviews on google about the business. If they are legitimate they most likely will have customers who can attest to their services, if there is no information about this company other than their website, this could be a concern.
3. Ask for Proof of Cyber Fraud Insurance From Your Title Company
For any business that deals with personal data and assets, cyber insurance is a critical material to have. If your title company is either not covered or underinsured, this can cause some serious issues should a scammer come across this lack of protection.
Find out if the business to which you are entrusting funds is adequately insured. To do so, go the extra mile and ask for a written copy of proof.
Planning Ahead
Now more than ever is a great time to buy and sell a home. The escrow process has never been more user-friendly thanks to the power of digital. The refinancing rates in California are lower than they have been in a long time.. As the year comes to a close and we prepare for the new year ahead, it’s important to know what you should be on the lookout for when it comes to potential escrow scams.
Interested in learning more about the escrow process or how to go more digital in today’s world?
New Venture Escrow offers virtual escrow services for real estate agents via our new app, VentureTrac 4.0! Provide information to your clients within seconds, send or email direct files from your phone, and save and store all of your information in one convenient locatio
