Tag Archives: vehicle escrow service
If you’re buying a used car from a local dealership you probably do not have to worry about payment fraud. The dealership has a physical location, plenty of cars in inventory, and a lot to lose by stealing your money.
But when buying a used car from an unknown private party or dealership online, you have to be very careful. Cars cost thousands of dollars and that attracts a lot of scammers and unscrupulous criminals. Fraud in car sales is very common and you need to protect yourself when buying a car from a stranger. This is where an escrow service can help you.
What is an auto escrow service?
Escrowing is when you send your money to a neutral 3rd party that monitors a purchase to make sure it’s legitimate and secure. An escrow service authenticates that money is exchanged in return for a vehicle and that neither party walks away empty handed.
When buying or selling a car, I strongly suggest using a secure and licensed escrow service like Escrow.com which is the only escrow company recommended by eBay Motors.
How does escrow work for buying and selling used cars?
- First, both the buyer and seller register with the escrow company and agree to the terms of the transaction. This includes the sales price, a description of the car, and shipping information if applicable.
- The buyer then submits a payment to the escrow service.
- After the payment has been verified, the escrow service lets the seller know to ship or deliver the car.
- The buyer receives the car, verifies receipt with the escrow service, and accepts or rejects the car.
- Upon buyer acceptance, the escrow service releases the money to the seller.
The key safety measure is that the funds are not released to the seller until the vehicle has been both received AND the condition approved by you.
What does a car escrow service cost?
Escrow.com charges the following for their vehicle escrow service:
|For Vehicle amount||Escrow Fee|
|$0-$5,000||3.25% ($10 minimum)|
|$5,000.01-$25,000||$162.50 + 0.26% of amount over $5000|
What is a vehicle escrow scam?
An escrow scam occurs when a seller recommends a fake escrow company to defraud unsuspecting buyers. Fraudsters place enticing vehicle ads on Craigslist, eBay, TrueCar, or Autotrader to lure you in. They pretend to be concerned for the buyer and recommend the fake company to help "protect" them during the vehicle sale.
This type of automotive fraud can be done to either the buyer or the seller.
Car Buyer Escrow Fraud: The fake escrow company fraudulently collects funds from the buyer and the car is never delivered.
Car Seller Escrow Fraud: The fake escrow company fraudulently indicates funds are received so that the seller gives away the car without receiving payment.
How to protect yourself from vehicle escrow scams
Here are some tips to avoid falling for an escrow scam.
- Don’t let the seller recommend their own escrow service. There are just too many scammers out there on the Internet. If you read tips on Craigslist or eBay Motors, they will also tell you to avoid unknown escrow services, Western Union and other wiring services. Again, Escrow.com is the only escrow company recommended by eBay Motors.
- Have a healthy suspicion of all sellers that are not dealerships. Look for tell tale signs like bad grammar, a price that's too good to be true, or sellers that claim to be out of the country and cannot show you the car.
- Try to reach the escrow service via phone. Most scammers will not bother to invest the time or money to staff a call center and answer customer service calls. Red flags are no phone number or a voicemail box.
- Don't pay an individual. Real escrow services will usually not ask you to wire money to a person or use a service like Western Union or MoneyGram.
- Validate the escrow website is legitimate. Check with the Better Business Bureau, VeriSign or TRUSTe. And make sure the site uses SSL to protect user information (look for a padlock in the browser address bar). Also, beware of domains with close misspellings or uncommon extensions like .cc, .biz, .info. And lastly, remember that Escrow.com is not associated with or affiliated with any other escrow site.