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January 2, 2021
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.
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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.
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.
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|
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.
Here are some tips to avoid falling for an escrow scam.
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