Escrow Scams

Professional Company Secretarial Solutions

Regrettably the internet allows and, in many cases, encourages a wide variety of frauds and scams that were not available before and one that we see all too regularly is the Escrow Scam. Unfortunately, people will often contact us after the money transfer has taken place, by which time it is too late.

Although it can take many different forms, the most common form looks something like this:

  • Fraudster advertises a car for sale at 10-20% below market price;
  • When the victim gets in touch, the Fraudster has a very plausible and detailed back story to explain the reduced price and this often seems to include the Fraudster recently having moved abroad;
  • As the Fraudster is not physically present, they suggest using an Escrow service to give both parties piece of mind;
  • Although this is one of the key aims of a legitimate escrow service, the Fraudster is not actually using an escrow service;
  • Either the Fraudster uses the name of a legitimate service, without their permission, or the Fraudster makes up a generic name;
  • The victim then transfers the funds as instructed but, instead of the funds going to a secure Escrow account, they are actually transferred directly to the Fraudster, who then disappears.

It is always important to be vigilant and cautious when dealing online and here are some tips to help you do this:

  • Always be sceptical; if it looks too good to be true, it probably is;
  • Any escrow service in the UK should be registered and regulated by the FCA and you can check the details of any registration on the FCA’s website here https://register.fca.org.uk/. You can see Elemental CoSec’s registration here;
  • If the escrow agent is outside of the UK, then we would not recommend you deal with them;
  • Get in touch with any escrow agent directly to check that they will actually be acting for you. There should never be an issue with sending them an email or calling them up to check;
  • Never send money abroad, if you do not know the person you are dealing with – it can often be a scam;
  • Do your due diligence on the seller and any escrow service.

Unfortunately there is no guaranteed way to avoid a scam, so please do be vigilant and careful in all your dealings.