Phony online escrow sites snare victims
Nervous about buying or selling a big-ticket,
to-die-for item on the Internet? You should be.
Scammers are using phony escrow sites to rip
off online buyers and sellers. And they're going after people buying
and selling some pretty pricey stuff -- plasma TVs, jewelry, digital
cameras, laptops, motorcycles, even luxury cars.
A legitimate escrow service acts as a middleman
for large, person-to-person transactions over the Internet. The
escrow service holds on to the money until the goods are delivered
and both parties are satisfied.
Phony escrow services rip off online buyers
and sellers alike. They take your money and never deliver the merchandise
you spotted on an online auction or classified site. Or they take
your merchandise, never pay you a penny and disappear.
About 100 phony escrow sites pop up every month.
"You knock one down and it's popping up
somewhere else," says Alvin Black, general manager of Escrow.com,
a legitimate escrow service recommended by eBay.
How they operate
Escrow scammers pay for these phony Web sites with stolen credit
cards. Once they've snared enough victims, they abandon the Web
sites and move on to the next scam.
"They know their escrows will get at least
10 victims or maybe 80 or 90 before they shut down," says Jeff
Ostroff, who runs CarBuyingTips.com. Ostroff has helped shut down
500 phony escrow sites since last summer.
A thief can net anywhere from $500 to $50,000
from a single scam victim. That's a lot of money to lose for trusting
the wrong person on the Internet. And the scam isn't over yet.
The thief, who also swiped your personal information,
can use your identity anyway he wants. He could go on a shopping
spree or use your identity when ripping off his next victims.
Ask Jennifer, a widow and mother of two living
She had a $50,000 emerald and diamond ring that
she wanted to sell. So in March, she listed the ring on eBay.
A buyer from Georgia contacted Jennifer and
suggested that they use an online escrow service called Escrow-secure.net
as a go-between "because of all the fraud out there."
"The only thing I knew about escrow services
is you use them to buy homes," Jennifer says. "So I thought
this is really safe."
She did a quick check of Escrow-secure.net and
it looked like a secure site. So Jennifer registered on the site
and mailed out the ring on a Thursday night. That Friday, the buyer
picked up the ring. But there was a hold-up with the payment.
"By 8 p.m. that night nothing had happened.
The bank hadn't seen anything," Jennifer says.
The payment never arrived. She e-mailed the
escrow company but there was no answer. She tried calling the buyer
in Georgia but there was no answer. She contacted a police department
in Georgia, the Federal Trade Commission and the Better Business
Bureau, but she never got her ring back.
They took more than her ring
Scammers robbed her young family of $50,000. And her battle is just
beginning. The crooks also swiped her identity.
"Not only did these people take my ring,
they've taken part of my identity. They've applied for things. They've
taken money out of my bank account. They're just scam artists. I've
had to change my bank account twice."
The crooks were using her bank account to collect
and wire money across the country.
"They know how to work it. I want to see
them prosecuted," Jennifer says. "I want to see them stopped
from hurting somebody else."
Catch me if you can
Unfortunately for victims, escrow scammers can be awfully difficult
"Nine out of 10 times there's no trail
leading to the scammers," Ostroff says. "They're using
all these patsies in between."
Escrow fraud is just one of an intricate web
of scams that these crooks have going on at any given time.
They wire money through stolen bank accounts.
They run phony auctions with stolen eBay accounts. They shop with
stolen credit cards.
They'll even pay the Internet service provider
for a fake escrow Web site with a stolen credit card. And they reserve
the domain name for a fake escrow site with a stolen identity.
"It's usually a victim they've already
ripped off," Ostroff says.
They hire unsuspecting consumers to receive packages and payments
for them in America and ship these items overseas.
"Sometimes the actual fraudsters have one
or two levels of intermediaries between them and the people being
defrauded," Escrow.com's Black says.