Quick Overview
Summary
Escrow scams involve fraudsters using fake escrow services to deceive buyers or sellers during high-value transactions, such as real estate or cryptocurrency deals. Victims are tricked into sending money or goods, believing a trusted third party is holding them. Scammers may also pose as asset recovery agents, targeting those already defrauded. Ensuring an escrow agent’s legitimacy is crucial for protection against these scams.
Key Points
- Scammers create fake escrow services to commit fraud.
- Both buyers and sellers can be targeted in these scams.
- Escrow scams are increasingly common in cryptocurrency transactions.
- Fraudsters sometimes pretend to help victims recover stolen assets, only to scam them again.
- Victims can be pressured to share banking information or install remote access apps, increasing risk.
- Verifying any escrow service independently is recommended as a prevention method.
FAQ
- How do online escrow scams work?
- Fraudsters create fake escrow platforms and deceive buyers or sellers into sending money or goods, which are then stolen.
- What should I do to protect myself from escrow scams?
- Verify any escrow service independently, never share banking information or install remote access apps for outsiders, and avoid sending funds to unknown parties.
- Are cryptocurrency transactions vulnerable to escrow scams?
- Yes, scammers exploit escrow methods in cryptocurrency, often posing as brokers or asset recovery agents to extract money from victims.
Table of contents
What is Escrow?
Cybertrace’s experienced scam investigators are issuing an urgent alert about a new scam technique using fake escrow services. As we know, real escrow services play an important role as a trusted intermediary in high-value transactions. Whether involving real estate, cars, or luxury goods, they provide both buyers and sellers with peace of mind. Sadly, we are seeing increasing numbers of ruthless scammers exploiting victims’ trust through the use of fake online escrow services.
According to Investopedia, an escrow is ‘a legal concept describing a financial agreement whereby an asset or money is held by a third party on behalf of two other parties that are in the process of completing a transaction’. Deriving from the French word escroue (a scroll of parchment), it denotes a third party holding a deed until a transaction is completed and is used widely in high-value transactions such as real estate, cars, stocks, or luxury goods. Throughout history, sellers and buyers have used trusted third parties to mitigate uncertainty and as protection against deceptive conduct. Because of the very trust inherent in these, escrow scam investigations would not have been necessary. But how does an escrow work in practice?
This has gone so far as to even expand into cryptocurrency fraud, where escrow scams proliferate. Not only are scammers duping buyers and sellers, but they also pose as asset recovery agents pretending to help scam victims. Just as victims start feeling some hope of getting their money back, these crooks fleece them a second time through mirror transaction fraud. Learn how to protect yourself from cyber fraud by reading how Cybertrace’s escrow scam investigations can help you get justice.
Let’s use real estate as an example. When a property is for sale on the market, there might be a lot of enquiries. But how does a seller know whether a buyer is genuinely interested? And how does a buyer know the seller won’t just pocket their deposit and sell to someone else? The answer: an escrow. An interested buyer places 1-2% of the purchase price with an independent for-fee escrow agent. Knowing that the interest is genuine, the seller takes their property off the market, and the two parties settle contracts. Once they have finalised the sale, the 1-2% gets taken off the purchase price, and everyone is happy. So far, so not in need of escrow scam investigations. But what about online escrow?
How does Escrow work online?
Allowing buyers to make risk-free, good-faith deposits and sellers to know that buyers are serious is vital for internet commerce. For a fee, buyers of high-value goods like cars, jewellery and art can place funds in escrow with an agent. Once the seller knows the escrow agent has received the funds from the buyer, they send the ordered merchandise. Once the buyer has received the goods in appropriate condition, the escrow agent releases the funds to the seller.
Such online escrow, similar to real estate or stock market escrow, thus protects sellers and buyers from non-payment and fraud. Having existed since the beginning of internet commerce and auctions, it helped to establish trust in the online sphere. However, there are very few genuine online escrow companies and, as with so many unregulated spaces, scammers have moved in. As a result, escrow scam investigations have become increasingly necessary.
How do online Escrow scams work?
Like all scams, escrow fraud involves scammers manipulating victims and appealing to base emotions such as greed, lust, or fear. As such, they can scam both buyers and sellers, all via fake escrow services that they control. When scamming sellers, fraudsters pretend to be buyers depositing money with a supposedly “independent” online escrow agent. After getting the go-ahead from the fake online escrow, the seller ships the goods but never receives any money.
Often, scammers use unwitting middlemen to receive and send the goods on to others, usually located abroad. When defrauding buyers, the playbook is even easier. Fraudsters simply pose as sellers with valuable (but non-existent) items and provide buyers with a fake escrow account. If a buyer bites, they simply wait for them to deposit the money, take it, and run. Sadly, escrow scam investigations reveal that the buyer is left wondering why they never received the goods.
What about Escrow cryptocurrency scams?
Many of Cybertrace’s escrow scam investigations now target escrow cryptocurrency scams. Typically, they follow a familiar pattern: first, scammers contact victims directly via phone calls, text, or WhatsApp. On the phone, they often pretend to be blockchain representatives or administrators overseeing the liquidation of a claim broker/investment platform. Alternatively, they may pose as an asset recovery agent helping scam victims to get their stolen funds back.
Whatever the fake backstory, they make victims feel as if they can easily get their money. Then comes the hitch: the scammers claim that they first must “synchronise” cryptocurrency wallets or “verify” bank accounts. Connivingly, they convince victims to transfer 10% of the funds they are due to receive back into an “escrow wallet”. Unfortunately, this is simply another iteration of the mirror transaction fraud. The wallet is definitely not an escrow but simply another of the fraudsters’ pockets into which victims’ money disappears.
Sadly, when scammers defraud them, many victims just blame themselves. What most don’t realise is that these fraudsters run sophisticated operations with elaborate fake stories and persuasive phone sales tactics. Some even manage to pressure victims into sharing banking passwords or installing remote access apps such as AnyDesk and TeamViewer. Under the pretext of “verifying” bank accounts, scammers send money to victims’ crypto wallets and on to their own wallets. While victims faithfully wait for their “escrow” to be returned, fraudsters simply keep asking for more funds. It’s a vicious cycle that often only ends when victims run out of money.
How do I protect myself from Escrow scams?
There are some useful general tips on how to protect yourself from escrow scams. Most importantly, make sure you independently verify any escrow services that others ask you to use. Additionally, only use peer-to-peer services like WesternUnion or MoneyGram to pay people you already know and love, not strangers. Do not under any circumstances share your internet banking login with outsiders or install remote access apps on your devices. It’s the equivalent of opening your front doors to burglars! And if all else fails and the scammers get to you anyway, Cybertrace’s escrow scam investigations can help.
What does a Cybertrace Escrow scam investigation offer?
Pernicious cryptocurrency escrow scam artists turn people’s healthy scepticism and wariness at dealing with unknown parties online against them. They exploit such caution by guiding victims to use bogus escrow services. Luckily, Cybertrace’s escrow scam investigations put the spotlight on perpetrators and help victims get justice. Our experienced investigators can trace cryptocurrencies across the blockchain to identify where your funds ended up, forensically analyse websites to identify the mastermind behind them, and investigate scams via a variety of methodologies and tools. Talk to us today about how we can help you regain both lost funds and peace of mind.
