An escrow agent in real estate business is an agent that is responsible for holding the money and title deed pending fulfillment of other conditions by the parties to the contract. This is a good risk management method.

Typically, the seller of a plot of land or house would let an escrow agent (neutral agent) hold the title deed and the buyer would let the escrow agent hold the deposit payment. The escrow agent shall release the title deed (plus arrange for ownership title transfer of property) to the buyer and hand the deposit over to the seller upon fulfillment of the contractual conditions. This minimizes the risk of the buyer losing the deposit money to the seller if the seller does not come to sell the property to the buyer on the agreed upon day of sale due to: the seller subsequently finding another buyer who is prepared to pay a higher purchase price; the seller cannot complete construction of the property for sale; the seller disappearing with deposit money; the seller cannot release the mortgage or other kinds of encumbrances attached to the property etc. Furthermore, the involvement of an escrow agent protects the seller and the buyer from other kinds of fraudulent and deceptive practices.

 In Thailand, however, escrow agent service was never solely offered by commercial banks or financial institutions because there had been no specific laws or regulations on this until May 19 this year. Under the Escrow Business Act B.E. 2551 (2008), effective as of May 19, 2008, an escrow agent must be a financial institution, a commercial bank, a financial company or other kinds of juristic person prescribed under ministerial regulations.

Some of the important provisions under the Act are: An escrow contract must be drafted, signed by the seller, buyer and the escrow agent, and must stipulate certain conditions. The escrow agent must be a neutral party with no connections whatsoever to either the seller or the buyer. The escrow agent must open an escrow bank account for the contractual parties with a financial institution and deposit the money held into this escrow bank account. In the event that the escrow agent is deemed a debtor under a court execution order, all property, money or title deed / other legal documents of the contractual parties that are held by the escrow agent are protected and not cease or use as payment for the escrow agent’s debt. The escrow agent must inform the official at the Land Office in writing that the property is under an escrow contract and that transfer of ownership is not permitted until the escrow agent provides the Land Office with a written notice authorizing transfer of ownership. The official of the Land Office must make a record of these as evidence. If there is a disagreement between the buyer and the seller under the escrow contract, the escrow agent shall not transfer money or property to either party until the contractual parties have reached an agreement or as according to a court order.

According to the Act, a financial institution, commercial bank or financial company who wants to operate as an escrow agent must obtain a license from the Ministry of Finance to provide escrow agent service. The application and granting of this license shall be according to the standards, procedures and conditions as provided by ministerial regulations. Thus far, no license has been granted to any financial institution, commercial bank or financial company to provide escrow agent service. It may be some time until we will be able to find an escrow agent in a real estate transaction.

Tip

This means that we still have to use other kinds of protective measures e.g. in a sale and purchase of property contract, the seller and buyer open a joint bank account where the deposit money of the buyer will be paid in. The withdrawal or deposit of money from the bank account can only be made jointly by the seller and the buyer.

 

** Written by David Tan. David is a Lecturer of Business Law at Asian University and author of the book “A Primer of Thai Business Law (Second Edition)”, available online at www.chulabook.com . In Bangkok, the book is available at all Kinokuniya and Asiabooks bookstores. Any questions or comments on escrow agent services should be sent to Business Legal Advisory Services at: blas.inter@yahoo.com

The 2008 IC3 report on cyber crime is just out, and the news is not good: cyber crime is up again. This, of course, is hardly surprising seeing as the cyber criminal is getting smarter, and more numerous, by the day; while law enforcement continues to play catch-up.

What is a little surprising, however, is that Internet Auction Fraud—which was the most reported online crime for the last two years—no longer heads the pack, though at 25.5% of all reports, it runs a close second; instead, the most reported online crime for 2008 is Non-Delivery of Merchandise and/or Payment, which comprises 32.9% of all reported instances of internet fraud.

The IC3

The Internet Crime Complaint Center (IC3) began operating on May 8, of 2000, as the Internet Fraud Complaint Center—a partnership between the National White Collar Crime Center (NW3C) and the Federal Bureau of Investigation (FBI)—to serve as a vehicle to receive, process, and refer cyber crime complaints.

IC3 was intended for and continues to serve the broader law enforcement community, including federal, state, and local agencies, and since its inception, IC3 has received complaints running the full gamut of cyber crimes, including online fraud (in its many forms), intellectual property rights matters, computer intrusions (hacking), economic espionage (theft of trade secrets), child pornography, international money laundering, identity theft, and a growing list of additional cyber crimes.

The 2008 Internet Crime Report is its eighth edition.

The Numbers

From January 1, 2008 – December 31, 2008, IC3 received 275,284 online complaints. This is a (33.1%) increase over 2007, which saw 206,884 online complaints.

Of all complaints received, IC3 referred 72,940 of them to federal, state, and local law enforcement agencies around the country for further consideration. The vast majority of these cases was of a fraudulent nature and involved a financial loss on the part of the complainant.

The total reported dollar loss from all referred cases of fraud was $264.6 million with a median dollar loss of $931.00 per complaint. This is up from $239.1 million in total reported losses in 2007. Other significant findings related to an analysis of referrals include:

Non-Delivery

Non-delivered merchandise and/or payment was, by far, the most reported offense, comprising 32.9% of referred complaints—this is a 32.1% increase from the 2007 levels of non-delivery of merchandise and/or payment reported to IC3.

Internet Auction Fraud and Other Scams

Internet auction fraud accounted for 25.5% of referred complaints. Credit/debit card fraud made up 9.0% of referred complaints. Confidence fraud, computer fraud, check fraud, and Nigerian letter fraud round out the top seven categories of complaints referred to law enforcement during the year.

Access Method

E-mail (74.0%) and WebPages (28.9%) were the two primary channels over which the fraudulent contact took place.

Fighting Back

According to the IC3, the best way to guard against Internet facilitated scams is to stay informed. Keeping informed of the latest scams on the Internet may enable Internet users to recognize and report these scams instead of losing money or their identity information in one of them. To learn about the latest scams, we recommend periodically checking the IC3, FBI, and the FTC websites for the latest updates.

Additionally, the IC3 and its partners have launched a public website, www.lookstoogoodtobetrue.com, which briefs the consumer about various consumer alerts, tips, and fraud trends.

Fighting Non-Delivery

The IC3 makes specific recommendation about fighting non-delivery of merchandise or payments:

• Make sure you are purchasing merchandise from a reputable source. As with auction fraud, check the reputation of the seller whenever possible, including the Better Business Bureau.• Try to obtain a physical address rather than merely a post office box and a phone number. Also, call the seller to see if the number is correct and working.• Send them an e-mail to see if they have an active e-mail address. Be cautious of sellers who use free e-mail services where a credit card was not required to open the account.• Investigate other websites regarding this person/company. Do not judge a person/company by their fancy website; thoroughly check the person/company out.• Be cautious when responding to special offers (especially through unsolicited e-mail).• Be cautious when dealing with individuals/companies from outside your own country. Remember the laws of different countries might pose issues if a problem arises with your transaction.• Inquire about returns and warranties on all items.• The safest way to purchase items via the Internet is by credit card because you can often dispute the charges if something is wrong. Also, consider utilizing an escrow or alternate payment service after conducting thorough research on the escrow service.• Make sure the website is secure when you electronically send your credit card numbers.

Fighting Internet Auction Fraud

The IC3 also makes specific recommendations on how to battle Internet Auction Fraud:

• Understand as much as possible about how Internet auctions work, what your obligations are as a buyer, and what the seller’s obligations are before you bid.• Find out what actions the website takes if a problem occurs and consider insuring the transaction and shipment.• Learn as much as possible about the seller, especially if the only information you have is an e-mail address. If it is a business, check the Better Business Bureau where the seller/business is located.• Examine the feedback on the seller and use common sense. If the seller has a history of negative feedback then do not deal with that particular seller.• Determine what method of payment the seller is asking for and where he/she is asking to send payment. Use caution when the mailing address is a post office box number.• Be aware of the difference in laws governing auctions between the U.S. and other countries. If a problem occurs with the auction transaction that has the seller in one country and a buyer in another, it might result in a dubious outcome leaving you empty handed.• Be sure to ask the seller about when delivery can be expected and warranty/exchange information for merchandise that you might want to return.• To avoid unexpected costs, find out if shipping and delivery are included in the auction price or are additional.• Finally, avoid giving out your social security number or driver’s license number to the seller, as the sellers have no need for this information.

Steps To Take If Victimized:

1. File a complaint with the online auction company. In order to be considered for eBay’s Fraud Protection Program, you should submit an online Fraud Complaint within 90 days after the listing end-date.2. File a complaint with the Internet Crime Complaint Center.3. Contact law enforcement officials at the local and state level (your local and state police departments).4. Also, contact law enforcement officials in the perpetrator’s town & state.5. File a complaint with the shipper: USPS, UPS, Fed-Ex, etc.6. File a complaint with the National Fraud Information Center.7. File a complaint with the Better Business Bureau.

A Closer Look at Non-Delivery

Doing the non-delivery math paints an unpleasant picture:

Since Non-Delivery constitutes 32.9% of the 275,284 reported cyber crimes in 2008, this means we saw 90,568 reported non-delivery cases. Now, since according to the National White Collar Crime Center’s August 2005 report, The National Public Survey on White Collar Crime, only one cyber crime in seven is actually reported to police or a regulatory agency, we will have to multiply this number by seven to get an accurate count of perpetrated non-delivery crimes for 2008, which ends us up with 633,976.

This in turn means that 1,736 such crimes occur every day, or 72 ever hour, 24/7.

Or, to put it in another light, here in the United States, every minute of ever day (24/7), a product is fraudulently sold (and gullibly purchased and paid for) online.

Not a laughing matter.

Fraudulent Online Escrow Protection

One of the IC3’s key recommendations is to consider utilizing an escrow or alternate payment service after conducting thorough research on the escrow service.

However, please take careful notice of the line “after conducting thorough research on the escrow service.” Why did the IC3 include that warning?

It is because fraudulent online-escrow protection has proven to be a very profitable online fraudulent activity, masquerading as it does as protection, while only intending theft.

It is nothing short of escrow wolves in sheep’s clothing. For this is the world of praying on the innocent and unsuspecting; of perpetrating fraud in the guise of help.

This is the world where the weary online buyer—well informed perhaps about online auction frauds and false promises—to safeguard his money turns to an online escrow service to make sure that he receives and approves the merchandise before his funds are released to the seller.

He Googles “Online Escrow” and is met with a host of sites, one seeming more legitimate than the next. He reads the “about us” carefully, and as much of the fine print as he has time or mind to absorb. Finally settles on one: Integrity Escrow.

He establishes an account, and his email is verified by the site, over a secure https link. So far so good. Seeing the https and the little security symbol in his browser makes him feel warm and fuzzy.

He then provides the details of the transaction, and, as a final step, deposits the purchase amount—in this case $3,500—in his newly established escrow account.

And that, as the saying goes, was the last he saw of that money.

How do they do it?

Impersonating the Solution

Turns out Integrity Escrow was nothing but a slick impersonation of a bona fide escrow company, established—normally in China, Russia, or the former Eastern EU—for the sole purpose of stealing your money while pretending to do the exact opposite, i.e., preventing theft.

Unfortunately, online escrow fraud is escalating, due to factors such as:

• Online identity/credit-card theft• The Anonymity of the Internet• A lamentable lack of public awareness about fraudulent escrow sites• Web hosting companies that allow fraudulent escrow sites to be created with stolen credit cards, and then allow them to remain on their service even after they have been reported.

To this, add an increasing number of tech savvy criminals with zero concern for their fellow man.

Luckily—for those who’s job it is to track the fraudulent online escrow sites down—those who set then up fraudulent are, as a rule, lazy people, who wouldn’t (probably couldn’t) create original copy if their lives depended on it. No, too much work.

Lazy people normally resort to templates, made to order scam sites (which abound as well) where they go to download a respectable site. As for trust-inducing copy, few sites are better than bona fide online escrows, which is where they go for the words.

Safeguard Your MoneyHow can, you, the average Internet user protect yourself against online escrow fraud?

Firstly, it is important that you (as recommended by the IC3) research these sites before ever sending money or merchandise. First, do a WHOIS search on the domain. This will show you how long the site has been up, where it is being hosted, how many times the site has been taken down. These are clues. If it smells fishy at all to you, go elsewhere.

It is your money. Handing it over to a cyber criminal probably has not yet made it onto your top-ten list of what to do with it.

There are many great deals online. There are many great auction houses online. There are bona fide online escrow sites, but nowhere near as many as there are fraudulent ones.

So do all the online research you can. When you have found a site that seems legitimate, you should take one of several additional steps:

• Firstly, while fraudulent sites can buy the necessary certificate to make it a secure site, they seldom do;• Secondly, you can check at escrow-fraud.com to see if the site you have decided on is listed as a fraudulent site by them; they also maintain a list of bona fide sites;• Thirdly, you can call the site’s customer service department to make sure they are based in the United States. If you have any doubts about that, ask them to call you back, and check the caller ID—if it is an international call, beware. Also, if the site does not have a customer service department, again, beware;• Once you know that you’re talking to a U.S. based service department, ask any questions you can think of to ensure they are legitimate, such as which bank are they using for their escrow accounts, and who is their main contact at that bank (whom you can then call to verify that this online escrow company does in deed have an escrow account there);• If the answer is a well-known American bank, and if the customer service rep can supply contact information at the bank, you are 99% there. Then, if you want to reach 100%, make that final call to the bank to rule out any vestige of doubt.

Now you have found an online escrow company you can trust; register with them and enjoy your purchase.

Escrow.com

To make your life a little easier: there is an online escrow company with the credentials to put your mind at ease.

Licensed by the state of California—as well as by the States of Idaho and Arizona, who require separate licenses—Escrow.com is the only on-line escrow company credentialed to serve every state of the Union, and who indeed does so 24/7.

While Escrow.com will handle transactions of any size, it may not make financial sense to turn to them for low cost items since their transaction fee is $25, and their commission is $63 per $1,000 value of the transaction if payment is by credit card and $32.50 per $1,000 for wire transfers.

But, if you value your sleep, Escrow.com would be indispensible for any transaction of $250 on up.

While Escrow.com is gaining increasing recognition as the Internet escrow company to turn to for peace of e-commerce mind, their staff, on a daily basis, also hunt and diligently work to shut down fraudulent impostors, which are encountered daily.

And they spring up like mushrooms, these impostors: there are days that Escrow.com staff discovers as many as ten new such sites.

The good news is that as these sites are tracked down, authorities are alerted and the sites are soon off the air.

eBay Weighs In

To quote the biggest online auction site of them all, eBay: “Pay safely – beware of fake escrow services when you consider using them to pay for your eBay item.

“For eBay transactions, you should use eBay’s only approved Escrow Company: www.escrow.com.”

Escrow.com—A Soon-To-Be Household Name

As Escrow.com gains further and further recognition on its way to become a household name, it gets harder and harder for impostors to defraud the public for the excellent reason that they are not Escrow.com—the only name you know you can trust.

Here’s to peace of mind and a good night’s sleep.

 

When we think of an escrow company, we almost automatically think of real estate. And for good reason, properties are high-ticket items.

The word escrow comes from Old French escroe and actually means “scroll.” You can picture a Dickensian scribe pouring over and painstakingly filling the scroll with every last inky detail. Thoroughness personified; something that still characterized the escrow company today, for as you know, the amount of paper involved in a property transaction can be intimidating.

Definition

But escrow is a function that serves a much-needed purpose in areas other than real estate.

By definition, an escrow company is a third party operation that holds money or property granted to someone else for release once certain conditions have been met, and it is now used in most transfers of high value personal and business properties—such as websites and businesses—and in the completion of person-to-person remote auctions (such as eBay).

An online escrow company serves the exact functions as its brick and mortar counterpart and is subject to the same stringent legal and regulatory requirements.

Cyber Crime

It is not that every buyer or seller online is out to defraud you, far from it. However, non-delivery of items purchased, and Internet auction fraud combine to make up the most reported cyber crime in the nation for 2008, constituting 58.4% of all reported cyber crimes.

That adds up to over 160,000 reported instances of non-delivery and Internet auction fraud. And considering that conventional wisdom holds that only one in seven cyber crimes are actually reported, the total instances of non-delivery and Internet auction fraud could be as high as 1,120,000.

This is still a low percentage of all transactions occurring on the Internet – eBay for one, boasts over 4 million transactions a day—but the number is certainly large enough to make you stand up and take notice. Chances are you will run into a fraudster.

Confidence

It is not only the fraud aspect of online transactions that speaks for the use of an escrow service.

Whenever buyers and sellers do not know each other—for the sake of a good night’s sleep alone— they should turn to a third party they can trust. The online escrow company serves precisely that function.

A bona fide escrow company must be licensed to conduct business by its home state, and in order to operate nationwide, must also be licensed in the states of Idaho and Arizona.

It serves as the single point of contact to track and manage all aspects of a transaction, including third-party suppliers.

Such a company reduces the potential risk of fraud by acting as a trusted third party that collects, holds and disburses funds according to buyer and seller instructions.

When to Use an Online Escrow

The short answer is that you should use an online escrow whenever you want the confidence that the transaction will be completed according to buyer and seller instructions.

The longer answer is that you should weigh the cost of the service against the value of the item, and your own peace of mind.

$500+ Value

Consider using an online escrow for any item worth over $500. The math alone speaks for this since the fee is only a small percentage of the total cost. For less expensive items, the cost of the service grows proportionately, and may not be worth the expense. Up to you.

Automobiles

Consider using an escrow service whenever your purchase an automobile online. Not only do you want to circumvent fraud, but you also want to ensure that the automobile is in fact as described. A full service escrow will offer vehicle inspection services to ensure that it meets seller description, and will also handle transfer of title.

Domain Name Transfers

No domain name should be transferred without an escrow service.

Before releasing payment to the seller, an online escrow service will verify that the domain registrant information now reflects the buyer. If the registrant information does not do that, the service should ask the buyer to confirm control of the domain before releasing money to seller.

If such transfer does not take place, the buyer can request the transaction to be cancelled and his money returned from the escrow company.

Art and Jewelry

From the standpoint of being high-ticket items, no art or jewelry should be sold online without the safety net of a licensed online escrow service.

Services

Whenever a service is purchased online, there is always the question of whether or not the service performed met the buyer’s expectations or requirements. An escrow service can hold all funds in abeyance until both parties have agreed that the service has been performed satisfactorily.

Used Equipment

Used equipment normally never come with intact manufacturer warranties, and may or may not meet seller expectation or requirements. In such instances, for the sake of both buyer and seller, an escrow service should hold all funds until the equipment has been inspected and accepted by buyer. Especially if it is a high-ticket item.

Peace of Mind

The bottom line—and one of those very valuable, though intangible, products a good escrow service provides—is peace of mind. Using a trusted third-party service, you do not have to worry about fraud, about missing pieces to the equipment purchased, or that there might be something wrong with the automobile title.

Peace of mind can add years to your life. Well worth the investment.

Escrow.com

Licensed by the state of California—as well as by the States of Idaho and Arizona, who require separate licenses—Escrow.com is the only on-line escrow company credentialed to serve every state of the Union, and who indeed does so 24/7.

To quote eBay: “Pay safely – beware of fake escrow services when you consider using them to pay for your eBay item.

“For eBay transactions, you should use eBay’s only approved Escrow Company: www.escrow.com.”