Escrow.com - Defense against Seller Cancelling the Transaction

[Earthian]

As many of you know , during an Escrow.com transaction , if a seller decides not to complete a transaction , he can just not transfer the domain after both parties have accepted the agreement ... of course they say that both parties have entered a binding contract , but basically there is no certain way to enforce the contract ...



result ... the buyer pays Escrow fees ... possible wire transfer fees (if for example outside the US) and possible wire tranfer fees to receive his money back (unless he gets a cheque) ... without acquiring the domain










I think that a good idea might be that Escrow make some changes to their procedure so as to ensure an even fairer environment for both seller AND buyer (if buyer is to pay escrow fees) and seller does not want to complete the transaction ... and both buyer AND seller (if seller is to pay escrow fees) and buyer doesn't transfer the funds after accepting the agreement ...




it should charge both parties' credit cards WHEN THE SECOND PARTY ACCEPTS THE AGREEMENT with ...

the whole escrow fees




... after the transfer of the domain and the transfer of the funds ... they can either refund the CC charge to the party that was NOT to pay the fees

alternatively , they could add the CC charged amount to the funds before transfer (buyer was to pay fees) ... or ... deduct the CC charged amount from the amount transferred for the payment (seller was to pay fees) ...




this way both parties will be more willing to complete the transaction because they would know that if they backed out ... they would lose the amount charged on their CC (this term should be included in the ToS) , while the party that was willing to continue will get a full refund ...











there is also a milder on-the-wallets way ... to charge half the amount to each party ...

afterwards , either ...

- refund the non-paying party and ... add half the fees to the payment amount (buyer was to pay fees) ... or deduct half the fees before transferring out the funds (seller was to pay fees)

- add half the fees to the payment amount and transfer it with the funds to the seller (buyer was to pay fees) ... or deduct half the fees from the payment amount and transfer the deducted amount to the seller (seller was to pay fees)


this way , both parties will be more willing to complete the transaction again ... or ... in case , one backs out , they will lose half the fees instead of the whole fees (as the system is now) ... but they would also know that the non-performing party also lost half the fees which can be kind of soothing ...

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[Smooth]

You are complicating it too much.

Escrow.com shd have a domain escrow account. The domain shd be transferred to this escrow account. The contract is accepted by the escrow only after transfer. Then the Buyer makes payment. Simple. This way, whoever backs-out, no one loses anything.

 

[RJ]

You are complicating it too much.

Escrow.com shd have a domain escrow account. The domain shd be transferred to this escrow account. The contract is accepted by the escrow only after transfer. Then the Buyer makes payment. Simple. This way, whoever backs-out, no one loses anything.

I agree, Escrow.com should look into handling the actual domain transfer. That's another BIG potential loophole where a buyer can lose money. (ie: Seller takes domain but says he didn't receive it.)

The issue Godian is referring to is a little different. If the seller cancels the transaction at any time after payment is sent, for any reason, the buyer is responsible for paying the full escrow fee.

It's a problem because escrow is supposed to be providing a security blanket for buyers buying from unknown sellers, and this policy could turn into a major liability for buyers.

I'll give an example.

What if a certain malicious person went around selling a three letter domain for a bargain price? Surely he'd get several interested parties that would not hesitate to agree to an escrow.com transaction. Now it turns out the guy never owned the domain in the first place. Suddenly we'd have a bunch of domainers out hundreds of dollars in escrow fees.

 

[Spade]

I wonder what the Chargeback rate would look like on that account? Ha... I think you may be dreaming a bit too much on this one.

Its not a perfect world, and bottom line is that not every deal is solid. I dont think its right that a buyer has to pay the fee when the seller backs out, however - it is what it is......

Could a better system be made? Absolutely. Escrow.com has flaws, no doubt. But the issue as it stands, doesnt look like its changing anytime soon.

Justin

 

[chupacabra]

Escrow.com is not a true escrow service, as smooth eluded to. That's why I only use Moniker. What is to stop a seller from simply changing whois info, and telling escrow.com that the domain has been transfered, but in reality the domain would still be in the sellers account?

 

[scandiman]

I agree, Escrow.com should look into handling the actual domain transfer. That's another BIG potential loophole where a buyer can lose money. (ie: Seller takes domain but says he didn't receive it.)

RJ, do you by chance have this scenario accidentally reversed?

 

[RJ]

I agree, Escrow.com should look into handling the actual domain transfer. That's another BIG potential loophole where a buyer can lose money. (ie: Seller takes domain but says he didn't receive it.)

RJ, do you by chance have this scenario accidentally reversed?

Yes, good catch. I did misstate that. The current loophole is where the seller can push the domain to a dishonest buyer, the buyer takes control of the name, changes whois, etc and claims never to have received it.

RJ

 

[Earthian]

Smooth - the process can be really simple just like buying a product with your CC and getting a refund 1 week later (if you are not the fees-paying party) ...

I think that Escrow.com should handle the transfers even just to make sure that the domain was actually transferred and received ...

but the issue I was describing was a rather different one and rather easier fixed without the rather large investment for a whole domain transfers department (at least in the meantime) ...






RJ - that was what I was referring to ... a seller backing out and a buyer paying for the non-performance of the seller ... I wanted to buy a Sony UX from a low-feedback-eBayer the other day and I was thinking that "hey , if that guy backs out , say hello to wire fees and escrow fees" ...






domainspade - this fees-for-nothing thing gets more irritating if you see it from a buyer-trying-to-buy-something-from-an-unknown-seller position ... also , it might hinder domain sales (or Escrow.com sales) , eg. a buyer that carefully went thorough the ToS might delay or abandon a purchase because of the possible fees-for-nothing charges ...






chupacabra - seller stating he transferred while he just changed the whois ... and ... buyer stating he did not receive while changed-whois/send-it-to-a-friend are the two main reasons why the transfer should be handled by the escrow company ...






scandiman - good eye lol

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[Ronald Regging]

It's not a true escrow transaction unless the escrow agent is at one point in possession of both monies/items being exchanged. I understand this is not viable for physical items being delivered through the mail, but in the case of domains, there is absolutely no reason why Escrow.com couldn't take possession of both the domain and money before dispersing both. Why they don't do this, I have no idea, but it really needs to be done. As RJ pointed out, it provides too many loopholes for possible fraud, which begs the question of why use their service in the first place?

And Godian, I do understand where you're coming from, but the issue is that if Escrow.com charged the non-completing party, that person would more than likely just do a chargeback as Spade mentioned... They just call their bank, tell them they never authorized the charge and received no service (which they didn't)... But if they already have your money, its easy for them to deduct their fees and send you the rest. At that point, the only recourse you have is suing them

 

[Smooth]

RJ & Godian: I don't understand this scenario. According to me, the domain is transferred from the seller first to the escrow account. Since the domain is transferred first, we know that the seller is the actual owner PLUS domain history can be referred for whois changes (just in case, its a stolen domain). I think the escrow process shd start only here.

Then the buyer makes payment. Now, the seller CANNOT even cancel the transaction, coz the domain is already in escrow account & a contract has been signed. So, once payment is made I don't understand how a seller could cancel the transaction. If he cancels, he loses both money & domain lol..

PS: And if i was the buyer, I wouldn't really mind paying just the escrow fee to get the domain!

 

[Earthian]

RR - Since it would be clearly stated in the ToS , I don't think it would be that easy to make Escrow.com to bulge to a chargeback request from the bank ... he accepted the ToS and therefore the seller authorized the charge ... I don't think the bank would believe that Escrow.com tried to steal $200 from someone ... plus the service was offered , the seller did not accept it ... if someone requests a chargeback , it does not mean that he will always get it ...








Smooth - I don't think many sellers would ship (or transfer) anything to escrow if the payment hasn't been send to the escrow account first ... would you ? ... therefore , if the buyer transferred the money to escrow first , he would be liable for the fees if the seller was not transferring the domain ... he would end up paying the fees for nothing ...

plus , if it is a high-traffic domain just transferring the domain to the escrow company for say 7 days (until the buyer is found to be a prankster) could cost the seller a lot of money ... especially in this case , I don't think a seller would transfer anything before the money are secure in the escrow account ...

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[Smooth]

Smooth - I don't think many sellers would ship (or transfer) anything to escrow if the payment hasn't been send to the escrow account first ... would you ? ... therefore , if the buyer transferred the money to escrow first , he would be liable for the fees if the seller was not transferring the domain ... he would end up paying the fees for nothing ...

plus , if it is a high-traffic domain just transferring the domain to the escrow company for say 7 days (until the buyer is found to be a prankster) could cost the seller a lot of money ... especially in this case , I don't think a seller would transfer anything before the money are secure in the escrow account ...

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I would & I have done it in the past. Especially in case of big transactions, when a buyer is serious about the domain, it gives the buyer the confidence to send money.

No escrow account changes your domain's nameservers. So until the buyer takes control of the domain & changes the nameservers, it is gonna be counted in your parking account only!

 

[Earthian]

Smooth - there are so many non-paying buyers that I would not even bother if the buyer did not send the money first ... of course it depends on the buyer ... who he is , how well you know him , past transactions , etc ... but for an unknown buyer that just emailed through whois or won an eBay auction , I would wait for him to send the money to escrow first ...




As I said in the previous posts , I think the escrow company should handle the domain transfer ... what I am discussing here is mostly about the current procedure of Escrow.com ... also with this discussion , some buyers might think more carefully about the possiible problems a transaction might have ...




also , even though the discussion refers mostly to domains ... I think this issue with the Escrow procedure affects physical items more seriously , where a seller would never ship the item before the money are in the escrow account ... and therefore the buyer could get in the fees-for-nothing situation more easily ...

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