How does Escrow work?

[RicoShay]

I understand the basic concept and have used Sedo's escrow when selling a domain name but I'm still a bit unsure about how the whole process works and what happens if something goes wrong - who suffers?

So I have few questions that I'm hoping someone can answer...


Q. Does the Escrow provider take on a risk instead of the seller in the sense that there can likely be charge-backs?

Q. What's stopping someone making a charge-back after they've received the domain?

Q. If someone makes a charge-back, who ends up losing out? The Escrow company? or do they take the money back from the seller's account?

Q. Does the Escrow company hold the money/domain for a certain period of time to ensure the money clears? What do they do to prevent charge-backs?


I've used Escrow as a seller so I don't know what is involved from the buyers side. But I always wonder if the Escrow company can take the money back from me if the otherside makes a charge-back!?

 

[Semtex]

I had a $1200 transaction with Escrow earlier this year and they were really professional and speedy. After they emailed me to tell me the seller paid, I transferred the domain and everything went very smoothly.

 

[Jaco]

I don't know how the chargeback process works with Escrow.com, as I've never been through it (been through enough fraudulent chargebacks with Paypal that I only use them as a last resort, though)

I do know I just deposited a paper check from Escrow.com, funds cleared and are now in my account. If the buyer were to 'charge back' the proceeds used to fund the transfer, that would be their problem, since it's too late to put a stop-payment on the check.

I do kinda like checks in this regard. The reversal process for all electronic payments is just way, way too ripe for abuse. I can't concieve why anyone would be unable to wait a few days for a check, save for needing bail money. Anything beyond that is child-like impatience where the 'instant gratification' of electronic payment is totally negated by the massive assumed risk of trivially easy chargebacks.

 

[RicoShay]

Thanks for the replies guys.

I agree with the cheques payments, sounds like a good idea. I also try not to use PayPal (unless its MassPay) for high value transactions. I've only experienced one charge-back on PayPal in the past, but it wasn't domain related anyway.

I'm still wondering how it works with the Escrow company. I mean, lets say if I took a credit card payment directly (or a wire-transfer) then whats the period of time that the buyer has to claim a charge-back? And with domain names, how do we prove that we actually transferred it to them in order to fight the charge-back?

Any ideas?

I'm considering taking a direct card payment (or wire if they can do that), but I need to know how long it is that I have to wait to know the money is truly mine and can't be reversed.

I'm sure the Escrow companies have something in place which stops charge-backs or at least they are insured against such things. If not, then they are taking quite a big risk, no?