How the scam works:
This is similar to the Online Purchase Arbitrator Scam in the Auto category and is very common on websites like eBay or Craigslist.
Say you just won an online auction for a video camera. It isn’t cheap, so you’re being extremely cautious and researching the owner. To prove he’s serious and reliable, the seller suggests you deposit the money into an escrow service, qualified as a third party arbitrator.
The Internet escrow works by placing money in the control of an independent and licensed third party in order to protect both buyer and seller in a transaction. When both parties verify the transaction has been completed per terms set, the money is released.
However, in the Escrow Service scam, the seller suggests the buyer a 'great and safe escrow service', but in reality this is a fake service (maybe even a well designed website) created by the criminal. The victim just deposits the money into an account that instead of being a third party, it belongs to the crook. Then, of course, not paid product is delivered.
How to avoid:
If the seller recommends Yahoo Finance or MSN Finance as an arbitrator, stay away as there are no such things. Scammers use well-known names to make their operations look more official. They simply create fake e-mail addresses, and send messages to buyers confirming that the products really exist.
The victims send the money to the escrow service, thinking they are safe. Use the official arbitrators of the website you’re buying the camera from. Also, rely only on legitimate agenices.
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