What Is An Escrow Service And How Do They Protect Online Purchases

| Friday, February 16, 2018
By Maria Stone


People of all ages have discovered how convenient and fast it is to click to select goods, add them to a cart, and pay for them at checkout, all without leaving their favorite armchairs. Most of these consumers are also very concerned about security and legitimacy. The best way to ensure the purchaser gets her merchandise and the retailer gets paid is to make use of an escrow service.

Trust accounts are nothing new. Real estate companies have been required to hold earnest money in them for many years. If you have ever bought real estate you know that a down payment is necessary. The money you tender goes into a special account and is held there until the closing. At closing your down payment will be applied to your purchase price. Most people believe the seller automatically gets your money when you pay for something online. Very often it goes to an escrow agent instead.

When escrow agents are used, the buyer's payment goes to that company to verify the funds and hold them until the purchaser receives her merchandise. The company notifies the seller that the funds are good, and the retailer releases the merchandise. Once the buyer receives her package, she inspects and accepts it. Only then is the money released to the seller.

If you are buying something as valuable as a vehicle, these companies are able to help you not only by holding your funds, but with liens, titles, and shipping documentation. Jewelry purchases can be tricky when you are doing them online. Scams are fairly common. By using these services, your money will be held until you receive the item and have a chance to verify its authenticity.

You have to be very careful buying certain items, like guns, online. You want to feel confident that your money is safe and the package is tracked until it gets into your hands. Even when purchases are small in amount, consumers want to know they are going to receive what they ordered. When customers have issues with their transactions, they give bad reviews, and sellers lose business.

The benefits for buyers are numerous. Most buyers feel much better knowing their money is in third party hands instead of going directing into the seller's bank account. They have a reliable company tracking their packages for them. Buyers have a small grace period to look over what they bought before they accept it.

The service has a lot of advantages for sellers as well. They don't release the merchandise until funds actually get into escrow. That way the retailer doesn't have to worry about charge backs. They know the funds are being held until receipt by the purchaser. When the seller accepts the merchandise, and the funds are released, the transaction is complete.

Buying merchandise online is a huge convenience. It's also a great way for sellers to move their product. With a third party holding the funds, everyone is assured of a successful transaction.




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