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|The Rub Of Escrow: I Think You May Be A Thief But Please Do Business With Me|
When Is Escrow A Necessity? When Is A Man's/Woman's Word - A "Hand Shake Deal" - Enough?
| 1:26 am on Apr 9, 2010 (gmt 0)|
I've sent money all around the world, never relying on escrow, because I firmly believe that there are MANY people who value their reputation far more than they value a few thousand or tens of thousands of dollars. Such are the people that I have wired money to without a contract, without using escrow.
Have I ever used an escrow service? Sure, a few times, mostly when I was dealing with someone about whom "evidence of standing and/or reputation" wasn't readily available.
But, really, at this stage of the domaining process I'm no longer open to a buyer appraoching me and insisting on using an escrow. Why? Because implicit in the demand/insistence, is the unstated belief or suspicion or concern that I may be a thief - I'll take the money and never deliver the goods. As if I just crawled out from under some rock where I've been hiding since my last domain deal heist. :P
If this costs me a deal here and there, so be it. I am no longer willing to countenance the implicit "I doubt your honesty". Phooey! You asked ME to do business, but I'm untrustworthy? So why are we doing business?
Forget the fact that as a lawyer, as in the case of most lawyers, after some ~30 years of practice I've handled millions of dollars of other people's money - essentially "as escrow", i.e., money "in trust" (my trust account).
Sure, I get that most people don't have that extra credential, but most people I did business with didn't have it. What they had was evidence of standing, evidence of business reputation/success. In other words "no bad rap".
So, in forgoing deals where a buyer insists on using an escrow service, am I acting like a loon? A bit to prissy, full of my self, high on my horse?
Or is it just a matter of "Hey, it's your choice to pass up the money . . . you loon"?
When or under what circumstances is escrow a necessity? When are you willing to dispense with "domain escrow"?
Is escrow fool/failure proof? I have my doubts that it's a perfect system. Anyone ever use an escrow service and get burned?
| 11:28 am on Apr 13, 2010 (gmt 0)|
Forget trusting Webwork, I wouldn't trust escrow.com
|I don't trust them at all because of their terms of service, I trust them because reputation management is everything in the business |
It wouldn't matter if it were $50, but given a large enough sum, I try to go beyond public perception of the person/the company's reputation. And I don't get that excited about using escrow.com.
For one, they're registered in California and it's not a good idea to deal with an escrow company registered in California if you're based outside of the US (IANAL, but I've written a detailed article examining the relevant provisions of the Californian Financial Code and how that impacts on escrow.com's services - Google it if you're interested).
Two, there is no company called escrow.com. It's Internet Escrow Services and they're leasing the escrow.com domain. If IES goes down, it allows escrow.com to funnel the bad rep elsewhere and re-lease the property to another escrow company.
Three, IES doesn't escrow websites.
I could go on, but as someone who has a lot of experience with escrow companies and transactions involving the buying and selling of domains and websites, I'll say this: There's many a slip between the cup and the lip. No matter how trustworthy the seller/buyer, use a third party as conflicts and misunderstandings can arise. If you are forced to use a particular escrow (like with SEDO) then you don't have a choice. Otherwise use a good lawyer, not an escrow company.
Not that long ago I withdrew mid-way through a purchase as the buyer didn't meet conditions agreed on. We were using IES (or escrow.com, as everyone seems to call them). I ended up with both my $15,000 and ownership of the domain. I returned the domain, of course, but if it could happen to two very experienced players it could happen to anyone.
| 11:53 am on Apr 13, 2010 (gmt 0)|
I've never used escrow services. I wouldn't discount using them if the need arose, but to date, I've just done it on faith. In fact, in many cases I've worked on a handshake.
I still remember my first ebay purchase back in the 90's - for $5000. I sent the money and hoped :). Got my merchandise.
The biggest site I sold, I sold based on a verbal agreement. $200k. No escrow.
Last week I bought two domains from a domainer - an area where I have a lot of distrust. Sent them the money (granted it wasn't excessive) and an hour later the domains were sitting in my account.
I have been burned, but I try not to let those times affect my general good faith in others. And as webwork implies, I prefer to just do a handshake deal and get the job done, not have additional layers of administration in the middle.
|man in poland|
| 12:04 pm on Apr 13, 2010 (gmt 0)|
All of you are welcome to join me in Eastern Europe and try doing this sort of business here WITHOUT escrow.
Oh, how we will die laughing watching all those handshakes, chummy emails and telephone chats.
| 12:56 pm on Apr 13, 2010 (gmt 0)|
|But I am certainly arguing against blind distrust. |
Contracts, purchase orders, due-diligence, escrow and other business execution formalities are simply doing business – nothing more.
These business instruments are to ensure that everybody is on the same page and the deal is executed predictably and with minimal risk to all parties involved.
|It is the same thing as a pre-nuptial. It is cynical in nature. |
If your 22 years old and own nothing but the clothes on your back, a pre-nuptial agreement does not make sense as there is nothing to be unfairly lost. However, if you have worked hard and own (paid for) your home, car, boat, have a thriving business and piles of money in the bank – and the person you’re marrying has nothing...
A prenuptial agreement can ensure everybody’s heart and intent is where it should be.
|When Is A Man's/Woman's Word - A "Hand Shake Deal" - Enough? |
When either party’s failure to honor the agreement DOES NOT cause significant hardship, financial loss, to the other party or parties involved.
| 12:57 pm on Apr 13, 2010 (gmt 0)|
I'm with Webwork on this one! Somebody has to stand up for trust. Are you part of the problem (in case you didn't NOTICE the problem of trust today, it's a RIFE ONE), or part of the SOLUTION, or, at least a step toward one!
Saying that trust would be any other way, would be to turn words on themselves (buckworks, I think you have done just that ENOUGH for just one thread). Yes, it cuts both ways, including the moral high ground of not needing the money, but needing the trust. Repeat business is nice too, as is ROI and believing/trusting people will do the right thing.
Trust builds reputation. Try it sometime. If you don't trust, maybe build more interpersonal skills and work it out. The World was meant to be a good place, do your part. Mistrust breeds all manner of things, and last I checked, legal people weren't that liked for these reasons alone.
*Trust builds business* without it you're just wasting time and splitting hairs. ROI means a lot to some people, A LOT!
Some people trust others (within reason), others do not (buckworks, etc?), we could get all Freudian, but I'll leave that for the shrinks… We could also draw cross cultural conclusions, but I'm trying to keep to TOS.
I'll happily waive any domain transaction that requires escrow (unless it's an amount, say over 10k). I've had lawyers contract domain sales to the point of planes flying into buildings and I think that's quite reflective of the personality of the buyer. It speaks volumes about them business wise, as well as personally. Something in my brain usually says, wow, they can't trust, wonder WHY! Yes we have all been burned, live and learn.
In commerce people buy things all day, everyday. They expect things to go smoothly and it's *buyer beware*, why should domains (from a publicly known domain seller, easily contactable) be treated any differently?
| 1:18 pm on Apr 13, 2010 (gmt 0)|
man in poland - Are there NO honorable/trustworhty men/women in Eastern Europe?
If there are how do YOU identify them?
Again, as I stated about I'm not arguing FOR blind trust but AGAINST reflexive distrust.
Can one encourage or cultivate a culture of trust. . even in places known for corrupt practices? How?
I suspect one practice is to identify/find people willing to partake in the benefits of trust: allow them to benefit . . and perhaps others will begin to emulate the behavior?
And, yes, the thieves will always be amongst us . . :( . . as will the greed or avarice or laziness that often participates in thievery. But that's a whole other can of . . . deadly sins. :-/
|man in poland|
| 2:47 pm on Apr 13, 2010 (gmt 0)|
Webwork - of course there are many, many honourable people in this part of the world. My wife - for one!
How do I recognise them? Simple. They're the ones who use escrow.
Your ideas about 'encouraging a culture of trust' is such a Western-centric foible. A bit like Democracy, as Westerners we assume it's not only right for us, moreover it's our duty to foist it upon everyone else in the world. Actually, it's a curiously arrogant attitude of us as Westerners, if you look at it subjectively.
As a Westerner, you feel 'put out' or somehow slighted by the merest indication by a third party of distrust. In this part of the world, quite the opposite. I'm not slighted if you ask for escrow. I'm more likely to be slighted that you consider my transaction 'unworthy' of escrow.
| 4:20 pm on Apr 13, 2010 (gmt 0)|
Unfortunately with domain transactions you rarely have the opportunity to meet the buyer or seller face to face. For many the transaction might not even include a conversation over the phone. The lack of "Face-to-Face" offers little opportunity to come to a reasonable impression of the other party.
There are many situations where I would rely on a hand-shake or someones word, but domain transactions is not one of them.
Right now I am in the middle of a 6 week process of trying to get a domain that was already paid for. All the sudden the seller is having issues accessing the domain. The last 6 weeks of frustration could have been avoided if we had put the domain in an escrow account.
Escrow instills trust for a transaction. I now feel that there is no reason to ever sell or buy a domain with out escrow.
| 4:40 pm on Apr 13, 2010 (gmt 0)|
There is nothing wrong with escrow. In fact, I never do a deal without it because while I am not a crook, the world is full of them. Better safe than sorry.
| 5:01 pm on Apr 13, 2010 (gmt 0)|
I used escrow in the last internet transaction deal I was involved with. Private seller wanted me to send a check and he's send the product. I asked if he had an attorney. He did. I suggested I send certified check to his lawyer to be placed in escrow until UPS showed the items were delivered to me. He was happy, I was happy and the transaction worked.
If I were buying from Jeff I'd have no problem letting my check cross in the mail whatever product he was selling. ;)
| 5:21 pm on Apr 13, 2010 (gmt 0)|
|There is nothing wrong with escrow |
I don't believe anyone has said that escrow is inherently wrong.
What I am leaning towards is that reflexive ~automatic resort to escrow is . . problematic . .
The more germane and, to me, more interesting questions (why I started this thread) are:
- Under what circumstances will trust suffice?
- What are satisfactory indicia (signs of) trustworthiness?
- What does it take for YOU to NOT REQUIRE escrow?
- When are you willing to just send the money?
| 5:47 pm on Apr 13, 2010 (gmt 0)|
>If this costs me a deal here and there, so be it
Remember that when you are a sole trader you can make these decisions but as company its not your money, you could be sued for negligence by shareholders for wiring there money without taking precautions. I use it when buying code offshore, it helps the contract initiate as the seller knows you have the funds for the project.
| 8:33 pm on Apr 13, 2010 (gmt 0)|
I am purchasing a to me very expencive domain name at the moment. I am 99,99% sure the seller is a honest domain name company. However I still can not afford risking sending the funds and not getting the domain in return. Obviously I asked for escrow.com, please forget the 'a man is a man and a word is a word'. I simply can't afford taking the risk of being wrong about the other part.
Similar my house is insured, because I can't afford a new one should the current one burn down and not be insurred. On the other hand my car is not really insured because i can afford a new one on my own. I would never personally be offended by someone asking for an insurance, who am i to deside what they can afford to risk?. To me escrow is an insurance.
| 9:19 pm on Apr 13, 2010 (gmt 0)|
Webwork - Now Im honest here when I reply to your title, some will not like the answere, "it depends which country you work with"
| 1:26 am on Apr 14, 2010 (gmt 0)|
You can't even completely trust cash in hand without inspecting it with a magnifying glass and special markers these days.
| 2:09 am on Apr 14, 2010 (gmt 0)|
|"it depends which country you work with" |
Statement 2.0 -
"it depends which culture you work with"
| 3:23 am on Apr 14, 2010 (gmt 0)|
|Otherwise use a good lawyer, not an escrow company. |
Lawyers here cost $300 an hour so if you buy a site or domain for up to a few thousand or so I'm not sure it would be worth the extra expense.
|That's why I love big company TCUs |
Yeah, they all suck and are all stacked against the little guy who doesn't have a team of corporate lawyers working for him. But if I didn't do business with companies whose terms of service I didn't like I'd never rent a car, have a bank account, get a mortgage, sell anything on eBay, buy stocks or own a credit card, either. I'm not sure escrow.com terms are any worse than the rest of the terms of service I'm practically forced to sign get by in life.
|Three, IES doesn't escrow websites. |
That is true. They really just cover the domain. I have never found anything comparable for the whole site. Still it seems better than nothing for people like me who buy up assorted little domains and sites don't deal in million dollar web site transactions.
| 5:25 am on Apr 14, 2010 (gmt 0)|
Never send without an escrow. Ever. Unless it is your best friend.
Scratch that. Even if it IS your best friend :)
| 7:00 am on Apr 14, 2010 (gmt 0)|
If escrow is available USE IT. The same can be said for seatbelts. Why would you not?
| 2:28 pm on Apr 14, 2010 (gmt 0)|
|If escrow is available USE IT. The same can be said for seatbelts. Why would you not? |
Because for some folks, escrow smells like lack of trust. And some folks make a conscious decision to do business dealings based primarily on trust unless there are signals to the contrary.
Using escrow on general principles for me would mean I'm going about my business choosing not to implicitly tryst those I'm doing business with. I specifically choose to make an effort to trust them - it's a deliberate decision. Yes you can get screwed, it's a risk.
Given a transaction that had some shakiness to it, or a sufficiently large transaction I'd probably go for escrow. But to date, I've done a couple six figure deals and a couple 5 figure deals without much in the way of paperwork.
I did have someone a number of years ago suggest escrow in a domain transaction, in a domain I was buying. I told him not to waste his money, I sent him the money upfront, he transferred the domain when he got it.
| 9:22 am on Apr 15, 2010 (gmt 0)|
You don't need to be friends with those you do business with. That's what real friends are for. Business is business. They don't have to like you or trust you or whatever, beyond the level required to effect a transaction.
| 12:31 am on Apr 22, 2010 (gmt 0)|
It all depends on the buyer/seller and the situation. There are certain people that I know have good reputation based on what past buyers and sellers say. In this case, I think an escrow is unnecessary. However, if I don't know much about the person, I would rather be safe than sorry and use an escrow service.
| 8:00 pm on May 3, 2010 (gmt 0)|
Interesting thought on this whole idea after thinking about it and needing to make payment arrangements for a relatively small amount...
The whole thing went really well and I actually decided on PayPal for the transaction, just because then at least I had some fairly quick and easy recourse for non-delivery of the domain. I think I would personally probably do it this way up to $1000 without too much hesitation, because PayPal will freeze an account or reverse the payment if the transaction is contested within a certain period of time and the transaction is rightly contested*, and they will also investigate to see which way the cash should go, so there is some protection IMO there, at least that's my understanding of how their service works.
* I would look a bit closer at the terms for a larger transaction, but I know PayPal will freeze an account, because I had them wrongly do it to mine and it took me about 3 hours and 6 phone calls to get it unfrozen again... Headache at the time, but good for future reference I guess.
| 12:37 am on May 4, 2010 (gmt 0)|
|and they will also investigate to see which way the cash should go, so there is some protection IMO there, at least that's my understanding of how their service works. |
You have more rights with a charge card than Paypal. I tried to get a refund on some bogus software I bought once and Paypal would not do a thing. With my charge card I would have had a refund credited that day. It was a live and learn experience.
| 1:20 am on May 4, 2010 (gmt 0)|
>>Paypal would not do a thing
Non-receipt of goods is the only valid reason to get PayPal to reverse charges. Any partial or ambiguous language regarding receipt of goods will get you nothing.
Using a credit card has far more protection which I will not go into except that most cards have a very small maximum liability for a fraud sale.
| 2:12 pm on May 4, 2010 (gmt 0)|
|Non-receipt of goods is the only valid reason to get PayPal to reverse charges. |
Yep, that's what it was for on mine...
I had to get through to a manager and show them proof the item was delivered before they would release the funds again, which was probably well over the limit most CCs would offer any type of protection for... It would have maxed out or been over the limit of many people's credit cards.
Non-delivery of goods is definitely grounds for reversal of a transaction with PayPal, but like I said I would look into it a bit more before I relied on it too much... It does not seem to be a much worse possibility than escrow though, and if you used a CC to make the PayPal payment instead of your PP account, you would probably have the best of both worlds... CC and PayPal as possible means of recourse.
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