One way to protect yourself as an eBay buyer is to be sure always to buy using PayPal or a major credit card, since either of these payment methods offers some measure of buyer protection in case of undelivered, damaged, or unsatisfactory goods. Credit card payments don’t protect sellers nearly as much, however, and may not be enough for the most cautious buyers or when transactions sizes run into the many thousands of dollars.
For these types of situations, it’s best to transact payments throw escrow.
What’s Escrow?Escrow services are services that act as payment intermediaries. They accept payment from the buyer, then notify the seller that the buyer has indeed paid; once the item is delivered, the buyer notifies the escrow service that all is well and the funds are released to the seller. In this way, both buyer and seller enjoy an increase in the measure of protection that they enjoy—the seller knows that the funds are both available and good, and the buyer knows that the seller won’t actually receive any money until a satisfactory item has been received.
The use of escrow has been a common practice in many conventional types of commerce since time immemorial, as is the case with buying and selling real estate. In today’s ship-it-around-the-world culture, however, escrow may also be coming of age for other types of transactions in which the buyer and seller are unfamiliar to one another and may never even meet on a face-to-face basis.
On eBay, escrow services are most commonly used for very expensive collectible, furniture, electronics, or computing items or for sales of automobiles or other motor vehicles on the eBay Motors site.
Using Escrow on eBayIf you’d like to use escrow for an eBay transaction, here are some things to keep in mind.
- Use only escrow.com for your transaction. eBay has approved the use of escrow.com for transactions, and the reason for sticking with this recommendation goes beyond mere marketing purposes. Escrow fraud—the situation in which a seller receives notice of payment from an “escrow service” that turns out never to have existed at all—is a very common form of fraud on eBay. The agreement by convention to use a known and recognized service like escrow.com protects all involved from fraud—which is the reason for the use of escrow in the first place!
- As a seller, demand escrow if you want to use it. If as a seller you want to use escrow, make clear in your listing description that you require buyers to pay through escrow and that no other forms of payment will be accepted.
- As a buyer, ask sellers if they’re willing to accept payments in escrow. Because most sellers do not have any hard and fast policy with regard to escrow, it isn’t often mentioned in item listings by sellers unless absolutely required. If you are interested in buying an item only if you can pay through escrow, contact the seller of the item in question and ask whether he or she is willing to accept an escrow payment.
- Escrow is not free. Escrow companies generate revenue by charging a fee for each transaction. See this page to calculate the fees that will be paid for a given dollar value. Either the buyer or seller can pay these fees; it is up to you and your trading partner to decide who will be responsible. Sellers should remember, too, that there may be additional fees for having the funds delivered after the transaction, depending on the type of payment requested.
- Remember that escrow is serious business. As a buyer, if you reject the item being purchased or pull funds out of escrow by any means, you’ll be responsible for all escrow fees assessed, as well as for the cost of shipping the item back to the seller, before your funds are re-released to you. For this reason, escrow should not be seen as a way to make returns easier or to circumvent the seller’s own return terms..
Once buyer and seller have mutually agreed to use escrow services to complete a transaction, keeping in mind the tips above, actually doing so is a simple affair. Each trading partner should visit escrow.com, create a new account there if necessary, and create a new transaction for the auction in question by following the given prompts. Both will be asked a number of questions, including who will pay for shipping, how much time the buyer has to inspect the goods, and who will pay for escrow fees. Both buyer and seller must enter the same information for the new transaction to be created and for payment to then occur. More information about this process can also be found on eBay’s using escrow services page.