How to Protect High-Cost eBay Transactions with Escrow.com

Escrow.com, eBay’s official escrow service, makes it more comfortable for an eBay buyer to proceed with transactions over $2000, which is the upper limit for PayPal buyer protection. Buyers gain peace of mind by using escrow because they know the transaction will be completed securely and easily.

As a new user, you or your buyer must register to use the service. When you want to offer escrow as a payment option in one of your listings, be sure to indicate such on the Sell an Item form so that it appears on the listing page. After the sale closes, the seller should initiate the escrow by going to the Escrow.com site or to eBay.

Start an escrow through Escrow.com’s home page.
Start an escrow through Escrow.com’s home page.

To initiate escrow, go to Escrow.com. On the home page, register or sign in under the Start an Escrow Now heading. On the following page, you start the process by typing the eBay item number.

To proceed with escrow, the process goes something like this:

  1. The buyer sends payment to Escrow.com.

    Escrow.com accepts most credit cards (including American Express and Discover), cashier’s checks, money orders, wire transfers, and personal or business checks. A check is subject to a ten-day delay.

  2. After the buyer makes the payment, Escrow.com asks the seller to ship the item to the buyer.

    When the buyer receives the merchandise, the inspection period begins promptly at 12:01 a.m. the next weekday and continues for a time previously set by the buyer and seller.

  3. If the merchandise passes inspection, the buyer notifies Escrow.com that the merchandise is approved, and then Escrow.com releases payment to the seller.

  4. If the buyer doesn’t feel that the merchandise is what was represented in the listing, the buyer must return the item to the seller in its original condition, adhering to the Escrow.com shipping requirements.

    The buyer also must log on to the Escrow.com Web site to input return shipping information. In the event of a return, the seller has the same inspection period to ensure that the item was returned in its original condition.

  5. After the successful return of the merchandise is confirmed, Escrow.com refunds the buyer (less the escrow fee and, if agreed upon ahead of time, the shipping fee).

Either the buyer or the seller can pay the escrow fee; the two can even split the cost. But you need to decide who will pay the fee up front and indicate this in your listing. The buyer is responsible for paying the escrow fee for all returns, no matter who had initially agreed to pay the fees. The following table includes a listing of escrow fees. (Credit cards are not accepted for payment for amounts over $5,000.00.)

Escrow.com Escrow Fees
Transaction Amount Check or Money Order
Up to $5000.00 3.25% ($25 minimum)
$5,000.01–$25,000 $162.50 + 0.26% of amount over $5000
$25,000.01 and up 0.89%

Keep in mind that escrow service has also become one of the most highly publicized scams on the Internet. Unscrupulous sellers set up fake escrow sites, sell a bunch of high-dollar items to unsuspecting buyers, and then direct the buyers to the faux-escrow Web site to set up what they think will be an escrow account. The buyers send their money (thinking the transaction is safe), and after the fraudulent sellers collect a bunch of money, they shut down the Web site and abscond with the money! Small wonder that many buyers are gun-shy of using escrow to pay for expensive items. Consider bonding your transactions to lure higher bids and confer a guarantee to the buyer.

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