Epik escrow or Escrow.com?

When is an escrow service really Escrow?

I’ve been reading a thread on NamePros that got pretty heated when Jackson Elsegood from Escrow.com, Matt Barrie (Freelancer CEO – Escrow.com’s parent company) and Rob Monster from Epik became involved. I don’t normally like to get involved in these types of squabbles, but I thought for this one I’d make an exception.

I would like to first state a disclaimer, I use Epik as a registrar and have been very positive in posts about the services they provide. I also use Escrow.com and Escrow.com has been a long-time sponsor of Whizzbangsblog. Now for this blog post….

There is a BIG difference between saying you provide escrow services and being approved by a governmental authority to provide Escrow services. Why is this? The governmental body has the authority and mandate to audit a fully licensed escrow service to ensure they are not only behaving in a correct manner but have the resources to backup any problems. There are incredibly large penalties for companies that don’t abide by the rules.

Anyone can put a shingle out and claim to provide an escrow service….I could be wrong but I would think that it’s only a matter of time before the governmental authorities stop them from doing this. If the authorities don’t stop it then it makes a bit of a mockery of governmental oversight.

That being said, my understanding is that Escrow.com does have governmental approval while Epik is not approved by any governmental authority. Regardless of whether it makes sense for the government to be involved or not these seem to be the facts.

When Matt Barrie (Freelancer CEO) challenged Rob Monster (Epik) on the state of the cash in Epik’s balance sheet it was a very relevant question. The only thing that can back-up a failed Escrow transaction is cash….not lots of other assets as claimed by Rob. For a start, the other assets take time to sell and may not be enough to back up a failed transaction.

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mgilmour
I did read the entire NamePros thread and I think that Jackson asked a really important question that was in the interest of both ... Read More
30 July 2019
Epik
The entire thrust of this special edition article is that you apparently think domain marketplaces should be licensed. They are n... Read More
30 July 2019
mgilmour
A couple of points: 1. It's a blog and not a special edition article.....but that's a good idea for the future! 2. I don't belie... Read More
31 July 2019
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Interview with Jackson Elsegood - Escrow.com

Earlier today I had the pleasure of interviewing Jackson Elsegood from Escrow.com. Jackson shared very openly about some of the developments that Escrow.com has done this past year.

Jack will be attending NamesCon at Las Vegas in January and is looking forward to meeting domainers to discuss how Escrow can further develop their services.

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Interview With Jackson Elsegood - Escrow.com

I recently had the privilege of interviewing Jackson Elsegood, the general manager of Escrow.com. During the interview we discuss all the latest news from Escrow.com of what they have been doing and what they plan on doing in the future.

Escrow services are a critical part of the domain ecosystem and Jackson expresses Escrow.com's ongoing committment to the domain space. I hope that you enjoy the relaxed interview and gain some new insights for your own domain business.

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Fallout From the DN.com Disaster

One of the most important things that any escrow business needs to do is keep up and running for its customers. The whole essence of being an escrow company is that you are the trusted partner between two or more organisations that don’t really know each other. Providing an escrow service is all about doing trusted transactions.

It just so happens Thursday last week the Chinese escrow company DN.COM was taken off the air by the Chinese government. Clients who were midway through escrow transactions had no way of finding out what was going on and large sums of money were left in limbo.

Eventually, DN.com sent out an email that indicated the problem was caused by a change in the entity of the business.

dn.com email

I must admit that there is a frightening chain of events that really strike at the heart of being an escrow business. For a start, escrow is all about being really careful with other people’s money….and as I said in the opening paragraph, it’s about trust. It’s all about being very detailed, focused and losing sleep over a rounding error in a transaction.

To have the business effectively shutdown by the government shows that it's everything but focused on the details. It makes you wonder what else is being forgotten along the way in any escrow transactions….which brings up another point.

How do you become an escrow agent in some of these jurisdictions? In most western economies, escrow is a serious business that is highly regulated by the government to ensure that all parties are protected, even in the situation where there is a failure of the business.

My understanding (and I could be corrected) is that these types of controls are not in effect in the Chinese market. What this means is that funds transferred to a Chinese escrow agent may be used for working capital, rather than being held in trust. If for any reason the business struggles, then the funds used to pay for goods may also be used to prop it up. The business may choose not to do this but there is no governing body that they are accountable to as an escrow agent. This effectively means the business is actually NOT providing any escrow but IS just a middleman swapping money between parties.

There’s a really good reason why Escrow.com spends an absolute fortune on compliance. As well as being legal, this process provides buyers and sellers with the confidence and trust that their chosen escrow service is looking after their transactions.

Now here’s where the whole DN.com business gets really nasty. It just so happens that a scam website dnd.com created a mirror of the DN.com website (prior to it going down). Google indexed the pages and when it came up in the search listings customers could mistakenly click on dnd.com and think that it was DN.com. They would then enter their username and password into the scam system…..I think you get the rest.

dnd.com scam

So whatever you do right now, if you are a customer of DN.com…..update your password! Also, if you use the same password elsewhere, first of all hit your head on your desk a number of times and repeat, “I’m an idiot” each time. Then go and update all of your passwords at any financial institutions so they are different.

To be very clear....I don't have anything against DN.com and I find that it's terrible that a disreputable organisation decided to take advantage of their predicament. At the same time, DN.com's problems were ultimately of their own making.....hopefully they've learned a few lessons so this doesn't happen in the future.

As a side note, I’m very selective about who I let sponsor my blog. The reason why I’m proud to have Escrow.com as one of my sponsors is because they’ve developed a high level of trust over many years by making sure they are compliant to all governmental authorities. I know who I use for my escrow….

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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mgilmour
Hi Echo/DN.com, I do appreciate your comment. It is valued, respected and more than welcome. It's never a good thing for any busin... Read More
18 March 2016
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When is an Escrow not an Escrow?

I was reading another blog recently (yes I do that) and was intrigued by the comments on an article about escrow. A viable, secure and reputable escrow service is absolutely key to every domainer if they are to safely buy and sell domains. So when is an escrow not an escrow?

I used three key words in my first paragraph and I would like to unpack them to help readers judge and escrow service.

Viable.
Is the business that is ultimately backing up the escrow service going to be there tomorrow? Do they have the financial ability to pay their debts when they fall due (ie. are they solvent)? My impression is there are too many people hanging out a sign saying that they can do escrow and actually have no idea what it means.

For example, I receive requests all the time from new monetisation companies wanting to get access to our large volume of traffic at ParkLogic. My problem is that for many of them I don’t know if they will be in business in the next 12 months. It’s the same for some of the start-up escrow companies, they just aren’t viable.

Secure
Security is all about whether there is an independent body that verifies that the internal processes of any escrow transaction are auditable and transparent. This means that the escrow company needs to go through the expense of government audits that verify they are a legitimate escrow business that is conducting themselves in a good and proper manner.

Recently I’ve seen a number of escrow companies pop up in strange and wonderful jurisdictions. This doesn’t mean that the escrow company is bad but it does mean that they are doing this for a particular reason. In many cases, it could be that the costs of providing a fully operational escrow business in the USA is too high, therefore they get an escrow license off-shore.

The advantage of a company that goes through the expense of a US license is that they tick a lot of the boxes. They have the money to pay and go through the government audits. It’s very likely that the US government audit will be a lot more stringent compared to other jurisdictions.

For example, my understanding is that you need to get a license for each US state (some are bundled together) and that California is really the big one. I’m not a lawyer but if you’re conducting an escrow business in California without a license then I would have thought that you’re on dangerous ground. There are some creative ways around this problem but if you’re doing business in California as an escrow company then why not just get the license and be done with it? I may be a little naïve but I just don’t get it.

Reputable
One of the most difficult things that you can do in business is build a good reputation. It often takes years and years of consistently doing the right thing by customers.

For example, I’m privileged to be part of a group of domainers get together at each conference. We do so because over the last 10+ years that we’ve known each other there has developed a sense of trust and mutual respect. It’s taken a lot of time to build these relationships and the result is a huge amount of business between us.

It’s the same thing for an escrow company. It takes years to develop the reputation as a place that can be trusted with literally millions of dollars of transactions. Reputation is everything.

So when is an escrow not an escrow? From my way of thinking, it's when they can't tick the boxes of viable, secure and reputable.

I’m very careful about who I have sponsoring my blog and I’m very proud to have Escrow.com on here because they are viable, secure and reputable. I’m not saying that any other escrow company is not any good. What I am saying is that I’ve only had positive experiences of dealing with Escrow.com

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face.

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mgilmour
I completely agree with you. Escrow is peace of mind and you're a great ad writer!
04 March 2015
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