Domain Spotlight:

Who Cares What Your Escrow Company Cost: The Real Question is Who’s Going to Protect You If There are Problems?

Since I’m on roll with “opportunities” that exist in the domain space.  Today’s article will deal with escrow companies. There are a lot of new Escrow companies in the market over the last few years.  Everyone is trying to get a piece of the (an advertiser on this site) stronghold that they have on the domain name sales market.  While I completely trust the owners of the newer Escrow companies (Andee, Ammar, and Francois) I need more details. I want to know is insuring the success of my transaction other than the word of a friend.

Andrew at Domain Name Wire did a nice piece comparing costs from all the major Escrow players a few days ago but there is something much more important that costs. Security.  Want I want to know is who is the legal jurisdiction if something goes wrong? Are they bonded or have insurance?  Are they audited and/or licensed by some trusted source to show they are more than just a few people getting together to be the middle man on my domain transactions?

If I am going to put $25,000 plus of my money into someone’s hands, especially if that money moves out of the US, I am going to need assurance that somebody is backing or responsible for my money if all Hell breaks loose.  I could care less if I’m saving $10 on a transaction if I am saving that money by having an Escrow company that has no 3rd party backing their actions.  My security policy can’t merely be that he/she/it that is running the company is a nice person.  Having money held in Escrow in a foreign company is not a deal breaker, but does that mean a legal problem would have to go to court there?

Maybe I’m the only one that has these questions. Maybe nobody else cares.   I use an escrow for security.  Escrow companies protect me from the bad sellers and buyers, but who is going to protect me from the Escrow company? I know that none of the people that I mentioned above would ever steal from me on purpose, but things happen.  Computers get hacked.  Employees do stupid stuff.  Life happens.  And I want to know is what happens when life happens, and who is going to take care of it.

So where am I headed with this?  I looked through the site themselves to see what the “Big 4” said on the their sites about my questions. does a great job showing they are bonded and licensed in California right on the front page. has the same thing and even sends you to a page that explains it.  I am not pointing these out because is an advertiser ( is not) . I am pointing it out because I am a domain buyer and seller and think that if someone wants to gain my trust this makes me feel more comfortable.  All the other escrow companies need to put that security, front and center on their website. They are a security company and we all need to know who is providing that security.

*remember anyone can put licensed and bonded on their website, due diligence needs to be done for any company regardless of words on the front page.

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4 Replies to “Who Cares What Your Escrow Company Cost: The Real Question is Who’s Going to Protect You If There are Problems?”

  1. So where is a company supposed to get the licensing if the state doesn’t even require nor support Escrow licensing?

    1. Brad,

      I didn’t say that they have to be licensed or bonded. I merely said they have to have SOMETHING that makes them different than some guy off the street that closes deals. What makes someone more trustworthy than someone else? There needs to be a system of checks and balances and some kind of larger entity that backs the process. That’s all.

  2. I sold a name last year for $28K, and of course the buyer was an end user who knew very little about our industry and he never even heard of He was nervous to use its service and he suggested we just use a lawyer. I talked him into it…..but at what point would you use a lawyer? I’m sure some of those million dollar sales are not using Escrow!

  3. Hi Shane,

    I understand your points.

    But I think there is simply nothing that makes one service more trustworthy than another, other than its employees and reputation.

    For instance, to make users feel more secure, an escrow company can purposely form a subsidiary in California just to obtain a license. They then have the ride to display it on their site. But that doesn’t necessarily mean it is any more reliable than without it.

    Perhaps if there’s a lot of steps to get licensed it might make a small difference but at the end it all comes down to reputation.

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