Castler Escrow

Controlling The Unprecedented - Avoiding Monetary Frauds

Monetary frauds are so rampant they’re almost normalised. Although everyone is in a bid to ensure that online transacting is a safe space for all, there is a rather simple and accessible solution that many stand unaware of.

Escrow accounts are commonplace abroad for ensuring safer transactions, but somehow this functionality has been passive in India for the longest time. This is perhaps attributed to the limited accessibility of escrow accounts, which can usually be operated via an established bank. With technology overriding every traditional brick and mortar resource, we now have digital escrow services that help you create accounts with a click. However, one may wonder about trusting an unknown solution. People have a tendency to bank on the commonplace and remain as risk-free as possible. To use an escrow is in-fact the best way to ensure this. 

Steadily this service is proving to be a necessity as well. Monetary crimes and frauds regularly claim victims through a variety of means – be it online phishing, account hacking, or transaction discrepancy. Back in February 2021, a gang of criminals in Haryana was intercepted by the police in Gurugram for committing real estate fraud through false identities and counterfeit paperwork. The head of the gang turned out to be a “proclaimed offender” (PO) and is settled in Dubai. Provided the victims had originally used an escrow account, this fraud would never have been possible. While opening an escrow account for the aforementioned deal, a set of terms would be signed between the transacting parties, and each party would have to honor their end of the agreement for the transaction to process and be successful. In this particular case, the buyers would have deposited the due amount in the escrow account, and the dealers would deposit the requisite paperwork. Upon inspection and identification of the papers, the buyers would have realised the validity of the deal and cancelled the transaction. The offenders would get penalised for attempt-of-fraud and the buyers’ money would be returned to them.

Issues extend to renowned and credible payment platforms as well. In January 2020, a man was duped out 1 lakh rupees while paying online through Paytm and GooglePay. Clearly these platforms are not fool-proof as they do not assume responsibility and accountability of identity and document verification. Had an escrow account been used in this case, terms of agreement would certainly be signed between the transacting parties. This is because formulating an agreement is a necessary step for setting up an escrow account. Therefore, the victim could have made sure that the terms are met by the unknown payment party before releasing funds. 

Further, the consumer products industry is flooded with frauds and scams. One of numerous such cases is from April 2019, when a woman was robbed of 75,000 rupees for a saree she had originally bought for 1,100 bucks. The case is that of an online transaction fraud, where a woman wanted to return a saree she had bought because it was defective. The customer care representative she had called was a scammer who asked for her bank account details to process the refund. This is a major red flag and led to the scammer processing 75,000 rupees out of the victim’s account through debit card cloning. Had the woman used an escrow service to complete the transaction, her original 1,110 rupees would remain safe in the escrow vault. This money would be released to the seller only after the woman verified the quality of the saree and was happy with it. 

Generic consumers are often powerless and vulnerable to getting scammed, but when huge multinational corporations get scammed one questions the illusion of security. In September 2019, a vice president of Goldman Sachs (Bengaluru), swindled the giant MNC of 38 crore rupees by accessing accounts of fellow employees. The money was withdrawn from a bank. The move was made in a bid to repay the accused’s gambling debt. Provided an escrow account was in place, the transactions would have been overlooked by a trusted third-party, known as the trustee. The trustee overlooks that the transaction process has been safely and justly carried out. Goldman Sachs lost money and was thankfully able to trace the offender. In-case tracing would not have been possible, the company would have suffered a great loss.