How Fake Escrow Companies Scam Buyers and Sellers

4 January 2026

The real estate industry has always been a hotspot for scams, and one of the most deceptive tricks in the book is the fraudulent escrow company scam. Imagine this: You’re all set to close on your dream home, or maybe you’ve found the perfect buyer for your property. You trust an escrow company to handle the transaction safely, only to realize they’ve vanished with your money. Sounds terrifying, right?

But don’t worry! In this article, we’ll break down how fake escrow companies operate, the warning signs to watch for, and how you can protect yourself from being their next victim.

What Is an Escrow Company?

Before we dive into the scam, let’s first understand what a legitimate escrow company does.

An escrow company acts as a neutral third party in a real estate transaction. They hold funds, documents, and other assets until all conditions of the deal are met. Think of them as a trusted middleman ensuring that neither the buyer nor the seller gets scammed.

Now, scammers know that people inherently trust escrow services, so they create fake ones to deceive unsuspecting victims.

How Fake Escrow Companies Operate

Scammers running bogus escrow companies use various tactics to appear legitimate. Let’s walk through how they pull off these scams.

1. Setting Up a Fake Website

The first step? Creating a professional-looking website. Scammers design fake escrow websites that mimic real, reputable companies. They use official-sounding names and even steal logos from actual escrow firms to appear credible.

These websites may include:

- Fake customer testimonials
- Professional email addresses
- Glossy branding and design
- Fraudulent licensing information

Since most people judge credibility based on website appearance, many fall for this trap.

2. Targeting Buyers and Sellers

Once the fake escrow website is up and running, scammers actively search for victims. They usually target:

- Homebuyers: They contact buyers who are looking for secure payment options and convince them to deposit funds into their account.
- Sellers: They trick sellers into believing the buyer has deposited money and push them into transferring property ownership before receiving payment.

3. Creating a Sense of Urgency

Scammers thrive on pressure. They’ll claim:

- "This deal will expire if you don’t act fast!"
- "Another buyer is ready to take this property if you don’t send the deposit today!"

By making their victims feel rushed, they reduce the chances of verification and logical thinking.

4. Disappearing with Your Money

Once the victim deposits money into the fake escrow company's account, the scam is complete. The website goes offline, phone numbers stop working, and the scammer vanishes with the funds, leaving the victim helpless.

Red Flags to Watch Out For

Now that you know how these scams operate, let’s talk about how you can spot them before it’s too late.

1. No Proper Licensing or Accreditation

A legitimate escrow company must be registered and licensed to operate. Always:

- Check with your state’s regulatory agency to confirm their legitimacy.
- Look them up on the Better Business Bureau (BBB) website.
- Verify licensing through state escrow licensing boards.

If a company can’t provide proof of their credentials, walk away.

2. Poor or No Online Reputation

A real escrow company will have reviews, testimonials, and a solid online presence. If you can’t find anything about them online (or worse, you find multiple complaints), consider it a huge red flag.

3. Requests for Unusual Payment Methods

Scammers prefer payments that are difficult to trace or reverse, such as:

- Wire transfers
- Cryptocurrency
- Gift cards

A legitimate escrow service will never ask you to send money via untraceable methods.

4. High-Pressure Tactics

If an escrow company is pushing you to act quickly or claiming that a deal will vanish unless you pay immediately, pump the brakes. A trustworthy company will never force you into making hasty decisions.

5. Unsecure Website and Email Practices

Check the website’s URL—it should start with “https://” (not just “http://”). Also, scrutinize their email addresses. Legitimate companies will have professional domain emails (e.g., [email protected]) rather than generic ones like [email protected].

How to Protect Yourself from Fake Escrow Scams

By taking a few precautionary steps, you can avoid falling victim to these scams.

1. Do Your Research

- Search for escrow company reviews and complaints online.
- Verify their credentials through state authorities.
- Ask for references from previous clients.

2. Contact the Escrow Company Directly

Got an email from an escrow company you’re unsure of? Call them using the phone number listed on their official website (not the one provided in the email). Scammers often use fake contact details.

3. Work with Verified Real Estate Professionals

A reputable real estate agent or attorney will have connections with trustworthy escrow companies. If you’re unsure about a company, ask a professional for guidance.

4. Never Send Money Without Verification

Before sending funds, confirm all details directly with the escrow company. Be especially cautious if the company asks for an immediate deposit via wire transfer.

5. Check for Secure Transactions

Legit escrow companies use escrow accounts monitored by financial institutions. If the company doesn’t disclose how your money will be held, that’s a big warning sign.

What to Do If You Get Scammed

If you believe you’ve fallen victim to a fake escrow company, don’t panic. Here’s what you should do:

1. Report the Scam – Contact the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB), and your state’s attorney general to file a complaint.
2. Notify Your Bank – If you sent money via wire transfer, your bank may be able to help you recover the funds. Act fast!
3. Warn Others – Leave reviews online and report the scam to platforms where you found the escrow company to prevent others from being deceived.
4. Consult a Legal Professional – If you’ve lost significant money, consider seeking legal advice to explore your options.

Final Thoughts

Fake escrow scams are becoming increasingly sophisticated, but that doesn’t mean you have to fall victim to them. By staying informed, recognizing the warning signs, and taking precautionary steps, you can keep your money safe and ensure a smooth real estate transaction.

The key takeaway? If something feels off, trust your instincts and verify before you hand over your hard-earned money. Scammers prey on trust, but with the right knowledge, you can outsmart them every time!