How Escrow.com Spent 5 Figures Protecting an Agreement

The job of an escrow service is to protect the buyer and the seller equally without prejudice. The escrow agent ensures that the buyer pays for the domain name, and the agent ensures the seller transfers the domain name. On occasion, there are issues with a transaction and the escrow service needs to act in order to protect one of the parties. I want to share a story about how Escrow.com protected a domain buyer who used its services.

A buyer and a seller engaged Escrow.com on a domain holding transaction. The buyer agreed to pay a certain amount of money over a period of time, and Escrow.com held the domain name in its domain registrar account during the term of the agreement. At some point during the holding period, the seller received a better offer and attempted to cancel the transaction.

In order to protect the deal and enforce the terms of the escrow agreement, Escrow.com rejected requests to cancel the deal, and per the terms of the agreement, it ended up in arbitration in California. The company spent a considerable amount of money in legal fees (in the low 5 figures from what I understand), and they were able to ensure the integrity of the transaction was upheld. It is likely that Escrow.com spent considerably more money than it stands to gain from this particular deal, but I think it illustrates why they are the trusted brand in the domain space.

According to the buyer who contacted me about this, “The seller caused a lot of trouble to me and Escrow.com. Escrow.com did everything they could to make sure that the integrity of the transaction was protected. Escrow.com lost money in this transaction but they gained the respect from my lawyers and me.”

Unfortunately, due to non-disclosure agreements, I do not have (and therefore can not share) specific details about the domain name or the parties involved.

I have used Escrow.com for just about all of my domain name acquisitions and sales that required an escrow service. Knowing that Escrow.com is willing to go above and beyond to help protect one of the parties in a transactions gives me confidence and helps to assure other parties that the company will protect their interests as well.

Elliot Silver
Elliot Silver
About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has closed eight figures in deals. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest. Reach out to Elliot: Twitter | Facebook | LinkedIn

18 COMMENTS

  1. Since you don’t have details on this transaction (due to the NDA), is it possible that this entire story was fabricated by someone looking to get a some positive free-press for escrow.com?

    If I tell you aliens visited me last night, but I forgot to take a picture, will you write about that too?

    Did escrow.com compensate you in some way to write this post?

    • I don’t offer paid articles and I trust my 3 sources of information on this (one from the company and two from outside the company). Also, not that it is important to anyone but me, but I have never asked for a price break from Escrow.com and I pay the full price for all of my transactions there.

      Obviously Escrow.com is an advertiser, and the company had been advertising for several years.

      Also just FYI, the news from Frank Schilling was not paid either and his company is not an advertiser. I think both articles are interesting which is why I chose to write about them Nd share them.

      Regarding the first part of your comment… I have earned credibility in this business and I wouldn’t jeopardize it by posting false info.

    • Your article made no mention of your claim that you spoke with someone at escrow.com prior to posting this article. This was an important fact that should have been included in the article (i.e. sloppy reporting).

  2. “Escrow.com lost money in this transaction but they gained the respect from my lawyers and me.”

    Escrow.com did what they had to do no more and no less. Companies rarely spend thousands of dollars in cases where it is not clear that they need to do so.

    “It is likely that Escrow.com spent considerably more money than it stands to gain from this particular deal”

    Does not matter. This is really no different than when an insurance company pays out a claim. They are required to do so contractually. That is why they do it. If they are not required they don’t pay. Has little to do with their reputation it is simply based on keeping up what they have advertised and entered into a contract to do. To do otherwise hoping to keep the internet happy wouldn’t work long term financially for them.

    I have used and I am very happy with escrow.com but from my understanding of this they did what any licensed entity in their situation would do. Or any organization that provided a service that specified in the contract what they are responsible for doing.

    That said I’d be curious if anyone can point to the contract language that indicates that they went above and beyond what they were required to do.

    • I (and others) have had buyers back out of deals with marketplaces and brokers, and even though it seems like they should bear some responsibility, I’ve never had anyone goto bat legally to enforce a deal.

      They may hav been doing what they are suppose to do, but it is still nice to know that buyers and sellers are both protected in a transaction.

    • Whether they “should” go to bat or not (in other words extending beyond what the contract says) depends on what their representation was to you in the deal.

      If a broker acts as a go between and tells you “I’ve dealt with this buyer before and he is reputable” that is not the same as saying “if this buyer renigs I will go to bat for you”. At that point his only “crime” could be if he lied about either “dealt with before” or “is reputable”.

      For example if I came to you to buy a domain name and was dealing with a potential buyer I would make it very clear what the nature of our relationship is (there isn’t one but I know a bit about you) and how and exactly what I know about you. The buyer has to then decide how much caution they want to have. When someone vouches for someone and wants me to then do something I ask a very simple question “will you make good if things go bad”. If they are not willing to then I take that into account (do you trust your brother in law enough to back up what he does? I don’t..)

      Otoh if I vouch for you left and right and you do the wrong thing then I might want to preserve my own reputation and somehow try to make good on the transaction. But the thing is I would not do that I’d rather just be truthful as far as what I know about you. And then the other party decides what level of comfort they have.

      I had a case where I had a deal to sell a domain name to a very well known and trusted person in our industry. And another where I sold a domain name for a very well known person. You know and have written about both of these people. Many many times.

      In one deal after it completed I was offered a bonus for the work that I had done. That was based simply upon the statement “I will take care of you if this deal is done”. And the seller made good and paid the money immediately (thanks if you are reading this). In another case I sold a domain to the other person and I waited literally 90 days to get paid. And went without getting emails answered. Was quite bizarre.

      I would have trusted the 90 day person more (before the incident) because I knew him so much better and because of what he did for a living. The person who paid me the bonus I didn’t know *that* well. I had never met them in person.

      So you learn these types of thing after many years in business. You know trust but verify.

    • Even if they are contractually obligated to bring it to court (im not sure that they are), its good to see it happen, and hopefully without trying to bullshit the client and weasel out the responsibility.

      It is probably more economical fighting for the customer, rather than getting all the bad press that would come out of not being there for the customer as promised. Here is where escrow and any insurance company (as an earlier comment suggested) differ, with insurance companies, it is second nature to bullshit customers to the very extent of the word.

      Fredrik Näs
      CEO Domaintower.com

    • https://escrow.com/escrow-101/terms-of-use.aspx

      10. Our Responsibilities. Escrow.com is obligated to perform only those duties expressly described in this Agreement and the General Escrow Instructions. Escrow.com shall not be liable for any error in judgment, for any act taken or not taken, or for any mistake of fact or law, except for gross negligence or willful misconduct (subject to the limitations in Section 17 below). Escrow.com may rely upon any notice, demand, request, letter, certificate, agreement or any other document which purports to have been transmitted or signed by or on behalf of a User indicated as the sender or signatory thereof and shall have no duty to make any inquiry or investigation. In the event that Escrow.com is uncertain as to Escrow.com duties or rights under this Agreement, receives any instruction, demand or notice from any User or financial institution which, in Escrow.com’s opinion, is in conflict with any of the provisions of this Agreement, or any dispute arises with respect to this Agreement or the Escrowed Funds, Escrow.com may (i) consult with counsel of our choice (including our own attorneys) and any actions taken or not taken based upon advice of counsel shall be deemed consented to by you, or (ii) refrain from taking any action other than to retain the funds in escrow for delivery in accordance with the written agreement of the Users, the final decision or award of an arbitrator pursuant to an arbitration commenced and conducted in accordance with the General Escrow Instructions or a final, non-appealable judgment of a court of competent jurisdiction, or (iii) discharge our duties under this Agreement by depositing all funds by interpleader action with a court of competent jurisdiction in accordance with the procedures outlined in the General Escrow Instructions.

      Depending probably on one’s interpretation, I don’t see anything there specifying that Escrow.com has to do what they did here. Then again, that maybe depends which part of that agreement (at least) one wants to enforce.

      (Dunno about the Escrow Law that Escrow.com linked to, so I’ll leave that one to lawyers who feel like answering.)

      OTOH, this part intrigues me:

      In order to protect the deal and enforce the terms of the escrow agreement, Escrow.com rejected requests to cancel the deal, and per the terms of the agreement, it ended up in arbitration in California.

      Elliot, would you know if the Buyer sued Escrow.com for that? Or did Escrow.com start the legal action to enforce their contract? Meaning, who “sued” who?

    • Shucks. That would’ve been nice to know.

      Still, I think this line says it all:

      Escrow.com lost money in this transaction but they gained the respect from my lawyers and me.

      Not everyday you hear of a company going that far for a client/customer, especially when they had a lot to (materially) lose.

  3. In the arbitration mode, two people pay the arbitration fee and those are buyer + seller. However, I fail to understand how escrow spent money in this transaction????

    Just curious Elliot 🙂

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