There is an epic (pardon the pun) battle that sparked up last night on Namepros between Jackson Elsegood and Rob Monster.
This thread is not a new thread, it started back in January. The dispute has been about whether the escrow services provided by Epik are truly escrow services. John Berryhill has weighed in along with many Epik customers.
Jackson posted a link to a story about an executive at a Bitcoin escrow company that defrauded two firms of $7 million.
Rob Monster posted an analysis of Escrow.com parent company Freelancer which is a publicly traded company in Australia. Freelancer was founded in 2009 and is listed on the Australian Securities Exchange (ASX: FLN).
So after reading Rob’s analysis of Freelancer, Matt Barrie the CEO of Freelancer, not just Escrow.com, weighed in.
Hello Rob
Great financial analysis.
While we are talking about financials, why don’t you post a copy of Epik’s so your customers know what they are getting into?
You sent me a copy a few months ago when you approached me to sell Epik, remember? I’m not sure what account you hold your escrows in given in December 2018 you had less than $50,000 cash between your bank and Paypal accounts. That’s not enough to even pay out all those people that you got to buy Masterbucks.
Regards
Matt
These are two companies that do a lot of business in the industry and the thread is worth reading and checking in on from time to time. The financial health and security of those you do business with is of paramount importance.
Author’s note: I do use escrow.com and I do use Epik as a registrar for some of my names, with some listed for sale there. I have yet to complete a sale at Epik.
Disclaimer: Whenever we write about Epik the need arises to make clear, keep comments on topic, if the comments are not about Epik or Freelancer/Escrow and the services they provide they will be deleted.
Thank you for publishing this, I have not given much thought to the financial health of the companies I am dealing with. Maybe dealing with only go daddy makes sense, I can see their financial data.
Well given that Escrow.com is a sub of a publicly traded company (Freelancer), you can see there’s too.
Y’all gotta give Rob his props he broke down fln to its core. Nice to see someone go hard compared to all the pussies you find in this biz.
Thanks @Domain.
Do you perhaps mean this recent powder-puff infomercial on DomainSherpa?
https://www.domainsherpa.com/moat-matt-barrie/
Escrow.com happens to be a sponsor of the show. As I recall, there were zero questions on fiscal strength, treasury management, audit practices, or counter-party risk. There were also no questions about transactions that went wrong, e.g. CQD.com, which is now at Epik, and what corrective actions have been taken vis-a-vis internal controls. This did not seem like “journalism” but instead more of a staged effort to discredit “fly by night” alternatives. I expect better from Domain Sherpa.
To be fair, I am sure that Matt is working very hard. And while I take issue with his methods, I actually respect his entrepreneurial talents along with his voracious appetite for opportunistic dealmaking. My one phone call with him was completely pleasant. As of today, I would still shake the hands of both Matt and Jackson in public. They are playing out the weak cards they hold as best they can. It is business. Although Epik is very happy to share the pie, Epik is not interested in being collateral damage.
Looking ahead, where Escrow.com needs to tread carefully is in apply dirty tricks tactics to try to protect a de facto monopoly that is probably way more vulnerable than they care to acknowledge in public.
Yes, it seems so
I don’t think it is wise of them to do this in public. Both could lose business. I will certainly be careful about increasing my dealings with both of them.
As mentioned in an earlier comment, it would be interesting to know more about the financial situation of the registrars we all use. How are companies such as NameSilo, Dynadot and NameCheap doing?
Thanks Raymond.
As for escrow.com, they are actively inviting regulators to try to put all marketplaces under the thumb of regulators. That would include the likes of Sedo and Godaddy, which could mean slower payouts, higher fees, less choices and probably less innovation, e.g. support for crypto currencies as medium of exchange.
When it comes to clearing domain transactions,I believe Escrow.com’s model is structurally flawed due to inherent counter-party risk associated with being dependent on a 4th party registrar to hold the domain during the transaction. I actually advised them to become vertically integrated as a registrar if they are going to offer domain escrow. I extended the same advice to Sedo.
As for this commentary about the respective fiscal strength of Epik vs Freelancer, we run a lean operation. We do also put cash to work, including providing domain investors interest-free loans for the types of domains that the likes of Domain Capital usually won’t finance. You might be surprised by the number of domainers who are still in this business because of Epik.
As some folks here know, I came back to the domain industry full-time last August, i.e. about a year ago after a turn-around consulting project that became much more, called DigitalTown. I am more optimistic about domaining than ever. I believe any objective observer would conclude that Epik is out-innovating nearly everyone in the industry through organic development, partnership and acquisition.
As for selling domains, if not already done, use the SSL parking landers. They look like this:
https://laptopcomputers.com/
Here is the how-to:
https://www.epik.com/support/knowledgebase/enable-a-coming-soon-or-domain-parking-page/
Customers can be approved for parking and selling their non-Epik domains.
As stated elsewhere, I encourage folks to price domains with Make Offer on the SSL landers, and then evaluate the incoming inquiry to decide how to price, and whether to offer buy now, leasing, financing or an escrow sale.
If I get what you are saying, escrow is narcing on every other company in the buziness? That’s not cool. How would registrar have to become an escrow agent?
I have often wondered why one of the Major Banks OR Law Firms do not start up an Escrow service ,someone with a long and good track record.
escrow.domains
Also at https://escrowdomains.com/
>someone with a long and good track record.
Tough to find better than Stevan.
https://www.oregonlive.com/business/2010/05/snapnames_sues_former_vice_pre.html
I was one of the people affected.
Enron had great numbers …. Until it didn’t …. It always comes down to people, not bank statements.
Then there is GoDaddy and “Standard Tactics”
https://techcrunch.com/2008/12/03/godaddy-uses-standard-tactics-to-warehouse-domains/
Why “trust” anybody? Keep everyone accountable, no matter what pretty pieces of paper with pretty writing they present us with.
Rob, this is an interesting statement…
“As for escrow.com, they are actively inviting regulators to try to put all marketplaces under the thumb of regulators. That would include the likes of Sedo and Godaddy, which could mean slower payouts, higher fees, less choices and probably less innovation, e.g. support for crypto currencies as medium of exchange.”
I have used Escrow.com for a bunch of domain name transactions and have been happy with their services and their low 3% commissions. BUT, I also know i have lost sales because of their K.Y.C. (know your customer) verification process. The Tier 2, and Tier 3 verification process there is intimidating and intrusive and downright scary to a potential buyer making a 2/3/4k purchase. Everyone has 5k/10k on their credit card and will make a quick purchase at that price point. But having to add your drivers license photo, and or passport, then wait a day or 2. Forget it. No more domaining for most if it comes down to that.
The definition of escrow – place in custody or trust.
Here is the thing. Registrars are NOT an escrow Company at all. GoDaddy, Epik, UNI, etc. are not escrow services at all. They are Registrar. They are the domain name store. They have the domain names right there in their store. I go to their store and buy their product (domain names, premiums, etc.) directly from them. Done. There is no need for any 3rd party at all. There is no need to place my domain in a custody or trust. It comes straight to my account. If the item is defective or misrepresented in any way, then I bring it back to them. The Registrar controls the domain names so there will not be any stolen domains sold to me. When going thru an Escrow Company, there is no way they can assure me I am not buying a stolen domain name from a buyer. A registrar can control that from happening.
This is frustrating if Escrow.com is trying to put all marketplaces thru same exact licensing and auditing as they themselves have to go thru.. I can’t imagine any registrars being held to the same licensing as an escrow house at all. Shouldn’t happen as no need for escrow. 2 completely separate services, imo.
We need more marketplaces, not less.
Amen.
Thank Vito for these information.
So I guess you are not using Escrow.com. Would you mind sharing the escrow service you are using? And is the fee you are charged fair compared to Escrow.com’s fee?
Hello Ethan,
As I said up above…
“I have used Escrow.com for a bunch of domain name transactions and have been happy with their services and their low 3% commissions.”
Sorry, if other things I wrote made it seem as if I do not use Escrow.com at all. I do. I’ve met Jackson and Brian and they are (2) of the nicest and most helpful guys in the Industry. I really like them. Domaining is not just about making friends though. It helps for sure, but I want to make money. So, I use as many places as I possibly can to sell my domain names. For this years domain transactions I’ve had so far, I used Godaddy/Afternic, Uniregistry, EFTY>Escrow.com and just yesterday had a couple domains close at DAN/Undeveloped. I was just mentioning to a friend today that I do want to try Epik next for some more domain sales.
Escrow is a great place to use to sell domain names. Because they are an Escrow Service only though they have to go thru certain licensing and auditing that other places (Registrars) may not have to go thru. They have to follow the KYC stipulations for each transaction though and it creates much bigger hoops for our potential buyers to jump thru. Unfortunately, that turns some away. Money lost.
This post and the NP thread has become Epik vs Escrow. We really don’t want to lose either of them from helping us all sell our domain names. If Escrow is trying to get all Registrars and other Marketplaces to abide by the same exact rules that they have to comply with, well that isn’t fair at all. Escrow houses and Registrars are completely different. That is a lose-lose for all of us domainers. The only one who can gain anything from that chess move would be Escrow.com and they could potentially become the monopoly. Nobody ever wants a monopoly.
Oh I just re-read your question. The fees I have paid so far this year,
Did one PayPal from someone I knew well. No charge.
Uni was like 1.6% as I was my own broker there.
Escrow is 3%
Afternic is 20%
DAN/Undeveloped is 9% and/or 5% if you bring your own lead there.
Hope that helps
Thank you for the detailed elaboration. I certainly hope Escrow.com would be more buyer-friendly so that we don’t lose potential buyers by using Escrow.com.
Sorry for the grammar of my previous comment. I should have started with “So I guess you have stopped using Escrow.com.”
and what, except for Escrow.com, is only a 3% commission for their escrow services?
I believe escrowdomains.com fees are the same as escrow.com
Don’t sweat it too much, guys. If you have domains at Epik and they finally go under ICANN emergency protocol will kick in and another registrar will take over your registrations.
I am not worried about Epik but I am worried about escrow.com after reading that namepros post.
John berryhill provides escrow. Siunds like a good option now
I like John Berryhill. If I needed a take-no-prisoners attorney/litigator, I think I would call him.
However, this does not solve the counter-party risk issue. See this thread from just now on NamePros discussing a Flippa transaction gone bad:
https://www.namepros.com/threads/flippa-sale-dispute.1147106/
An attorney is just another counter-party. They have to charge for their time, and indeed they should! For smaller transactions, that might be unaffordable.
Now, if this is a large transaction where one or more parties need a purchase and sale agreement with reps and warranties, yes, get a lawyer and, indeed, get John Berryhill.
However, the counterparty issue still exists — the money and domain asset are going to be held by one or more counterparties until the transaction closes.
And as dicey as that sounds in the context of the conventional currency arena, it is more dicey with crypto-currencies.
“I have used Escrow.com for a bunch of domain name transactions and have been happy with their services and their low 3% commissions. BUT, I also know i have lost sales because of their K.Y.C. (know your customer) verification process. The Tier 2, and Tier 3 verification process there is intimidating and intrusive and downright scary to a potential buyer making a 2/3/4k purchase. Everyone has 5k/10k on their credit card and will make a quick purchase at that price point. But having to add your drivers license photo, and or passport, then wait a day or 2. Forget it. No more domaining for most if it comes down to that.”
vito, I completely agree. my last transaction on escrow took 7 weeks, due to the process.
Damn, 7 weeks for a domain sale is absurd. I hope for you to wait that long it was at least a 6 or 7-digit sale for you to have been worth that insanely long wait!
Never, ever should it take even half this amount of time.
Domains can be bought & sold and in a matter of minutes. It is the money movement that should be the one and only factor here, except in the rare case someone wants a domain transferred to their Registrar and that domain is located at Network Solutions. Then we all know we will have to add 3 days for the auth code BS game they play.
So let’s think about the actual worst case DN transaction timing scenario in most transactions.
Buyer pays for a domain thru an International Wire (2-3 days) = 3 days.
Buyer wants the domain transferred out of sellers NetSol account to their account = 3 days.
Escrow has something they call “Inspection period” – Not ever applicable in the case of domain names. Maybe for artwork or a car purchase this is applicable, but inspection period should never ever be an option for a domain name. That is a joke. It takes 1 minute to see that the DN is in my account now, ok done.
Payout time. Lets say that is another International wire transfer, (2-3 days) = 3 days
Let’s add a weekend in there since that always happens to me. Seems like every transaction or payout for me always starts on a Friday – lol
Weekend add = 2 days.
(2) International Wire transfers, a weekend and a NetSol 3 day auth code waiting game.
So we have 3+3+3+2 = 11 days total as a worst case.
Most sales/payouts should be done within a week.
Add the time it takes for the buyer to initially sign up for Escrow.coms Tier 1, Tier 2, K.Y.C (know your customer) period time and that domain buyer is gone. Time doesn’t even matter when they feel their Security is at stake. Who wants to add their Drivers License or Passport anywhere else online these days?
This whole conversation is ridiculous. No Registrar should ever be pushed to same standards as an escrow service. You can spend $5/10k online immediately at Amazon.com, Walmart.com from your credit card for whatever. What’s the difference when it comes to a domain name that a Registrar owns and is able to push into your account in a minute. Registrars take payments already. Payment processing is not an issue w/Registrars. Sometimes they take big payments w/all these newG Premium name prices lately especially.
This cannot ever happen across the board.
> “What’s the difference when it comes to a domain name that a Registrar owns and is able to push into your account in a minute.”
The key purpose of using an accredited escrow service is to ensure the integrity of the transaction of a domain owned by a private owner who could be anywhere in the world, not one owned by the “Registrar”.
If you are buying a premium .app domain from Google for example, of course you wouldn’t insist on using Escrow.com.
If in the course of an Escrow.com transaction the “buyer” ceases communication or fails to pay, the transaction is automatically cancelled after three weeks.
This is entirely the fault of the fake buyer, not Escrow.com.
Apart from my one sale on a payment plan, I think all my half dozen or so deals using Escrow.com, both buying and selling, have completed in less than two weeks. (This is because a transfer to a different registrar is typically involved so at least a week is required for confirmation, not minutes.)
When a push was involved, the time involved was typically less than a week. The time here is determined more by how quickly both buyer and seller (who may be in different time zones) respond to the numbered steps than it is by Escrow.com’s platform.
Why did your last transaction take seven weeks?
I received an email inquiry into my domain EscrowPro com, they said they were starting a new escrow service, I said that’s cool I use escrow.com all the time, they said they didn’t like escrow.com very much, so I asked if we make a deal how will we handle the payment / transaction? They said we should use escrow.com lol…
I should also add that when I told them how much I was asking for the domain they said they were just a start-up professional escrow company and didn’t have much capital, lol again. It made me laugh thinking about getting an offer on a domain like BigMoneyLending com and the first thing they say is they are a start-up big money lender with a small budget and no cash on hand hahaha…
Your second comment is funny. Your first comment is ridiculously funny!
I use Escrow.com, It’s a licenced escrow service.
The only way I would use Epik Escrow, is if a customer demanded it.
Even banks don’t hold your checks for more than a week!!!
They are using the floats as interest….
“Damn, 7 weeks for a domain sale is absurd. I hope for you to wait that long it was at least a 6 or 7-digit sale for you to have been worth that insanely long wait!”
Vito, I completely agree. And Escrow was trying to talk me into cancelling the transaction as the buyer hadn’t responded to emails for verification, even after he had made payment. He was traveling overseas for business and vacation. It was frustrating. And, no, not a 6 figure name. Just 5 figures. I even thought maybe there was a case o f ID fraud, but things didn’t add up to fraud, as his emails sent to me were the same ones he had on other sites (Angel List) — he’s also an entrepreneur who scored a major exit a few years ago with hs startup and always cordial and polite, But it was very frustrating. I had similar experience in 2014 with a pretty sizable transaction via Escrow.com. Brandon Abbey or his assistant contacted the buyer (who was Dutch) while he was on holiday in Portugal to agree that he had received the domains in transfer so they could release the funds to me.
and yes, agree — these transactions on escrow.com used to take 3-5 days from start to release of funds. We need changes or alternatives.
That sure sounds frustrating as hell. Even 5 figures is still a lot of money so for your sake, I am happy you didn’t cancel the transaction and the sale did finally close for you.
Funny, but other than some PayPal transactions i’ve had w/people that I know, one of my quickest closing transactions ever was at Escrow.com 8/9 years ago. I agree though, we do need changes and/or alternatives.
“Inspection period” – Not ever applicable in the case of domain names. Maybe for artwork or a car purchase this is applicable, but inspection period should never ever be an option for a domain name. That is a joke. It takes 1 minute to see that the DN is in my account now, ok done.”
completely agree, Vito, and what’s interesting is I bought some art from the estate sale of a fairly known artist with all the funds/purchases going to charities. Purchased online, and with zero inspection. It’s a reputable auctioneer, but you either buy it with zero inspection or fly to NYC to view all the pieces. With domans, there should be zero inspection. If the seller misrepped the domains, there should be penalties.
I will not use escrow.com anymore and will insist on using Epik escrow.
The “inspection period” is an indispensable step in the escrow process because it gives the buyer a short time period to manually confirm or deny receipt of the domain.
The Escrow.com default inspection period seems to be only 24 hours, just long enough for an on-the-ball buyer who is monitoring their emails in any time zone to confirm the transfer.
24 hours is very reasonable – no inconvenience at all.
Without this step it would be questionable whether Escrow.com would even be able to hold an escrow license in the first place. (For example, they are licensed in California which is regulated by the California Department of Business Oversight.)
If you don’t have an “inspection period” there is no point in using escrow in the first place. A “seller” could falsely say they transferred the domain to you. (Or send you a worthless substitute – happened to me on eBay.)
The “inspection period” gives the buyer just enough time to manually confirm or deny receipt of the domain. This is absolutely essential.
If the “seller” falsely says they have shipped the domain, an alert buyer has just enough time to stop the payment from happening.
Escrow.com has a fantastic system where both buyer and seller must complete compulsory steps in tandem. This provides perfect protection to both parties and works beautifully.
There is nothing fantastic about escrow.com you must be an employee, shareholder or not know the definition of fantastic.
If you read others the inspection period does not have to be replied to by the buyer. Greg Ricks pointed this out on Namepros. https://www.namepros.com/threads/if-you-are-not-using-epik-com-for-escrow-you-are-wasting-time-and-money.1119508/page-7#post-7329880
> “There is nothing fantastic about escrow.com you must be an employee, shareholder or not know the definition of fantastic.”
You are totally wrong on all three points. And by the way, I have a Major in Engish Literature so I definitely know what “fantastic” means.
> “If you read others the inspection period does not have to be replied to by the buyer.”
So?
I am already very well aware of that since I am an experienced Escrow.com customer.
You have totally missed the point – the inspection period serves to give the buyer THE OPTION IF NECESSARY TO TERMINATE THE DEAL IF THE DOMAIN HAS NOT BEEN RECEIVED.
It is critically important for a prospective buyer to have the option (for a short time) to be able to advise Escrow.com that they have not received a domain as claimed and stop payment. There is no need for this step to be mandatory. If the buyer makes no complaint, it is assumed the domain has been received, and then the funds are disbursed to the seller without further need for buyer approval.
A major in English lit wow, that means a lot in 1919 oh wait it’s 2019. You are an escrow.com fanboi congrats. The rest of us are not.
Nether, you are a fool of the Internet, Never engage the fanboy population! Everyone using Escrow.com over the last year knows they are not fantastic.
Dave,
A 24 hour inspection period makes total sense if the escrow intermediary is not actually the registrar. The escrow provider is likely relying on a WHOIS update, which is easily gamed. Therein lies the challenge. The WHOIS can be whatever the registrant wants to set, along with the DNS. A clever scammer would simply update those fields and adamantly insist to the escrow agent that they fulfilled the contract.
In the case of Epik, we ARE the registrar. So, we know with certainty that the buyer got their purchase. The default setting at Epik is that we do apply a 60-day transfer lock. This is however waived at will in most cases, particularly if the buyer funded their purchase with non-recourse funds like wire transfer, ACH, bank deposit or major cryptocurrency.
Where this matters a lot is that it often happens that the buyer is neglectful to confirm a transaction. As a matter of policy we like to get the buyer to acknowledge that they received their purchase. However, this is merely nice to have and does not stop us from disbursing sale proceeds to a seller. If we don’t hear from the buyer within 24 hours, we’ll clear the transaction regardless.
As for Escrow.com, folks here and elsewhere are reporting cases where there is a delayed closing. I get that this can happen from time to time. We have one such case now where the buyer used multiple credit cards, including attempted charges with cards that did not work, in order to fund their purchase. We used Validation.com (part of Namecheap actually) to attempt to validate the seller.
By the way, for anyone who cares about payment fraud, here is another pro tip. We use Maxmind for fraud scoring. It is an inexpensive service and is wonderfully effective at detecting potential fraud based on a brilliant algorithm. This service has spared us from frauds many, many times. As a result our chargeback rate is almost nothing and has been for many years.
Coming back to the state of Escrow.com, the UX of Escrow.com is certainly elegant enough. Any remaining gap on workflow management will be closed shortly. The issue at hand is not the cosmetics of the product — the lipstick if you will. The issue that has bubbled to the surface as a result of the latest provocation from Jackson is whether Escrow.com is viable — the health of the pig if you will.
Long story short, I am comfortable with our position at Epik, both in terms of operating lawfully, and also operating responsibly. For reasons discussed here and elsewhere, I believe our approach is more secure than Escrow.com. And because this is ancillary for us, we can afford to do many transactions without any fee at all.
And now with the cards on the table, the market will now decide who has the better offering: Epik or Escrow.com. I definitively know the answer there and others will figure it out soon enough. Cue visual of Forrest Gump cruising into port after Hurricane Carmen:
https://www.youtube.com/watch?v=7C-y2o9ssi8
Folks can try us out here:
https://www.epik.com/services/escrow/
Welcome to Epik.
Regards,
Rob
Skype: robertmonster
Telegram: robmonster
> “In the case of Epik, we ARE the registrar. So, we know with certainty that the buyer got their purchase.”
Your comment seems to imply that with your system domains have to be transferred to Epik, or even perhaps already be registered at Epik.
With Escrow.com, I can safely transfer domains from any registrar to any other registrar. This is a key advantage. Sometimes buyers request a transfer to a particular and different registrar, because many people like to consolidate their domains in one place.
Yes, we do require the registrant to transfer to Epik.com as part of the escrow closing process. This can be done quickly at most registrars. With Godaddy, which has a 60% market share, it can be done in a few minutes from start to finish.
Once the domain arrives and the transaction completes, we do not enforce the 60-day transfer lock. Registrars can and do waive this requirement based on their discretion, e.g. being confident that there is clean title to the domain that is being sold. We do make that risk assessment.
The point that needs to be emphasized is that DURING the transaction, if the intermediary cannot take secure title to the domain, it becomes way harder to be sure that the domain is free and clear to be sold in the first place. It would be akin to a bank holding cash but not having a secure vault!
Some buyers do end up consolidating at Epik. Many sellers use proceeds to fund consolidation of domains at Epik. We also allow them to use their proceeds to buy domains through the Afternic and Sedo MLS without a markup. This is becoming more popular. We also do buy-side brokerage.
Yesterday I started reading this post and there were only two comments and today I was aroused by the curiosity of what to write all of you in the end I think that the purchase that Freelance.com made to Escrow.com was a gift from those who are never in markets where USD billions move per year.
When writing on Google: Escrow also knows that I have lost sales due to its KYC verification process (meet your customer).
https://www.tmf-group.com/en/news-insights/articles/2017/may/kyc-non-compliance/
https://domainnamewire.com/2017/01/12/want-use-escrow-com-prepare-verified/
I believe that with the sales domains of the figures previously described by @Steve, Escrow and Freelance they should have a cap on low and medium $ figures if a customer account would be close to exceeding the limits allowed after acting according to the laws.
@Jose, I agree. Thank you
The point is it’s hard enough to get offers on our domains, then reach a mutually agreed price, then have the buyer pay for our domains, and now to face this additional obstacle of KYC verification.
I don’t think there are escrow “licenses” in most US states, with the exception of California and a few others. If you’re not based in those states, you’re not required to obtain a license. As a matter of fact, most states don’t provide a license. We’ve looked into this about a decade ago with an industry attorney. We wanted to get an escrow license, but an escrow license in our former state simply did not exist. We were free to operate as an escrow company. Correct me if I’m wrong. But that was the case back then and I’m quite certain it is now.
California is just one out of 50 states. California has a lot of laws and regulations that other states do not. I’m not really sure that Freelancer/Escrow.com even knows about this, it seems they keep talking about California like it’s the entire US.
If it is legal to operate an escrow company in your state that is one thing. However, if you perform a transaction with someone in Texas or California you are in violation of their laws and can be fined.
Meant to post this here as well as Namepros.
Probably a little off-topic, but here are my thoughts. Competition is good for the industry.
I haven’t paid much attention to the escrow space since Payoneer closed their escrow operation and I left the company. Escrow software is available, but to do it the way I wanted it would have cost $1.5 million and taken close to two years. I do have a history with both Epik and Escrow.com. Here are some of my observations. While at Escrow.com we had a good relationship with Rob Monster and Epik. It was a form of coopetition, sure we competed at times, but we also worked together. That doesn’t appear to be the case anymore. Rob and I have kept in touch, not so with Matt Barrie.
When Escrow.com started there wasn’t a significant aftermarket for domain names. We kind of fell into it with encouragement from many of the top individuals in the business. After attending my first TRAFFIC conference I knew this was where we could make an impact. My thanks to many names you will see here – https://www.dnjournal.com/cover/2006/february.htm, especially Ron Jackson. The original plan was to provide escrow for vehicles and it never took off the way we had hoped. eBay Motors and AutoTrader were two of our first customers. When eBay bought PayPal in 2002 that relationship dwindled to a couple of transactions per month. At the time of the sale to Freelancer domain/website sales were about 75% of the business.
Escrow.com has certainly changed since I was there working with 15 very talented employees. From a recent article interviewing Barrie I noticed this – Today the company employs 72 people in five countries, mainly located in Australia but with its headquarters in San Francisco and offices in London, Buenos Aires and Manila. https://www.news.com.au/finance/bus…s/news-story/9f6a4d6951749db793bb49eebb46c920 That is some serious growth, congrats.
I can understand why Barrie is hot on the regulatory issues. From Freelancer 2018 annual report regarding Escrow.com – “as part of this process, in FY18 the division incurred one-off regulatory penalties of $0.8 million (FY17: $0.2 million) for unlicensed activity (substantially preacquisition). In addition the Company has further made provision of $0.4 million as an estimate of probable penalties.” I wasn’t able to find the details of how transactions are handled on Freelancer’s own domain/website marketplace, Freemarket.com.
Really off topic – Internet fraud was something of a hot button for me and I participated with the FBI and IC3 in their efforts to combat the fraudsters. Occasionally, I will send a note to Barrie when I see something that doesn’t look right – http://www.amazonautosales.us/ and https://paymentexchange.com/
@Brandon,
Are you certain about this statement: “However, if you perform a transaction with someone in Texas or California you are in violation of their laws and can be fined.”.
It just doesn’t sound quite right. I’d say it would only apply to businesses that have a presence in California.
My thinking here is that if you’re in the US you don’t have to comply with every law and regulation with the 200+ countries in the world and their individual regional laws just because you’re an internet company and work with customers from all around the world. Sure, there are instances where you would. But I’m quite convinced this is the not the case. If you have a presence in California, or any of these countries that have a requirement for a license, it’s a different story altogether.
Anyway, even if it is the case and what you say is correct, the entire debate began by Escrow accusing Epik of not being licensed as per NP thread. What do you say to a company that is not based in CA/TX and doesn’t have a license BECAUSE THERE IS NO SUCH THING AS A LICENSE in their state/region and they deal with customers that are not in CA/TX? They should move to CA to obtain a CA license even though they have no dealings in CA?
You can’t get a license if a license purely does not exist. Again, we looked into it with an industry attorney.
Now will let any other attorney come here and prove me wrong. Would love to hear their opinion. Perhaps I am wrong. Hope I am! Curious to know the facts! As of now, these are the facts we’ve established from our own research.
Hi Matt,
Long-time no talk, I hope you are well. Yes, that is what I believe to be true. You can review a Texas decision here – https://www.dob.texas.gov/public/uploads/files/Laws-Regulations/orders/2015-009.pdf Maybe things have changed, but I think not.
When I was at escrow.com I did receive a cease and desist order from the state of Texas. After many discussions, we were allowed to continue processing transactions based on our commitment to apply for a money services business (MSB) license, which we did. The state of Washington sent a similar letter and would not allow us to provide escrow services to their residents until we were licensed as an escrow company. Every state has different requirements. The state regulators in Kansas told me they were going after a company based outside the US. It would be much easier if this was regulated by US organization like FINCEN, but each of these states requires you to pay a license fee along with other regulatory fees. When they come to audit you it is at your expense. I believe the state of California bills out at over $100/hour. The last audit I saw had over 150 hours and was nowhere near complete, it was not escrow.com or Payoneer. Back around 2014, it seemed like the regulators started coming out of the woodwork and many more required either an escrow license or an MSB license. I believe if you can structure a business with a nationally chartered bank and run the escrow as a division of the bank you should be able to piggyback on their charter. The attorneys can weigh in on this. Best regards,
Brandon
@Brandon, excellent. That about settles it. Certainly the licensing does make sense then. Honestly, if what you’re saying is the case, then a business that is in the business of escrow services should just take the extra steps to acquire the licensing. It may be a bit of a hassle but doesn’t seem like an impossible task.
Escrow.com is not a true escrow service, because the domain is not transferred to escrow.com (as with Sedo), but directly to the buyer. The domain should be transferred to an “escrow account” controlled by escrow.com and then to the buyer.
This is important to sellers.