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In escrow fraud, the fraudster will propose the use of a third-party escrow service to facilitate the exchange of money and merchandise in an Internet auction. The victim is unaware that the fraudster has actually compromised a true escrow site and has created one that closely resembles a legitimate escrow service.
The victim sends payment to the phony escrow and receives nothing in return. Or, the victim sends merchandise to the subject and waits for his/her payment through the escrow site which is never received because it is not a legitimate service.