Starting an Escrow Service..?
Anyone know what, if any, legal hoops one has to jump through to start an escrow service?
Such a service, similar to how it works on Rentacoder et al, would be a core feature of a new project I have planned.
Does one need a "license" or permission slip from someone wearing a suitably pointy hat or can I just go ahead and offer such a service?
By 'escrow' I mean the simple act of holding onto a buyer's money until they are satisfied they've got value from the seller, at which point the money is released, minus an admin fee for costs)
AC
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You can also hold source code and other IP in escrow until some financial (or other )transactions take place. – Tim J 13 years ago
2 Answers
There are almost certainly escrow laws in your jurisdiction. You probably need a license. For example, in California, see here.
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Yeah, I stumbled across that link yesterday. It certainly confirms there's no way in Hades I'll be starting a business in America! From 'Land of the Free' to red-tape spagetti and cronyism. I've contacted the UK's 'FSA' and as you'd expect of government they INSTANTLY leapt into action, sending a useful and informative response... some time in the vague future. Letting down the private sector, Paypal's response has been the same. Cheers for the link Joel, even if it did confirm my worse fears! Sorry for re-post, darn thing posts the moment you hit return... – Alan C 13 years ago
I suggest getting an attorney involved. Escrowing needs an agreement signed off for each customer and having that agreement worded correctly would be good. There may be rules around providing interest on funds being held so have appropriate research done prior to offering the service.
Luck
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Cheers John. I'm not sure what country it will be in at this time, either Malaysia or the UK, so I'll wait until I know for sure before hiring a lawyer. Was just hoping someone already had direct experience in this? – Alan C 13 years ago
