Definition of Escrow and Escrow Licensing
by jtaylor42, Window Shopper
- Created: September 10, 2009, 2:43 am
I am trying to start an online company that will facilitate projects between graphic designers and customers. The original concept was to have a buyer establish a project for bidding, negotiate a price, then transfer their fees to us as a neutral party. Those funds would be held until the finished product was delivered through our service to the customer, after which we would release funds to the designer, minus our commission.
After spending months outlining the business a friend of mine mentioned that this sounds a lot like an 'escrow' service and that such services are regulated. I've been trying to wade through the federal and state regulations on what defines 'escrow' and who can engage in an 'escrow' service, but with little luck. Almost everything pertains to massively large transactions, such as buying homes or cars, and I can find no clear answer as to whether I would need some type of license or what regulations would govern my business. It is worth noting that each transaction, on average for our business, is in the range of hundreds of dollars at most. Not tens of thousands or more like other escrow uses.
Does anyone have any advice or suggestions? I am completely overwhelmed trying to figure this out and this is my last chance before sucking it up and going to pay a lawyer.
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