The Better Business Bureau of Hawai'i issued an alert today to warn online shoppers that scammers are posing as phony escrow services in an attempt to defraud consumers.

Internet-based thieves are now using escrow service fronts with some new twists to steal money and personal identities, the BBB said in a news release.

The scope and cost of Internet fraud is growing. In 2007, the Internet Crime Complaint Center processed 219,553 complaints and the Federal Trade Commission reported that nearly $526 million was lost via Internet fraud. FTC also reports that 28 percent of online fraud victims sent funds to scammers via hard to track wire transfer services – a favorite tactic of fake escrow services.

"Legitimate escrow companies in Hawai'i and on the mainland create a safe environment where both the buyer and seller feel comfortable exchanging money and goods knowing they can't be taken advantage of," said Dwight Kealoha, chief executive officer of Hawaii's BBB. "Unfortunately, scammers have realized they can cash in on this type of transaction by creating a facade of trustworthiness as an escrow company."

Escrow fraud is typically perpetrated through online auctions or Web sites with classified ads. Both eBay and craigslist have posted warnings to consumers about escrow fraud on their Web sites, but BBB notes shoppers in Hawai'i and across the country continue to become vicitims as the scams become more sophisticated.

Victims of escrow fraud are often shopping online for big-ticket items such as a used car when they come across a deal that is often too-good-to-be-true, according to the release. When the buyer and seller make contact, the seller recommends using a specific third-party escrow company in order to protect both of their interests, according to the BBB. The escrow company contacts the consumer and requires that they wire the payment for the item through Western Union or MoneyGram and then the car will be delivered. After wiring the money, buyers don't receive the car and usually never hear from the seller or the phony escrow service again.

Recent complaints to the Golden Gate BBB serving the San Francisco Bay area show that escrow fraud scammers are taking increasingly sophisticated steps to instill a sense trust in their victims. Scammers, using the name "Best Auto Trades," created a complete Web site that explained the escrow process in detail, required the buyer to register through the Web site, and even provided a transaction number and the supposed escrow officer's contact info.

"Perpetrators of escrow fraud have learned that every detail they provide and every step they require the buyer to take creates a greater sense of trust in the company," Kealoha said. "These scammers know that the more intricate and complicated the process, the more legitimate it will seem."