Some legitimate hosting companies are not doing enough to shut down fake escrow sites, according to an online-fraud watchdog and Internet sleuth. Because of death threats he says he has received, we will not publish his name, but "Mr. X" has been actively targeting scammers and reporting them to authorities for years. Escrow.com President Brandon Abbey agrees with Mr. X, saying some web-hosting sites are a "criminal's best friend."

Online fraud is a numbers game. If even half-of-one-percent of targeted victims fall for a scam, it can be a lucrative business for fraudsters. One way buyers can minimize risk in online transactions is to use an independent escrow service that holds their money until they have received the goods from sellers.

But scammers have been duping victims by using their own fake escrow services since 2002. Victims send money to the escrow site recommended by the scam seller, often using wire-transfer services, and never hear from the fake site or seller again.

Mr. X and Abbey said some hosting companies are very helpful and responsive in shutting down scam sites. Escrow.com's Abbey used Yahoo as an example of a site that fights fraud as much as they can. But some other hosting sites do not respond to reports of fraudulent escrow sites, said Abbey, and "are not held accountable for the content on their site." He believes hosting companies are afraid they might make a mistake and shut down a legitimate site and that the liability for a mistake could be greater than hosting fraudulent sites.

Abbey believes that any site claiming to be a financial institution, such as escrow sites, should be required to do due diligence, such as providing a business license, and he would like to see laws requiring accountability. "There are laws about child pornography, and there should be laws about pretending to be a bank or credit union." In the meantime, sites like Escrow.com and watchdogs like "Mr. X" fight scam website one at a time.

"Mr. X" and Abbey point to their recent efforts to shut down the website www.br-trans.com/escrow, which they each claim is a fraudulent escrow site hosted by web-hosting company, Web.com. Mr. X said he first reported the site to Web.com on May 26. Abbey also contacted Web.com later the same day. Both Abbey and Mr. X said a Homeland Security Secret Service agent emailed Web.com in support of their claims that the site was a scam. But Web.com's Senior Vice President of Legal and Corporate Development Jonathan Wilson said he reviewed the history of the case, and the company had only received a suspicious-sounding call from someone claiming to be a law-enforcement official who never followed up with a fax.

Web.com removed the escrow-related pages of the site one week later - after receiving a valid DMCA (Digital Millennium Copyright Act) report on June 2 - not because they were notified it was a scam site.

Wilson admits that Web.com's abuse desk incorrectly told Abbey and Mr. X that the company policy only allowed them to remove a site under court order, even though Web.com has no such policy. Wilson said abuse desk personnel will receive remedial training to handle such situations in the future.

Wilson said Web.com does not have a duty to validate the truth of what its clients are publishing online, but said the company cooperates with law enforcement officials. "Web.com is a service provider, like the electric company, and criminals get electricity from the electric company," Wilson said.

He pointed to the company's Acceptable Use policy, which states that customers may not utilize the services in connection with any illegal activity (http://www.web.com/legal/acceptable-use-policy.aspx).

Wilson said Web.com's abuse desk gets one thousand emails a day, and the vast majority of it is junk. Sometimes the emails do not make it clear who the sender is, or it may be someone with an axe to grind against the customer, such as an ex-spouse.

However, Web.com does not want to be involved with something that is illegal. Web.com will terminate user accounts that are involved with illegal activity, Wilson said, because it's the right thing to do and because it's good business in the long run. However, it seems that in practice, Web.com acts only when law enforcement becomes involved. And Wilson acknowledge that it is often only after law enforcement officials receive hundreds or thousands of complaints about a scam site that officials will investigate it.

Debbie Matties of the Federal Trade Commission said the agency does not break out Internet fraud statistics by complaints related to fake escrow sites. She said the FTC representative involved with complaints about such sites is out of the office and therefore unable to comment by this article's deadline.

Escrow.com's Abbey said he does not believe the problem of fake escrow sites has improved over the years, and says the crooks behind the sites are part of organized crime and "are more aggressive and predatory. These sites are of a mobster variety."

Some sites Mr. X pointed to as being fake escrow sites were convincing and looked like some time had been invested in designing them. But Mr. X pointed to several sites that were identical to each other, and said scammers use the same template to set up numerous sites. It's worth spending the time to make a fake escrow site more realistic-looking, since the template can then be used over and over again using different domain names, he said.

Identical "escrow sites" at BR-TRANS.com and BESTFORUSE.com

Abbey said fake escrow scammers target not just auction sites, but "every site that's selling something." He believes education is crucial and points to a website called LooksTooGoodToBeTrue.com, which has a section on escrow services fraud (http://www.lookstoogoodtobetrue.com/fraud/escrowfraud.html).

Web.com's Wilson said he believes the answer is in self-regulation by responsible Internet companies along with consumer education. But Abbey and Mr. X want laws so web-hosting companies will be accountable for hosting scam sites.

Mr. X said web-hosting services should be required to provide a secure environment on servers for financial websites, like an escrow service. And he believes the web-hosting service should be required to verify financial institutions' licenses before hosting their sites.

"The consumer is not protected," he said.