Legal Question in Business Law in California

Internet Escrow Law

I am interested in starting an online trading service that would involved transactions both domestically and internationally. I would like to include an escrow service to protect both buyers and sellers.

Question 1: Do I need an escrow license if the main business is an online trading company?

Question 2: If yes, which states require any escrow license?

Question 3: Do I need to check with international laws to get any international escrow licenses?

Are there any specialized lawyers who have experience with online escrows law?


Asked on 1/23/09, 1:30 pm

1 Answer from Attorneys
John Gibson

Re: Internet Escrow Law

1. Yes. If you are holding users' money in trust you will need an escrow license. Additionally, from a business perspective you would want a license. Otherwise most consumers would not feel comfortable using your site/services.

2. Every state I have dealt with requires an escrow license for online transactions that keep user money in trust.

3. It's always a good idea to check depending on the countries where you are really planning to do business.

I don't know of any attorneys that specialize in online escrow. My firm handles all types of complex transactional work that have included online escrows for other entities.

I tried to answer your questions as best I could based on the limited information and the complexity inherent in what you are trying to accomplish. I highly recommend you work with an attorney on this matter going forward. Feel free to contact me if you have any other questions.

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Answered on 1/23/09, 6:40 pm


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