Entrepreneur Mike Pero's new consumer protection service has been embraced by trades associations and the Consumer organisation.Mr Pero told NBR that his escrow company, SafeKiwi, has enjoyed hundreds of trades.When he launched it in a year ago he touted
Entrepreneur Mike Pero’s new consumer protection service has been embraced by trades associations and the Consumer organisation.
Mr Pero told NBR that his escrow company, SafeKiwi, has enjoyed hundreds of trades.
When he launched it in a year ago he touted it as a potential way of combating fraud. But for most users, it involves the trade of goods or services.
Purchasers of the goods or services pay the full contract amount, before work starts, into a bank account held under the custody of Public Trust. Once the work is completed the buyer is asked to release the funds. The process is managed online by SafeKiwi for both parties. In a dispute, the money held in escrow remains in trust until agreement is reached by both parties, possibly involving an independent mediator.
Mr Pero said this gets around the common problem where contractors ask a buyer to provide some of the money upfront as a protection against non-payment. However the purchaser of the goods or services may lose out if the contractor fails to complete the work.
Placing the money with an independent third party means the vendor or contractor of goods or services is assured of payment. The purchaser is also protected.
Groups that have to embraced the system include the Master Painter’s association and Consumer. Mr Pero said he thinks painters may be particularly vulnerable because they are often the last contractor to be employed on a project when money may be running low.
SafeKiwi matches the similar escrow protection provided by TradeMe with lowest fees at $4.95 per transaction and climbing depending on value. SafeKiwi can be used for online trading but can also extend to motor vehicles, heavy machinery, domestic and international transactions. Fees can be paid by either party or shared on a 50/50 basis.
Sometimes tradeseople may ask clients to provide money for materials. According to Mr Pero, if someone is reluctant to use escrow it can often be a warning signal that they are under capitalised or they may have problems obtaining accounts with building supply firms.
“Every second complaint to programmes like Fair Go involves a situation where someone has paid up front for materials or the whole job. This gets around that problem.”
When it comes to fraud, Mr Pero said SafeKiwi provides a simple solution to combat fraud, which may be as high as $1 billion a year according to some estimates.
“Admittedly a large slice of the losses involve deceit and bad investment decisions, but there is still likely to be a huge amount lost through careless business operators and unreliable customers.”
“Imagine a customer is buying a kitchen where payment is often made upfront. The cost to protect $5000 is $49.50 and SafeKiwi also provides a template for a supply and payment contract between the customer and the supplier. Escrow has been used for the simplest transactions, like buying a mountain bike, to bigger trades like yachts and commercial buildings.”
