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Would a website that provides a third-party escrow service to protect its members that trade between themselves be increasing its exposure to any additional liabilities?

My thinking is that despite bringing in the services of a third party escrow service that is designed to protect the interests of both members, the website could be seen as taking a proactive step in facilitating any potential trade disputes and therefore become legally liable in some way?

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    Liability for what? Criminal liability for illegal trades? Criminal liability for scams? Civil liability for scams? Civil liability for trades not meeting up to the agreement between the parties? Civil liability for paying out the escrow money to one side or the other when they have a dispute? There are many kinds of liability.
    – cpast
    Jul 14, 2015 at 21:24
  • Hi @cpast - thanks I will update the question. Fundamentally though, the website would provide as much security and protection to members as possible while not exposing itself to additional burden of additional liability issues - eg risk:reward ratio
    – Bendy
    Jul 20, 2015 at 7:54

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You say "a [person] provides a third-party service" - the specifics of how this service is provided matter!

Taking a broad brush approach, a legal person is responsible for their own acts and omissions and acts and omissions of their agent's (see vicarious liability - the agent is jointly and severally liable as well).

The third-party may or may not be an agent of the website owner; it will depend on the specific facts.

If the third-party is an agent then the website owner is jointly and severally liable for the third-party's acts and omissions.

If the third-party is not an agent then the website is only liable for its own acts and omissions - one of those acts was effectively recommending the escrow service.

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