Bitcoin Forum

In nearly all the posts I read regarding Bitcoin people mention that irreversible transactions are fantastic and the way forward.
 
I can understand this from the point of view of businesses but not from the point of view of the consumer. Why would people switch to start paying in BTC if they have no comeback should whatever it is they purchased not be as described or not received?

I read it all the time, people saying how they sent x thousands of $ to a random company they found on the internet in expectation that they would receive BTC in return - of course many people get ripped off and have no comeback as they are sending payments by non reversible methods.

If Bitcoin will continue to gain ground it will not only change how payments are sent and received but will change the very nature of how things are done leading to a survival of the fittest scenario where people not blessed with a large amount of common sense end up penniless and destitute.

I have read so many sob stories on this forum from people who have sent money for BTC to a company with no address listed on their site based in some backward country that it makes you think how could someone be so stupid? I have also read recently someone who sent money 3 times to the same company as each time they gave an excuse as to why they needed more? I mean come on!

Just wondering if the general consensus from long time Bitcoin users is that if someone is stupid enough to send money to a company that is so obviously not legitimate they deserve to loose their money?

When using an irreversible payment method, consumers have to make a conscious effort to transact with businesses that have a solid history of being honest and trustworthy, or use escrow.  Consumers that aren't ready and willing to take on this responsibility, shouldn't be using irreversible payment methods.


Yes.  Freedom and responsibility go hand-in-hand.

Agree with all that. In the future, escrow-based transactions will be much more commonplace. Buyer doesn't have to trust the seller, seller doesn't have to trust the buyer, both just have to trust the escrow agent. Much better than current ebay / paypal "mess / scams" with disputed transactions.

Better, perhaps, but negates the cost benefit of Bitcoin where escrow is used and a fee is charged.

Escrow is just a OPTION, you don't NEED to use. If you are worry about fees, trade directly with the seller/buyer.

yeah u are right..u can use escrow for more safe transaction

So lets then assume consumers aren't willing to?  Where does that leave the proposition that Bitcoin use will become widespread common currency?  I agree with the OP, chargeback is an advantage of Bitcoin that only benefits seller and as most people are buyers, the advantage is overstated.



You "just" have to trust the escrow agent.  Paypal is an escrow agent, and how well is that working out for disputes?  The core problem is who to trust when a consumer says goods are not received, not working or otherwise not fit for purpose.  I don't think its a problem that can be solved through changing currencies, some buyers and sellers will try to pull a fast one on the other party.

It seems then that Bitcoin can be portrayed as being bad for start-up companies as they have not had time to build trust. A new company will be viewed as being high risk and will likely not get very far due to preconceived feelings that they 'must' be con men.

I think escrow most definitely is not the future - companies rely on cash flow to survive - if they have to wait until the buyer confirms receipt of an item and then wait for the escrow agent to release the funds before they actually receive them they could go out of business.

Don't get me wrong I am a fan of Bitcoin but I feel that one of the main reasons for Bitcoin - to give control back to the little guy - will do the exact opposite, where people will trade with large companies as they simply don't trust anyone else.

Sure if the trader is a real company or someone with a great trust rating here. If its a dude showing up on here with no trust rating only a fool would trade without escrow. There are so many rip-offs.

I have used escrow a lot. It is very cheap and adds very little time to a typical transaction.

Interesting point OP has. One thing that has kept me from ordering anything from websites yet is the possibility of me not receiving the item etc. Would they sound out a replacement if it never turned up, or what rights would I have if they never sent it out of provided any proof of doing so?

I'm not so sure it's so difficult. What you actually see across most businesses is invoices being paid on 30 day billing cycles, and it's incredibly common to have issues with the entities you invoice not paying on time. This is also true with B2C, hence companies usually have predefined terms for late payment fines and automated systems to deal with them.

In the Netherlands it's also common for mail and online order shops to ship you the item and hand you an invoice when it's delivered. You then have some time to pay the bill.

So I'm not sure if using Escrow is really going to create cash flow problems that companies aren't already used to dealing with.

In fact, when I think about it, a streamlined Escrow system fits very well with the existing goods delivery process: you normally sign for any items that aren't just a letter anyway to confirm the delivery company has delivered it. I think there's a nice niche here for an Escrow startup to add an additional confirmation in the "sign for the item" process, so you confirm delivery AND you release the funds to the seller at the same time. Of course for big ticket electronics you might need a short amount of time to confirm everything is working. Maybe big ticket items would work more like the example I described in the Netherlands: you have 10 days to release funds from Escrow upon receipt, otherwise you have to return the item.

It'd be bad for business if they kept doing this, so I guess it depends on what type of business they want to run. I'd always advise only buying items that come with tracked shipping.

With no chargebacks and no transaction feed (on the receiving end), merchants will be able to offer their products much cheaper, drawing in more customers int eh process.

Large scale escrow is the solution but then again this will add a lot to overall fees

The irreversible nature of bitcoin is great for people in third world countries like Nigeria who can't normally order via credit card online because of all the credit card fraud going on.

The lack of a discount fee should also allow merchants to set lower prices for people who pay in bitcoin.

___________________________________
Get 420 with bitcoins at zeltasgarden.com

Great point. And it applies to a huge number of countries. Credit card companies turn down huge amounts of business because of risk. This means merchants lose business, customers don't get the goods. Bitcoin solves this.

they will refund you the coin by sending it back  :D

how business normally make refunds

I think businesses normally try and avoid this if possible. First port of call would be to send out a replacement.

A chargeback system doesn't necessarily protect the consumer. Here's a link explaining why porn industry merchants prefer credit cards.

https://bitcointalk.org/index.php?topic=392310.0;topicseen

I had to do a chargeback for a Thai ferry company who said I hadn't paid them for my tickets when the transaction actually had gone through. We still needed to use the ferry so I ended up paying with cash closer to the date in a brick and mortar office. After trying to contact them several times when I got back with no success I asked my credit card company to do the chargeback. Overall it was a massive waste of my time (and probably the CC company's), and the ferry company ended up with a black mark against it, presumably because of bad back office software or bad accounting. (The ferry company is generally reputable and the actual trips went fine).

I think if I had paid with Bitcoin escrow for this service it would have been much simpler. They would have been forced to issue the e-ticket before receiving any funds. If they hadn't issued the e-ticket and I'd ended up paying in cash, I would have wasted a little bit of time on my end... and that's it.

One thing that might help in this kind of situation where a merchant with high transaction throughput uses Escrow would be to perhaps show their Escrow "success rate", a bit like a consumer credit rating. But I'm not sure about the implications of this.

There's a huge market here. :)

Using an escrow is just like relying on chargebacks anyway, so I don't really see the difference.

That's the problem right there. As a buyer, I'd pay with credit card unless there was a BTC discount. As a seller online, I usually don't take credit cards for intangibles because there is so much fraud revolving around it.

The solution is simple, a thrid party middle man to act as honest broker -> a quick fortune to be made here

https://en.bitcoin.it/wiki/Contracts#Example_2:_Escrow_and_dispute_mediation

And probably why the porn industry hasn't adopted bitcoin at all :(

Another issue then is who sends to the escrow agent first?

Say I want to sell 1BTC for $750 - If I send the BTC to the escrow agent and then the buyer negates on the deal then I have lost time and effort.

Also if I'm running an online business for example I would not want to ship anything until the money was safely in my account/wallet. You have to bear in mind that you still need to trust the escrow agent - I don't want to have to trust anyone or trust that the escrow agent will find in my favour in case of an issue.

I really hope that a solution that is not escrow can be found to this issue.

Escrow really isn't that difficult. Its works quickly and efficiently 99% of the time. If you don't want to use it, fine. Just buy off big retailers that you trust.

Or just keep using ebay / paypal and the mess that is!

Everyone is saying Escrow, but as a business owner, I don't want a middle man in my transactions with my customers.  No way.  I don't know what the alternative could be, but that will not fly IRL. 

Small businesses will need to develop a strategy to handle this concern from their customers, for sure. 

The strategy is to become "trusted", and to offer + give refunds to unsatisfied customers. Not sure how this mechanism will develop with bitcoin but I'm sure some service will step in.

As a business owner, you should be delighted at the the prospect of accepting customers from round the globe that previously got turned down automatically by credit card companies because they come from "high fraud" countries. The age of truly global commerce is just about to happen.

So the middleman/escrow is only for untrusted accounts, as they gain rep.?  That makes sense.  That's true that a refund will be simple to accomplish, but as someone pointed out, going from untrusted > trusted could be a very challenging task for small businesses.  Local businesses it's much easier to handle that situation, with face to face transactions. 

I'm definitely excited to be able to accept a new global customer, and a new form of currency!!  For small businesses that sell online, this is great!

I am a merchant. I sell domain registrations and other domain services. Our "merchant processor" blacklists probably 100 countries because of fraud. That would instantly go away with bitcoin. Of course the customers would have to trust me to deliver the service, but there are many ways to show you are trustworthy as a merchant. For example, I've been in business 10 years. That helps. Plus delivering the "goods" every time. And if you have any dispute, which can always happen, show good faith, just as you would with any kind of customer, whether they are paying with an irreversible currency or not.

Confidence Chains can support chargebacks natively.  This capability is critical to conducting e-commerce.

http://altchain.org.

-bm

Chargebacks are not critical to conducting e-commerce, sorry.

it's in a businesses best interest to behave nicely. If they rip people off they cannot succeed ultimately as a business. It is in a customers best interest (selfish interest) to behave maliciously. They don't have a reputation they have to keep. They can rip off a business and move on. So it makes sense to have the burden of trust placed with the customer rather than the business.

That aside..... it's perfectly possible to have chargebacks with bitcoin. If a site like ebay accepted bitcoin they could keep transactions off the blockchain and therefore reverse when they want to.

use escrow if you dont trust them.

No, the advantage is clear and huge. Chargebacks are the main vector of credit card fraud and probably the biggest source of all fraud in the world.

This leads to higher prices for goods and services which are passed directly to the consumer.

By eliminating these excessive fees, Bitcoin allows businesses to operate with much lower margins which has a massive benefit to everyone.

Furthermore, credit cards as they exist today are simply exploitive of the 99%. I own a couple simply for credit score purposes.

If you cant afford to buy something or cant be sure you trust the company you are buying from, you shouldnt be buying the product at all. Period.

Exactly. But most consumers are "protected" from knowing about chargebacks, how they work, how much they cost, how they stop people from buying things, how they increase prices. Too many people have been "educated" by credit card companies. Time for change.

I don't know how many normal people with credit cards really know about chargebacks. Most people only find out about them when something goes seriously wrong. I don't think I knew about them until I started working with e-commerce projects as a developer, and I'd had a credit card for many years before then.

I did my first chargeback last year, ~14 years after getting my first credit card. I suspect many people are like me.

Fraudsters on the other hand... it's a weapon for them!

Biggest source fraud in the world?  its not even the biggest source of credit card fraud, which is skimming/cloning. 

The whole argument seems focused on online consumer business, yet i find these to be cheaper than brick&mortar where there is less use of cards and far fewer chargebacks (presumably though i have no evidence, but there are less scope for claims, no failed delivery, product not right etc.).  I conclude that there are higher overheads for a bricks&mortar than an online shop, suggesting the CC fees aren't as big an issue as claimed. 

Believe me, in the US at least, every consumer I have come across knows about chargebacks. With my domain registration biz, I have had literally hundreds of threatened chargebacks, and dozens of actual chargebacks. As a merchant, it costs me a bomb. The consumer gets away without a scratch. And this is when they've done something stupid like register a domain with the wrong spelling and only notice a few weeks later, lol. They call and threaten a chargeback if I don't give them a refund. If I do the refund, I end up paying for the domain myself. If I don't do the refund and they do the chargeback, the merchant processor charges me a $100 fee.

I don't like chargebacks :)

Possible solutions that I see:

New companies can seek a bond that guarantees their transactions. This bond would have to be issued by a reputable bonds company or insurer. This gives the customer the assurance that they can make a claim against a company's bond if they fail to deliver.

Independent association that vets the reputation of a business. Sort of like the Better Business Bureau (BBB). People can register complaints against a business and the association will work towards a voluntary resolution that satisfies both parties. Companies will be rated highly if they are complaint-free, next if they resolve complaints quickly, all the way down to scammy companies with "F" ratings. Companies can advertise their ratings. Association should be funded by current bitcoin businesses who want to promote the integrity of bitcoin - based transactions and businesses.

It's definitely a big problem, but dealing with BTC I've seen a lot of people being scammed by comapnies not delivering the products and then the consumer is left out of pocket. It's a shit situation either way.

Sure. People are getting scammed every day on these forums. Sad but true. But its because the sellers are anonymous, and the buyer pays some or all up front. People should never do that.

In the real world, where companies care about their reputation, it will be a lot less of a problem i.e. they will have a stated refund policy, which they will honour, regardless of how you pay for something.

Well. that excludes every Bitcoin exchange.
Bogus escrow services (https://en.wikipedia.org/wiki/Bogus_escrow) are a big problem. There are probably more fake ones than real ones for eBay. The various Bitcoin escrow services are rather flaky - many are run anonymously, but hold your money.

Nobody was suggesting using an eBay escrow service,  lol. What use would that be with bitcoins?

As you well know, there are several totally trustworthy bitcoin escrow services here at bitcointalk. Stop creating problems which don't exist.