Bitcoin Forum

Assuming a merchant accept Bitcoin,

You as a shopper, place an order, and that merchant did not deliver, or sent to the wrong address, or sent a fake product.

You can not reverse the payment, you can get your bitcoins back, and the only thing you can do it leave a negative feedback.

Of course, there are many other scenarios, like phishing websites, fake websites, selective scams, and so on

What are your thoughts and ideas to prevent these scams.

Either do your own due diligence (stick with established, well rated merchants) or use a credit card when shopping somewhere "less than reputable".

Yeah well the purpose of my question is about promoting Bitcoin for merchants.

Thank you anyway for your though

Anybody else ?

to ensure security in the bitcoin transactions and prevent fraud, it may be very useful to use escrow. but, it is very difficult to find it. if no escrow, try to see the feedback obtained by the site, whether it is good or not. you can see a site with comments from previous visitors.

Unfortunately because of anonimity and it's virtual nature, lack of regulations, Bitcoin is very convenient for different kind of scam and fraud. Often, when that happens you don't have much choice to get your coins back or to report someone for fraud so before you get into any kind of business with Bitcoins you have to be very careful, do the due dilligence and check everything twice.

If we assume that we are talking about a centralized service like Amazon and you are buying from there then I see no reason why you won't get the item unless It's a scam, people will realize that after one order and stop using the service.

If we are now speaking about something like eBay where you are dealing with individuals instead of companies then the feedback and reputation system is there for a reason, and usually, service that offer this have an escrow system. I have personally never got scammed while trading using bitcoin or any other payment method for the simple reason that I don't trade with shady people, I do my homework before trading with anyone.

your question should be what is promoting bitcoin for "customers" not merchants.
in fact bitcoin is best for merchants! because it doesn't have charge back. the worse thing that keeps happening to merchants is either charge back or credit card fraud and bitcoin eliminates all of these.

but according to your OP it is customers who will be affected by things you said. and if the merchants is trusted and has a good history trusting is not hard.

While Bitcoin is very easy for fraud due to its pseudonymity and convenience, trusted vendors who begin to accept Bitcoin will always be legitimate.  If, for example, Amazon started accepting Bitcoin payments, it's not like they would scam people just because people are paying with Bitcoin.  What's important is that the site verifies their owners and other details about their business.

Yes, you are right, you need to choose a seller who cause trust. Or to agree that you will pay 50 percent of the prepayment, and the rest after receiving the goods

It really does come down to Trusted vendors.

Do just the same thing you would do if you were to trade a real life object, say a smartphone, with another guy: never go first unless the trader is a very reputable guy. If it's an online website, the only option is signing an agreement upon signing up on the website where you would agree to the fact that it's mandatory to refund the money in case the order hasn't been delivered, the wrong product arrived or something else...

Unfortunately, this makes it difficult for new vendors, without an established position on the market, to start a Bitcoin business. They will need to offer something very attractive to a potential buyer to make him risk the money and buy it, or offer something cheap, so that people will ignore the possibility of being scammed and try it out.
Many scammers choose this strategy to start with a legitimate business that sells cheap products and then use their established position and well known brand to take advantage of their customers.

Some type of escrow or trusted 3rd party service to hold funds in trust until goods/services are confirmed delivered could be the best we can hope for.

Alternative methods to keep track of scammers other than IP tracking may also help.

Whatever scamming bitcoin is subject to has to be pale in comparison with the massive amount of credit card fraud in the world.

Unfortunatelly scams are part of bitcoin since the beginning.
And the way bitcoin is designed, it makes it attractive to sellers.
Personally I don't use direct payment to a seller, only bitcoin payment service provider.
Sooner or later one of them will come up with some protection for the buyer, like paypal does it.

In my view using trusted merchant and escrow is best if you have no these options then try to use some other method which can give you bring back payment option is more useful because if you are using bitcoin without escrow or trusted feedback then you can lost your hard earned money

You better use your credit card unless its a %1000 trusted seller which you haven't had any problems before. Using a decentralized currency has its advantages and disadvantages. Bitcoin is not your daily shopping currency.

When you have a problem with the seller, nobody's going to fix it for you if you used bitcoin.

Think of Bitcoin as the anti-PayPal.

Paypal protects consumers at the expense of the seller. Businesses get screwed over buy PayPal all the time but it's great for the consumer. The upside is that average consumers are more likely to trust startups and sellers with no or limited history because PayPal will protect them if something goes wrong. It's good for new sellers too because they can get an easier start.

Bitcoin protects sellers at the expense of consumers. Consumers get screwed over buy Bitcoin businesses all the time (don't call me out and make me list businesses like Butterfuck labs to prove a point because I can list two pages of them) but it's great for the seller because they can't have a shady customer reverse their payment after they receive their product. The upside is startups and sellers with limited capital can avoid losing money to scamming consumers. It's bad for sellers though because consumers may be hesitant to trust or use businesses with limited history.

Holliday was right, everyone needs to use the system that works for them.

As for a consumer solution to the problems you list there are only a few. Escrow is one of them, using a business that's regulated by a responsive government is another but Russian consumer roulette is what most people have used historically. Sometimes you lose. Just don't spend much money at once using Bitcoin so you're not out much if you get screwed. Oh, don't think you're safe if you use a big company either. I have had an open investigation with Overstock.com for a long time about .95btc I sent them and never received the product.

Escrow is the biggest thing that you can use to prevent things like this from happening, and especially when it comes to online commerce reputation can be (and is) very, very important. Bad reviews along with proof can mean a world of a difference.

Escrow may be another medium, but it does make a bit more money move within the Bitcoin economy, and that can be a good thing.

Bitcoin as a currency? agreed.
Bitcoin as a store of value? agreed.
Bitcoin as a digital gold? agreed.
Bitcoin is exchangeable to fiat currency? yes.
Bitcoin is accepted in exchanging services worldwide? yes.
You should really use whatever is more convenient and easy for you which is to exchange bitcoin into fiat then use credit cards for your daily needs.
Even developers are trying to change bitcoin into a massively used worldwide cryptocurrency but with the current protocols it's impossible.
Once again if you feel you are losing money or not having the charge back advantage then turn your bitcoins into currencies where their processors accept and do chargebacks.

It is pretty much possible to scam with every Payment method there is. Bitcoin is not different here, but since it is new people pay extra attention to scams and maybe scammers also test it so that there actually is a bit more scamming going on. However people are using all sorts of payment methods without being perfectly safe, because the wast majority is honest and it works most of the time. For big transactions you take extra measures to be safe.
Right now Bitcoin is developing more into the store of value direction rather then everyday cash, so we might see extensive use of escrow services. It wouldn't surprise me to see to see 2 or 3 big escrow companies in the future that get used for 90% of all transactions.
Escrows do cost more and take some time to, so i would expect that we just use Bitcoin normally and and accept the relatively rare scams as normal.
As a society we can do something against scams, but this is time and cost intensive. Especially to kill off the very last bit from under 1 % to 0 is very hard, time and cost intensive. The extra effort to do this is unproportional high, so we as society accept it. This btw is true for all crimes. 

generally, the same thing apply to USD or EUR or any other payment option....
and the solutions could be applied to bitcoin too...

big websites generally offer service like escrow(in case of p2p) or you can buy from a trusted seller.

ps: your history illustrate the buyer side, not the merchant/seller.

As you can see now a many are fraudsters they want to get a easy money. The one thing you do don't trust anyone and  best thing is don't buy online using bitcoin.  You can cash out your bitcoin in real money then go to buy the things you want.

This is not quite accurate.  Bitcoin is particularly used for scams, in a way which transcends other currencies, because of its nature.  Bitcoin is designed in a way which facilitates scams.  Fortunately, anyone with a bit of scrutiny and intelligence can tell the difference between scams and legitimate businesses (or people) in about 95% of cases with some basic checks.

Fortunately the use of escrow is very convenient with Bitcoin as well with trusted members.  You can also feel secure because you only get scammed out of as much as you send to the seller, so in one way getting scammed with Bitcoin is better for the victim as they don't reveal their private information and are therefore not risking getting their accounts stolen.

I think that the most major companies are quite legitimate and people would assume that these services would scam them.  I don't know a lot of people that buy products from sites other than Amazon, eBay etc, and you know that if these sites starting accepting Bitcoin they wouldn't magically turn into scams.

I guess we disagree here. Like i said we might see more scams now because Bitcoin is new. That is why people fall for "the double your money" scam and such. But i would argue that it is no because of the technical aspects. What do you have in mind? No charge backs? We don't have that with cash and they are not so common with bank accounts and credit cards. I don't expect significantly more scams with Bitcoin just because of its nature.

What the Internet don't buy things for other currencies? Scammers do not pay attention to the currency. It does not matter what currency you have selected. On the Internet you need to buy only in the checked areas.

Well even reputed merchants can sometimes send wrong products and refuse to acknowledge it.
This has happened with me once.Although it didn't involve bitcoin but the merchant was reputed online e-commerce website.

My question was about protecting the shopper, the merchant has nothing to worry about, he get his funds, no chargebacks or any lock on his wallet.

For those who answered with "use a credit card", well thank you genius, but the point here is using and promoting bitcoin while keeping both sides of the purchase satisfied.
For those who answered with "Do the same if you paid with another method", Paypal / CC / Wallets / Bank accounts have a solution to report fraud and get your funds back, not the case for Bitcoin.


Escrow is a good solution for digital products, but merchants will not get their funds fast, thus it is not convenient for the merchant to wait days till a shopper receive his order, and if he did, that shopper will probably not confirm.

Will see if somebody have something better to suggest

You are right it's rather better to be aware and smart rather than asking changes in the bitcoins while being stubborn of our own. If you don't trust a service provider and you yet want to try it, the best way is to use an escrow.
Yeah, one thing that I sincerely want is the development of an escrow site which is active 24/7

There are lots of scenarios where chargebacks should be applied but in this case if you want to make a platform like shopify or similar to it you have to send the payments after a month or like Google Adsense where the funds of this month sends at the end of next month, by this you can make the chargebacks and other things and not allowing the merchant to withdraw the profit. Check also Aliexpress they handle the disputes of their customers very well.

On the seller's side, since you are accepting bitcoins, generally you are safe in the deal if you require your customers to send first. If the customers sent it to the wrong address that is his fault and the seller does not have to send the product. If the seller sends a wrong address that is the sellers fault, and the seller must send the product as he was the one who had a mistake and the customer has already paid.

Well tell me once site or shop that scammed a buyer, I mean that accepted bitcoins and scammed .. show me please !
Because it's the sellers who are always scammed and another drawback with chargeback is that if chargebacks are enabled then the currency would be of course centralized which is not the case with bitcoins.

You are right the non reversible mode is actually taken as a positive rather than a negative aspect. By the way mate amazon hasn't yet started to accept bitcoins as far as I know, though there are indirect ways available to do that but not directly. I think apart from an escrow there is not much that user's can do to void scammers.

Just try to avoid the suspicious thing, And that's the usefulness of the escrow.

Escrow was providing you with a middle way on your transaction. to keep your transaction is safe and securing your interesting stuff.

There are less cases where a seller scams as compared to the buyer's scams and hence if chargebacks are allowed almost all the sellers would be worried. This is actually the biggest drawback with paypal and a reason why mos of the people prefer bitcoins over paypal.
And how can a seller scam man ? I mean you would of course buy from genuine and verified users, no ?

What you want OP is a charge back which unfortunately is not available with bitcoin. All you can do is purchase only on trusted sellers, use escrow, or use other payment method which have charge back policy. Use paypal instead if you are not sure with the merchandiser. They have chargeback.

therefore it would be better if you use an escrow for any transaction in bitcoin dude it will be safe, look bitcoin kept anonymous so better be careful :)

Bitcoin anonymity has its pros and cons also because of it's anonymous Feature criminals can use it in many different illegal ways.
Best method to avoid being scam:
Check the site reviews
Check the websites traffic
Check its alexa

Do the some background research first to the site before purchasing in it just to check the sites legitimacy.

Frauds and hackers are found much when it comes to bitcoin. Even with highly secure trading websites hackers easily getting and stealing bitcoin targeting person who new to the trading business. So its better to buy or sell once after going through a good study all the necessary things need to be considered before making a move.

pretty much same answers, a bit useless.

Escrow : That will not apply since you are buying from the merchant directly.
Paypal : We are talking about Bitcoin here, can we avoid the terms "Credit card / Paypal / Whatever" ?
Seller protection : We know that BTC payment are irreversible, hence how to protect the shopper from scam sellers.

I am glad to see that most of you agree on Escrow.

there is a big difference here!

when the payment system has charge back it means any random person on the internet with complete anonymity can use any payment method and charge it back.

when it doesn't have it (like using bitcoin) if the merchant pulls a scam you can find him because it is one person not just a random anonymous person on the internet. they can be registered, give their information have a real physical shop,.... and lots of other things to make the trust and people easily use them.

Escrow now emerging, but there are indeed only escrow that was out of line from their goals while opening the service. but you don't have to worry anymore about escrow in this forum, because now there are already some very trusted escrow and give something good. You need to know the comments are not necessarily provided by others, they can just make another account and doing the commentary in order to provide a confidence level of a person.

Scams are everywhere and if you are not sure in the legitimacy of a business then do a background check and take time reading from the feedbacks of their previous customers. dont trust easily and be aware of the possibility that you are dealing with a scammer. escrow is a good choice to prevent this from happening especially we are talking about btc as the payment cant be reverse once you made it. although it will take time for merchant and a bit incovenient for his part to use escrow, this will ensure that both parties will receive what is supposed to.

First of all, bitcoin is not paypal who's capable of doing what you mentioned. The system of bitcoin is very much transparent to us and we know it's limitation so under the situation, it should be the transacting parties initiative to transact safely. Bitcoin was not created solely for online shopping, it's just a currency that can be use for online transaction and it has nothing to do with the safety of both party to make a successful transaction.

We cannot get our bitcoins back modify the op. My idea to prevent to this type of scenario is just always use escrow when transacting to merchants. This is the only way to prevent merchants to do this crazy act. And when it comes to phishing and fake websites, just always be cautious and learn to look at the url to protect yourself.

Yes but using escrow for every purchase is a recipe for the failure of bitcoin. I'm a big online shopper. If I had to use escrow every time I used my credit card to buy something online I would cut them in half and throw them away. Credit cards would be useless for me then.

I'd much rather take my chances on losing my btc than use escrow for every purchase. I just don't buy costly items using Bitcoin. I use credit cards with fraud protection for those items.

I think the key escrow to secure bitcoin in the world who want to perform any transaction, I think it is a very reasonable thing if escrow is reduced by half of your money because you are using an escrow service to shop safely online. When you shop with a credit card if you do not pay at the end of the month you will be subject to fines or fees per month, so I thought to do anything not free without giving money, surely you know about online shopping are many cases of fraud, you use a credit card there wandering hacker, definite and secure only use escrow to mempastikan that the money or property was fine.

I dont get it. You are promoting bitcoin to merchants and yet your example says "assuming the merchant accept bitcoin".
I would be taking safety precautions before I deal with anybody else. Just a little dirt to him will cost me to not trust him.
I will be looking at the trust rating first and reputation and see some good feedbacks. If none, go deeper try to google the name of it.

I think this problem has only one solution of the improvement of the product.  Because if the shopper send you the product and you didn't like or found problem then surely he will get negative response but he will remain in the market forever so he needed to improve his service and product so that everyone will satisfy with his service otherwise giving the negative trust is only a type of review which is not a solution at all .

I don't think it will cause bitcoin as a failure also is a matter of choice. Most of us prefer to use escrow just to make our transactions successful and avoid this type of scam and failure to comply with the product you had bought with that merchant. Also we are talking about bitcoin usage, we know that credit cards does have fraud protection.

That's the main reason bitcoin will never be massively adopted for online shopping, unless transaction escrow and transaction disputes are managed by some Paypal alike corporation and bring some security to buyers.

You can see it happening all the time on dark markets, not only high reputable sellers make an exit scam, entire markets exit scam.

That will totally be your fault if you lose your money because of Bitcoin irreversible features. There is something called google in this world and of course if that site is there for a long time there will surely be scam accusations or why don't you just purchase items using an escrow or just ask the seller to make an account on a site called bitify as they have an escrow option.

But it doesn't. You can't make a PayPal account with a pseudonym, there are strict identity checks.


Kind of contradicting yourself there  ::)

Does Fiat guarantee that there will be no scams whatsoever. By using a credit card can you be sure that your data is safe and your data won't be comprised. There is no guarantee in any currency, all one can do is do through research and then only proceed to buy. One way is to first see their past reputation. Have they made similar kind of deals. And you really need to be choosy, scams are possible when people fall for high discounts, newbies. Offering super deals. You should ask for vouches or ask people who have traded with them to make sure you get it right.

There will always be people who stumbles upon a fraud. However as with all payments made to persons, do your reasearch.

Also, I'm sure there will come more and more companys who buys for you that meaning a 3rd party who makes your purchase (you pay a small fee for them doing so) but your initial payment is safed so if it's a scam it's the 3rd party that will lose on it, not you, well as long as the 3rd party is trusted of course. :)

Best Regards,

Fraud regarding Bitcoins can be regulated or prevented to some extent. Fraudulent activities can never be stopped but somewhat prevented.
Like, Regarding investing you Bitcoins, becoming knowledgeable about it, where you are putting your money, who is taking the money etc., will help you avoid frauds, but not always though. And as the transaction are non traceable, the frauds are increasing regarding BTC, which is why many of my friends are not interested, after deeply researching on it, mostly they fear of getting conned.

You must study and search for a legit site first before spending your bitcoin over there.Mostly its the buyers fault why they are being scammed by sites or other peoples too their trust too much depending on the feedback which may be fake

Yes op is right, Its very easy to cheat customers if we pay via bitcoin. In my opinion use bitcoin as online payment method if you are sure that  merchant  can be trusted. In my opinion , you can use bitcoin as payment method if you want to buy any branded product. Because branded shops wont cheat their customers. If anything like cheating happens it will affect the brand name. So definitely the merchants will be  carefull regarding that.

This would depend on the merchants decision if he would tend or plan to give you a refund or not since we do know bitcoin transactions arent irreversible and if you bought from a certain merchant and do accept the thing which you didnt expect then this would be a hard thing thats why its really important to always search for the legitimacy of such merchant before planning on making any bitcoin transactions.

Well to dodge this kind of scams is very hard because this kind of things happens to any us users. But to solve this kind of stuff is just to be wise on what you will decide and search about the information about the website that you will shop, and don't trust people in the internet easily because they can be that wise to scam you :D.. get the info about the website and you won't be scam,

Well the way to promote it to merchants is easy.... concentrate on these 11 drawbacks on using a credit card :

https://www.consumerprotect.com/11-types-of-credit-card-fraud/

Bitcoin does eliminate some of these fraudulent activities and are a much better payment option than Credit cards.

Yup that's pretty much the safest way that one can take. But now with payment processors like bitpay.com coming around its safe to use btc almost anywhere where bitpay.com is used.

Using Escrow Service can be a good way to prevent scams from untrusted sellers.
For trusted sellers, I don't think you will face such problem ever.
By the way, Consumer Court is always there. Suppose, you made payment through cards/cash, then too transaction is reversible only when company wishes so. Similarly, in case of Bitcoin if company wishes, it can issue you refund. No matter whether transaction is reversible or not.

This is the 5th time I say it.

A Seller who will accept payments on his online store will not use Escrow.

And using reputables sellers like amazon, or using Paypal - CC is not helping Bitcoin, and is not helping new businesses.

i think you missed the point of an escrow, otherwise why they exist, just use an escrow with undoubtedly merchants, if amazon were to accept bitcoin you would have no problem with them, but with private man selling stuff, i would use an escrow, any other serious merchants with his website will not scam you that would be stupid from him, would cost him customers

No, you missed the whole point of this conversation.


Escrow can be used in a platform where sellers and buyers can do business, or sellers can sell their products, not the case for single merchant websites.

No contradiction at all. Bitcoin escrow is too slow when all I want to do is order a pair of Levi 501s. I log on, make the order, enter my CC info and place the order. 5 minutes involvement tops. The CC company keeps me safe because I signed a contract with them that guarantees my safety wherever I shop (plus the 20 other benefits I get like flyer miles). That's not escrow. That's a legally binding contract that I can sue over.

Setting up an involved escrow is too much work for a pair of jeans. The bitcoin escrow services I've used in the past were more expensive than the 2% merchants get charged per transaction. I used to trust JohnTheDong's escrow but I don't know if I trust any others. Searching for an escrow that I trust isn't worth the time for me. If I do find an escrow person that I use regularly they can still rip me off eventually (that's happened many times before). Its just not worth it for me, you're mileage may differ.

Using escrow is the best way I know to avoid the scam and be safe in the deal. It works almost 90% while dealing online, especially with strangers. There are best escrows with us on bitcointalk and I will always keep recommending newbies (and senior members too) to go with escrow because the security assurance is worth more than escrow fees.

Sometimes scenario is a small picture and not of sites, for example I see an ad here in currency exchange thread where I see my need being fulfilled then how do I know if the guy providing that service is legit ? And on asking for escrow, the seller or exchanger refuses.

In many cases I have seen that who refuse escrow are scammers but still we can't call someone a scammer just because they don't trust a third party.

This problem is somehow solved by multisig address, or even having an escrow.  Product will go to escrow and escrow deliver the product to the buyer.  Then after escrow received the product, escrow and buy will then unlock the fund and pay the seller. This is the best setup to avoid scam or fraud when buying online.

You should know who the merchant is and trust the website/person enough to trade with them in bitcoins. It's the same case with ebay where people have just created/bought fake accounts with a lot of feedback and the payments have been reversed or the item was damaged. It is better to use a middle man who can hold the payment and release it when the product has been delivered but here lies the problem if the buyer is a scammer and lies about not receiving the product/receiving a damaged product.

When big websites like Amazon can be fooled by customers, we too can be cheated. Buying something from a physical store using bitcoins is the best way to avoid such scams.

Pretty useless answers here.

Escrow can not be used for single merchant websites, generate frictions for shopper and merchant.
Feedbacks and reviews of merchants are useless for new businesses, can be faked.

Using Paypal / CC is the opposite of this thread, since we seek to promote Bitcoin and keep both parties (Buyers/sellers) safe.

Thank's for your participation anyway.


Topic locked.