Hi virtualfaqs, I'm glad you ask this question cause there's probably a lot of people out there who wanna know how to protect from good known "chargeback paypal fraud". With our escrow service it is very easy to evade this. I refer to the article 12.2 b of Paypal here: https://cms.paypal.com/ca/cgi-bin/?&cmd=_render-content&content_ID=ua/UserAgreement_full#12. Resolution Procedures for Unauthorized Transactions and Processing Errors. To be eligible for 100% protection for errors in your Account, you must notify us within 60 Days after any unauthorized transaction or processing error first appears in your Account history statement.By knowing so, seller who use paypal cannot scam a buyer if this buyer wait 60 daysbefore releasing the funds. So with this the buyer cannot be scammed by the seller doing chargeback on his transaction. The seller have the same protection with us because if after 60 days the buyer didn't release the funds he can fill a dispute at our resolution center. Then show the proof that he really sent the money from paypal to the user in order the provide evidence. Using this method the best way for us to know what's happen will be filling the "Product Description" field with "paypal to BTC (xxx.xx$ to xx.xxBTC)" while creating a new escrow. In rare case paypal can still do chargeback after 60 days in exceptional condition: ex: people at hospital etc etc. But this is very very hard to prove to them and they should detect the scam by not doing the chargeback. No buyer in their right mind is going to use PayPal to pay if the seller is going to hold the BTC for 60 days first. In other words you don't offer any protection which is fine. Also some credit card chargebacks have a bigger window than 60 days. For the moment (solution coming) we do not recommend using Western Union at all. I know a lot of countries can only use Western Union but it's at 80% used for fraud.
We are currently working on a reshipping service and we will include payment reshipping like check and western union money. So stay tuned if you really need Western Union without fear of being scammed we will take care of that soon.
Uh... what? The Western Union is for bitcoins right? I'm not talking about those Nigerian scams. |
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Hey BTCrow,
I only had enough time to skim this thread so for that I apologize.
Can you tell me how disputes will be handled for Western Union and PayPal payments. Like PayPal chargeback or a buyer claiming the Western Union was never picked up? What about other intangible items?
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Selling BTC in my thread. http://forum.bitcoin.org/index.php?topic=30293.0Thank you for your consideration. Every single thing sent through PayPal except mass payments can be reversed (and if you're shitty enough you could phone up the bank to cancel a 'fraudulent bank wire transfer).
Mass Payments can be reversed by PayPal not just bank transfer reversals. I also do not recommend to use paypal as payment processor to exchange BTC, till they told in their ToS that they aren't currency exchanger you can get your account banned without any questions. Jules info@btcrow.comBTCrow.com There's no way to prove this if the seller doesn't mention it. As long as it's not in your PayPal transaction comments or PayPal email or eBay auction, you should be fine. |
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Selling for $7. Price updated as of 6/3/12  Purchase: No additional fees for paying with a US PayPal account. 1% added to total for non-US PayPal accounts. (This fee is rounded up to the nearest US dollar.) Limited to 5 BTC per person using this method. Your next transaction will have to be funded by a bank. Make sure to get your PayPal verified. Mass Pay: No additional fees for paying with a US PayPal account. Limited to 20 BTC per person using this method. Western Union: Buyer pays for fees. Receives discount. No Limit. Miscellaneous Transaction Info:- After our first transaction, you must submit feedback for me before we can do business again.
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If someone sold Bitbills ( http://bitbills.com/) via PayPal and used some kind of certified mail service, would that allow them to accept PayPal payments for Bitcoins without getting scammed? That reduces the chance of getting scammed, but it wouldn't stop all scams. Certified mail service would show it was received, but it's very difficult to prove what was actually received. Then on top of that you have to explain to investigators what Bit Bills are. Most likely they're not going to care and just rule for the buyer. |
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I still don't want to mention it to them as it is a competing online currency.
PayPal is not a currency, any more than Visa or Mastercard are currencies. Ok let me issue a correction. I still don't want to mention it to them as bitcoin is an emerging online payment method that PayPal might see as competition. |
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read this for my way to guarantee proof of bitcoin transaction. First there's no guaranteed proof. How does someone know the video wasn't tampered with? Credit card companies probably have no idea how bitcoin works so your screenshots or vides are going to be completely meaningless in showing delivery. There's no personal info attached to a bitcoin address. You could show a couple emails but at the end they will still be skeptical. The more you explain bitcoins to a chargeback investigation, the more it sounds like a scam. So your emphasis should be prevention and not post-sale. Also although I'm pretty sure PayPal doesn't care about buying/selling bitcoin on a small scale, I still don't want to mention it to them as it is a competing online currency. |
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You mention on your FAQ that the way to sell intangible products is to have the buyer state in the comments "Virtual goods recieved".
But if the buyer later tells Paypal that the product is Bitcoins and that is against there terms, is Paypal going to reverse the money, and then presumably shut down your account for TOS violation?
I'm just wondering if that works for most Virtual Goods but back fires with Bitcoins.
That I don't know for sure. But there's no way to prove the transaction was for BTC or anything else. Also PayPal has not formally made an announcement that BTC is against their Terms of Service. I still feel the currency clause in the ToS applies to normal fiat currency and not BTC. PayPal is only banning big dealers as far as I know. Unless there's other evidence proving otherwise that I missed. You have the power to not deliver your BTC until you're completely satisfied with your buyer. This can consist of asking for emails confirming the buyer is NOT buying BTC, PayPal comments stating the same thing, opening a dispute and closing it "to show your buyer is satisfied after receiving the virtual goods all of a sudden." I would worry more about a credit card chargeback than PayPal stopping you. |
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But if they fund it normally, liek just recieving money from people, gifts are not reversible.
This is not correct. I covered this in another post here. http://forum.bitcoin.org/index.php?topic=22255.msg305823#msg305823Also there's no currently no definite way to tell whether a domestic gift payment was funded by bank account or credit card. What I do if I sell bitcoins through paypal is offer a ZIP drive, thumb drive, or some other inexpensive product with the details of the sale on paypal showing tracking and confirmed delivery so the item can not be disputed. Seems to have gone fine so far.
Doesn't work. There's no way to prove what's on the zip drive. So yes, you may be feel secure now, but there is a way around that system. |
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What if the buyer is told to pay and send money as a "gift".
How is it reversible then?
Easy you can do a gift payment by credit card or unauthorized dispute. Contrary to popular belief, just asking for a gift payment, only stops SNAD and did not receive disputes. No decent PayPal scammer uses those tactics. PayPal may also step in and say, "Looks like a hacked PayPal account. Let's reverse this illegitimate transaction." That will be 1 BTC!  Ok next question. |
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Actually this would work for PayPal. I believe PayPal doesn't get involved with SNAD disputes and asks you to resolve it between the buyer and seller. However it wouldn't work for a credit card chargeback.
I just checked their policy and it seems you are correct. Wow, that makes PayPal's policies seem really stupid. If I send you an empty box, PayPal won't chargeback. Buf it I can't prove I sent you anything, they will. Well it's difficult to prove one way or another so that's how they set their policy. Same as receiving virtual goods, they really have no idea if anyone ever got something. Clearcoin decided to take a neutral stance. If anything goes wrong, all they do is hold the item and return it back to the buyer after a set amount of time. In 95+% of all situations that would work, but someone will always test the limits. |
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I thought Clearcoin closed up?  |
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Yet you still have 180 days to chargeback...I'll pass I don't like gambling with my coins. No offense of course.
The stickies all over saying BEWARE OF PAYPAL aren't there just for show.
There are ways to make sure your buyer isn't paying with a credit card when accepting PayPal. I see gambling as when my net profit is under 50%, but there are ways to minimize this all the way down to less than 5%. Coinpal accepted PayPal and their fraud rate was only 1.5%. I'm willing to teach anyone who wants to learn. I understand your reluctance to accept PayPal, but I also feel everyone should give PayPal another chance. |
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Not if the seller proves the description accurately described the product delivered.. So we're right back to where we started. The buyer says the product wasn't as described because he didn't get the promised BitCoins, he only got the certificate. If you say the buyer gets both a certificate and BitCoins, and the buyer says he only got the certificate and sent it back, then he's saying the product wasn't as described. So you're back to having to prove to PayPal that he got the BitCoins. Actually this would work for PayPal. I believe PayPal doesn't get involved with SNAD disputes and asks you to resolve it between the buyer and seller. However it wouldn't work for a credit card chargeback. |
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I have never trusted paypal since over 5 years ago when i sold some online gold for ultima online. I sold this guy about 20 million gold, and he ended up pulling the "take delivery and reverse" course.
I ended up losing the dispute and my money, and never felt comfortable selling game gold again.
Which is sad, i enjoyed doing that as a hobby
This is exactly why I started Virtual FAQs. New MMORPG sellers don't know how to deal with PayPal scammers. I try to stop this by verifying every person before they're allowed to trade on my forums. I have a question as well. Would it be feasible for a scammer to create a PayPal account, conduct a couple of transactions and withdraw the money before they are able to dispute it? Would the buyer be able to get their money back or is it gone for good?
Nope if the buyer issues a dispute, the seller's account is frozen. Bank transfers are reversed. Even if the money reaches the seller's bank account, there used to be stories about how PayPal was able to take money back from the seller. I'm not sure if they're still allowed to do this. There's conflicting stories. However there's always the chance, the seller gets away with it. If the funds are not recoverable, then the buyer will not get refunded. PayPal will not take the loss unless... The buyer files a credit card chargeback. The buyer will get their credit back and PayPal will chase after the seller. If PayPal is unable to recover the funds, PayPal will take the loss. |
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I have a question.
Ive been thinking of receiving payments on papal for some things and don't want any kind of reversible payments.
I looked over your very good faq, but there's one thing i kinda seemed to not see that id been wondering about.
Paying for goods as a "service"
If someone makes a payment to you, for anything, and then pays as a service, and then leaves a comment such as
"Thank you for the software consulting service"
"thanks for completing the consulting"
Would that pretty much make the payment irreversible, being that it was for a service, and they made the comment it was completed?
You'd still have problems winning an unauthorized PayPal dispute and credit card chargeback from someone who was dissastisfied with your service "after" sending payment. The only 99.99% non-reversible method is for someone to give you a Money Pak code and you enter it into your PayPal account, but someone could argue that's paying with Money Pak and not really paying with PayPal. There's tons of tricks to decrease the chance of a reversal, but no easy 100% irreversible method that's convenient for the buyer yet. (At least that I know of, but I'm always looking.  ) |
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