Idea: A Clean Way to Trade BTC/PPUSD

[cptmooseinc]

Note: Before any flamers reply angrily, please take a second and read this at least! I would like constructive input and opinions.

I noticed something today when digging around Paypal trying to find a way to make it safe(r) to conduct BTC/PPUSD transactions. I will quote the text from Paypal at the end of the steps I'm listing. This couldn't be done on a massive scale, but it could be done with trusted buyers/sellers for maybe a few transactions a day/week. This is as of yet untested so I cannot confirm it yet, as it may cause the offending Paypal account to be closed if too many disputes occur too rapidly or too often.

Scenario:
1.)Trusted seller offers 10 BTC for sale at X price via Paypal.
2.)Trusted buyer agrees to pay X price with a cash balance in his Paypal account (to avoid paying the 2.9% fee to accept credit cards, and the potential that they will reverse the transaction by complaining to the CC company). This step must always be done in CASH.
3.) Buyer sends funds to Seller's Paypal account.
4.) Buyer IMMEDIATELY files a dispute with Paypal over the transaction once it shows up in his "Recent Activity" following these steps...
     4a.) Buyer must choose the "I have a problem with an item I purchased" radio button and click "Continue".
     4b.) Then it will ask the Buyer for what the item category was (choose "Virtual Goods"). It will also ask what was wrong (Choose the one that says  
     "Item Not Received")
     4c.) Buyer submits the dispute.
5.) After the dispute has been submitted, the Buyer must click the "Resolution Center" tab that's under the "My Account" section of Paypal. This will list all open cases.
6.) Buyer clicks "View" beside the transaction he just disputed (should -hopefully- be the only one in there unless they've had problems with something else).
7.) Buyer scrolls down a tad and clicks the "Close Dispute" under the "More Options" section of that page. This will bring up a new page for the Buyer to leave "Additional Comments". Buyer should put something quick and nice here, such as "Impatience on my part! Sorry! Item received! Thanks!"
8.) Buyer clicks "Close Dispute".
9.) I'm not sure if there's a confirmation page after this or not because I haven't closed a dispute out to see. If there is one more confirmation page, then make sure to submit. If there's not, then that should be it.

Now, this is what's listed in Paypal's dispute section that makes this a viable option:

Remember, a closed dispute cannot be re-opened or escalated to a claim with PayPal. Make sure that you are 100% satisfied with the outcome of this dispute before you close it.

One more time for good measure. Read it again!

Remember, a closed dispute cannot be re-opened or escalated to a claim with PayPal. Make sure that you are 100% satisfied with the outcome of this dispute before you close it.

Basically, if you open a dispute and then close it, you absolutely CANNOT do a chargeback (so long as a buyer used Paypal funds. If you see reduced received amount stemming from accepting a CC, immediately reject payment and do not conduct business, though this shouldn't be a problem since trusted parties only should be used). Paypal will stand behind the seller at this point as the buyer already claimed to be made whole!

Again, I am not saying this should be done in great quantity, or with anyone that isn't trusted. Nor do I think one should do it with their normal Paypal account (if they have one otherwise) on the seller side. As long as you don't start a new transaction before closing the old one, you should only ever have one dispute and should stay below Paypal's radar. They should only come sniffing around if the disputes stack up unresolved.

I would like to hear any opinions on this. This seems to eliminate chargeback risk and make PP trades for BTC much safer if done with the right people. Escrow can be added on top of this for an extra layer of security. I am also looking to test this theory either by being the buyer or seller of 1 BTC at COST (not looking to make or lose money as this is for experimental purposes). I don't even care if I'm the one who tests it. I understand I'm new and "not to be trusted". So please, if there are two people on BTCtalk that trust each other and are willing to try this experiment out, please do so and post results.

Thanks!
-Moose

[John (John K.)]

Everything is void if the PayPal account was indeed hacked.

[cptmooseinc]

Again, this is why only trusted buyers and sellers should be used. I'm not talking about setting up a website and doing this. I'm more suggesting this as an option for board members who have conducted good business with each other in the past and are looking to shave off some of the percentage points in fees it sometimes costs to access funds quickly or have them be "safe" and "non-reversible". It's plausible that someone could have their Paypal hacked along with access to this board and try to convince someone to trade BTC, but it's an extremely low probability.

Those wishing to become trusted buyers could start off with small purchases (~1BTC, maybe even .5BTC) multiple times over the course of a month to gain enough trust to move up to 2, 5, 10, etc BTC transactions. Further proof of identity could be requested by any seller if they want. Everything can be hacked. Someone with a keylogger that accesses MtGox could still lose everything if they hold BTC there or someone monitors for funds to come in or not. This is actually a real option though that established users of this board could readily use to make trades more liquid, quick, and at lower fees.

[John (John K.)]

Again, this is why only trusted buyers and sellers should be used. I'm not talking about setting up a website and doing this. I'm more suggesting this as an option for board members who have conducted good business with each other in the past and are looking to shave off some of the percentage points in fees it sometimes costs to access funds quickly or have them be "safe" and "non-reversible". It's plausible that someone could have their Paypal hacked along with access to this board and try to convince someone to trade BTC, but it's an extremely low probability.

Those wishing to become trusted buyers could start off with small purchases (~1BTC, maybe even .5BTC) multiple times over the course of a month to gain enough trust to move up to 2, 5, 10, etc BTC transactions. Further proof of identity could be requested by any seller if they want. Everything can be hacked. Someone with a keylogger that accesses MtGox could still lose everything if they hold BTC there or someone monitors for funds to come in or not. This is actually a real option though that established users of this board could readily use to make trades more liquid, quick, and at lower fees.

For trusted buyers and sellers, even I would be willing to get paid in CC funds if the person is well known enough.

Over course of a month isn't enough frankly. Stolen PayPal accounts have been known to be discovered after a couple of months.
Even if the buyer is honest enough, there's still cases where PayPal fucked both parties over by freezing both accounts as it's explicitly stated in PayPal's TOS that they don't condone such trades. I've lost count how many times newbies go crying after another PayPal deal went sour - so don't do it if anyone values your money. A few exceptions might be the fastcash4btc service, where they pay using a corporate account and mark the funds accordingly.

Do not hold any BTC you can't lose in any online services, and use 2FA if possible.

[Zebulon Pike]

I think that there is a catch-22 here.

What you are suggesting provides a way for the seller to get protection from a buyer chargeback claim.  However, once the buyer has essentially forfeited his right to contest the charge, what stops the seller from simply not sending the coins?

You can say "trust," as you have repeatedly in your post, but then why would the buyer need to take the extra steps to not be able to void the transaction?  All you have done is reverse the set-up.  Not to mention the fact that virtual goods are not eligible for chargeback protection via PayPal anyhow (its in the TOS as "intangible items, including digital goods").

A good escrow service is all that is needed, in which case there isn't a real need for PayPal.

[420]

ESCROW!

NEWBIES CAN BUY WITH PAYPAL IT JUST TAKES YOU 7 STEPS!