PayPal for Bitcoin [Solving Chargebacks Professionally?]

[michaeladair]

We all know the number one reason why PayPal isn't used in trading Btc is because of Chargebacks. Does anyone know how we can prevent this, say like providing receipts or maybe making someone signs a legal document. I would like to make a site to host these transactions and I would like it to be hole free, any ideas?

[matt4054]

I'm still puzzled by the PayPal chargeback thing. About 2 months ago I was at the other side of the transaction, buying BTC for PP from several users here. Obviously I had to send PP first. Most transactions went smoothly, but I eventually got scammed for a "small" amount (about $80) by this user.

My mistake, I was in a hurry to get BTC to buy digital goods, so I took that risk quite recklessly with the family & friends kind of PP payment. The user was noob but didn't have any negative feedback by then, and I thought the worst case scenario was that he wouldn't send the BTC but I could chargeback with the "my account was hacked" trick that had been discussed previously in other topics.

Turns out that when I attempted to charge back, my requested was rejected by PP within 48 hours and without any human-written explanation (just the default template like "request reviewed by staff but denied").

Bottom line is that the scammer has got my money and I've got nothing but that stupid story. I could try to chargeback on my credit card, but I won't bother because I hate the paperwork and hassles that CC chargeback procedure involves. I didn't even bother to leave negative feedback on the scammer since he had already got plenty in the meantime and had obviously abandoned his account. I just won't deal with noobs again, even when I want something quickly and I'm short of BTC

[erikalui]

We all know the number one reason why PayPal isn't used in trading Btc is because of Chargebacks. Does anyone know how we can prevent this, say like providing receipts or maybe making someone signs a legal document. I would like to make a site to host these transactions and I would like it to be hole free, any ideas?

There is no way to be safe from cashbacks unless you are dealing with physical goods/products that are couriered or things that can be proved on paper. I don't think for Bitcoins, anyone would provide a legal document for an exchange but if there is any signed document like in case of physical goods where you can produce a courier receipt while selling/buying the product, then chargebacks couldn't be successful.

You can read about it here: https://www.paypal.com/in/webapps/mpp/chargebacks

[michaeladair]

We all know the number one reason why PayPal isn't used in trading Btc is because of Chargebacks. Does anyone know how we can prevent this, say like providing receipts or maybe making someone signs a legal document. I would like to make a site to host these transactions and I would like it to be hole free, any ideas?

There is no way to be safe from cashbacks unless you are dealing with physical goods/products that are couriered or things that can be proved on paper. I don't think for Bitcoins, anyone would provide a legal document for an exchange but if there is any signed document like in case of physical goods where you can produce a courier receipt while selling/buying the product, then chargebacks couldn't be successful.

You can read about it here: https://www.paypal.com/in/webapps/mpp/chargebacks

Couldn't the blockchain prove to be basically proof of shipping?

[matt4054]

Couldn't the blockchain prove to be basically proof of shipping?

Chances are that the mere mention of 'bitcoin' in your PP counterclaim would make you lose the case. This is based on other users' shared experiences, it's not formally documented anywhere AFAIK.

[michaeladair]

Couldn't the blockchain prove to be basically proof of shipping?

Chances are that the mere mention of 'bitcoin' in your PP counterclaim would make you lose the case. This is based on other users' shared experiences, it's not formally documented anywhere AFAIK.

Have the buyer use the address form to put their btc address then reference how blockchain for shipping?

[erikalui]

Couldn't the blockchain prove to be basically proof of shipping?

No. Bitcoin transactions are anonymous and by a wallet ID/address one cannot prove a transaction as the wallet does not hold any proof like ID card or address proof. Only the IP address is recorded which is not sufficient that you have sent the bitcoins to the person. Xapo uses mobile verification but still it is not a solid proof.

That's why people prefer using Virwox or localbitcoins for exchange. Even Ebay transactions can be chargedback.

[Enzyme]

PayPal Masspay is presumably unchargebackable.

[cloverme]

We all know the number one reason why PayPal isn't used in trading Btc is because of Chargebacks. Does anyone know how we can prevent this, say like providing receipts or maybe making someone signs a legal document. I would like to make a site to host these transactions and I would like it to be hole free, any ideas?

Last year I was "admonished" by PayPal for selling BTC for PayPal electronically. The ones they didn't care about were paper wallets sent via FedEx. Either way, still risky... Paypal is behind the times, they don't "get it". It's like they are still AOL with install discs, while fiber is being dropped in homes. Give it 5 years and no one will even know what Paypal is, they'll be the radioshack of money transfer.

[achow101_alt]

Couldn't the blockchain prove to be basically proof of shipping?

No. Bitcoin transactions are anonymous and by a wallet ID/address one cannot prove a transaction as the wallet does not hold any proof like ID card or address proof. Only the IP address is recorded which is not sufficient that you have sent the bitcoins to the person. Xapo uses mobile verification but still it is not a solid proof.

That's why people prefer using Virwox or localbitcoins for exchange. Even Ebay transactions can be chargedback.

You can prove you own an address by signing a message using that address. The proof is the fact that you own the private key to that address which, like the name says, should be private and one that only you have. Also, your IP Address is never recorded.

[Armis]

I'm still puzzled by the PayPal chargeback thing. About 2 months ago I was at the other side of the transaction, buying BTC for PP from several users here. Obviously I had to send PP first. Most transactions went smoothly, but I eventually got scammed for a "small" amount (about $80) by this user.

My mistake, I was in a hurry to get BTC to buy digital goods, so I took that risk quite recklessly with the family & friends kind of PP payment. The user was noob but didn't have any negative feedback by then, and I thought the worst case scenario was that he wouldn't send the BTC but I could chargeback with the "my account was hacked" trick that had been discussed previously in other topics.

Turns out that when I attempted to charge back, my requested was rejected by PP within 48 hours and without any human-written explanation (just the default template like "request reviewed by staff but denied").

Bottom line is that the scammer has got my money and I've got nothing but that stupid story. I could try to chargeback on my credit card, but I won't bother because I hate the paperwork and hassles that CC chargeback procedure involves. I didn't even bother to leave negative feedback on the scammer since he had already got plenty in the meantime and had obviously abandoned his account. I just won't deal with noobs again, even when I want something quickly and I'm short of BTC

Sad that you tried a "trick" to get your money, all you needed to do was to tell the truth.   Your correspondence with the seller would have proven that he didn't send the merchandise to the address you requested.   The TXID is empirical evidence of the actual facts of the matter.

Nevertheless, it looks like you still have not issued negative feedback.  If it's true that he didn't have neg feedback before you dealt with him and now he has lots of negative feedback perhaps some of them would have been warned if you issued him neg fb when you realized you were scammed.



_____________________

PayPal Masspay is presumably unchargebackable.

Although that is true, most people don't know how to do it, and it only involves business accounts (unless they changed things).

You will find that not everyone at PP are experts like they would want you to believe, most have no idea about Masspay.





______________________________

We all know the number one reason why PayPal isn't used in trading Btc is because of Chargebacks. Does anyone know how we can prevent this, say like providing receipts or maybe making someone signs a legal document. I would like to make a site to host these transactions and I would like it to be hole free, any ideas?

You should only do it if you are willing to back-up the enforcement of the legal agreement.  90% of the time when paypal is dragged into court they lose, but 99.99999% of the time no one sues them.  Bluffing doesn't work with PP, only real lawsuits or real crazy people willing to do real crazy harmful things.

If you are not willing to back-up your enforcement with court or crazy, then simply follow PPs rules to the letter of their law.  When you do a deal send the merchandise by USPS mail with DC (fat envelope), if it's over $200 make sure that you get signature confirmation and tracking.   Talk to the USPS to see if the merchandise could be covered by insurance, if so make sure to get it.

[matt4054]

Sad that you tried a "trick" to get your money, all you needed to do was to tell the truth.   Your correspondence with the seller would have proven that he didn't send the merchandise to the address you requested.   The TXID is empirical evidence of the actual facts of the matter.

Actually I didn't have the 'tell the truth' option:



Picking 'Item dispute' here wasn't possible. I can only paraphrase the error message that was given, as trying to reproducing it now gives me another error message because I already filed a dispute for this transaction and my claim was rejected (I can't do it again). The initial error message was something like "this transaction is not eligible for buyer protection". My understanding is that when you choose "family & friends" type of transaction, you can't dispute it, at least not this way.

So the only option left was the second one i.e. unauthorized transaction. This forces you to imply that your account was hacked, to change password etc. I did mention, in the description field, that it wasn't the case and that instead, the receiving account wasn't legit, i.e. Timothy White is not a real person / is a fake identity. It didn't help.

Nevertheless, it looks like you still have not issued negative feedback.  If it's true that he didn't have neg feedback before you dealt with him and now he has lots of negative feedback perhaps some of them would have been warned if you issued him neg fb when you realized you were scammed.

Your point about giving negative feedback ASAP to protect others is valid.  That being said, the scammer used delaying tactics. There was an unfortunate coincidence: scammer pretended that his account was frozen immediately after I sent him the money, because of suspicious activity. At the very same time, I noticed that the credit card that I used for the transaction was blocked by my bank for real (I still don't know why, probably automatic anti-fraud algorithms / patterns). This gave some credibility to his claim.

If you look closely at his trust reports, you will notice that his scamming activity was very short, from 2015-02-16 to 2015-02-19, i.e. 3 days. Lifting the blocking of my credit card and sorting things out took me just about the same time, so it was a bit too late already.

His account was created on November 19, 2013 and a quick review of his posting activity at that time didn't make it suspicious, although by now I would suspect that the account was only bought recently by the scammer. This is why I don't like the forum policy of 'officially' allowing account resale, although I'm aware that prohibiting it by the rules couldn't prevent it entirely.

My point here wasn't to complain about it, otherwise I would have done it in scam accusations. I take responsibility for getting scammed because I didn't protect myself enough, it was a risk that I was willing to take at the moment. My point was rather to ask how PayPal as family & friends payments can be charged back at PayPal level (i.e. not credit card charge back).

[Armis]

Sad that you tried a "trick" to get your money, all you needed to do was to tell the truth.   Your correspondence with the seller would have proven that he didn't send the merchandise to the address you requested.   The TXID is empirical evidence of the actual facts of the matter.

Actually I didn't have the 'tell the truth' option:


Picking 'Item dispute' here wasn't possible. I can only paraphrase the error message that was given, as trying to reproducing it now gives me another error message because I already filed a dispute for this transaction and my claim was rejected (I can't do it again). The initial error message was something like "this transaction is not eligible for seller protection". My understanding is that when you choose "family & friends" type of transaction, you can't dispute it, at least not this way.

So the only option left was the second one i.e. unauthorized transaction. This forces you to imply that your account was hacked, to change password etc. I did mention, in the description field, that it wasn't the case and that instead, the receiving account wasn't legit, i.e. Timothy White is not a real person / is a fake identity. It didn't help.

Nevertheless, it looks like you still have not issued negative feedback.  If it's true that he didn't have neg feedback before you dealt with him and now he has lots of negative feedback perhaps some of them would have been warned if you issued him neg fb when you realized you were scammed.

Your point about giving negative feedback ASAP to protect others is valid.  That being said, the scammer used delaying tactics. There was an unfortunate coincidence: scammer pretended that his account was frozen immediately after I sent him the money, because of suspicious activity. At the very same time, I noticed that the credit card that I used for the transaction was blocked by my bank for real (I still don't know why, probably automatic anti-fraud algorithms / patterns). This gave some credibility to his claim.

If you look closely at his trust reports, you will notice that his scamming activity was very short, from 2015-02-16 to 2015-02-19, i.e. 3 days. Lifting the blocking of my credit card and sorting things out took me just about the same time, so it was a bit too late already.

His account was created on November 19, 2013 and a quick review of his posting activity at that time didn't make it suspicious, although by now I would suspect that the account was only bought recently by the scammer. This is why I don't like the forum policy of 'officially' allowing account resale, although I'm aware that prohibiting it by the rules couldn't prevent it entirely.

My point here wasn't to complain about it, otherwise I would have done it in scam accusations. I take responsibility for getting scammed because I didn't protect myself enough, it was a risk that I was willing to take at the moment. My point was rather to ask how PayPal as family & friends payments can be charged back at PayPal level (i.e. not credit card charge back).

Ok, the rejection you received for Friend & Family thing was perfunctory; although you are not technically covered you were a victim of fraud.  You have to have them understand that you were just following the instruction you were given by the seller.  Paypal will handle this sort of thing on a case by case basis.  If it seems that you lied as opposed to going with the only option that you thought fit your situation they won't go to bat for you, however if you could show them that the guy was a scammer, and that you didn't try to deceive them but they system didn't allow you to give the most accurate picture of what occurred you might be able to get your refund.

Given the dates this involves you could still get a refund -- call them.



BTW, what's the reason why you still have not given him negative feedback about the transaction?

you might want to be more guarded with your email address  (hint: erase the images)

[matt4054]

Given the dates this involves you could still get a refund -- call them.

So, I called them. They are rejecting my chargeback based on the following policy:

13.3 Ineligible Items. PayPal Purchase Protection only applies to PayPal payments for certain tangible, physical goods. Payments for the following are not eligible for reimbursement under PayPal Purchase Protection:

Intangible items, including Digital Goods

About fraud: basically they say they would only consider it as fraud if I didn't willingly initiate the transaction, i.e. if my account was hacked. The fact that the recipient of the money did not fulfil any kind of agreement, contract, deal etc. doesn't qualify as fraud as per their policy above.

BTW, what's the reason why you still have not given him negative feedback about the transaction?

Basically because it was too late, the scammer had abandoned his account (not logged in for a long time), and he had already got several negative feedbacks from people in DefaultTrust. But I just did.

you might want to be more guarded with your email address  (hint: erase the images)

Unless I've missed something, the only e-mail that I exposed is his, not mine, but thanks

(on the screenshot above, I'm the buyer, he's the seller)

[Armis]

Given the dates this involves you could still get a refund -- call them.

So, I called them. They are rejecting my chargeback based on the following policy:

13.3 Ineligible Items. PayPal Purchase Protection only applies to PayPal payments for certain tangible, physical goods. Payments for the following are not eligible for reimbursement under PayPal Purchase Protection:

Intangible items, including Digital Goods

About fraud: basically they say they would only consider it as fraud if I didn't willingly initiate the transaction, i.e. if my account was hacked. The fact that the recipient of the money did not fulfil any kind of agreement, contract, deal etc. doesn't qualify as fraud as per their policy above.

BTW, what's the reason why you still have not given him negative feedback about the transaction?

Basically because it was too late, the scammer had abandoned his account (not logged in for a long time), and he had already got several negative feedbacks from people in DefaultTrust. But I just did.

you might want to be more guarded with your email address  (hint: erase the images)

Unless I've missed something, the only e-mail that I exposed is his, not mine, but thanks

(on the screenshot above, I'm the buyer, he's the seller)

Fraud trumps all of that. you were a victim of fraud, their system facilitated the fraud and my guess is, without doing an ounce of investigation, that you were not the only person defrauded of your funds via PP.   This is a case of fraud, "fraud is deliberate deception to secure unfair or unlawful gain", you were a victim of fraud and Paypal knows it. 

Their attempt to hide behind policy is sad.  If any of the other people that issued him negative feedback also did a transaction via PP you might be able to put more pressure on paypal. 


If you have a few people that were scammed though the PP system it might show some negligence on PP's part.  Focus on the fraud and demand that they reopen the dispute and to give it special handling.  When you call make sure that the person you get is a nice person, not someone who sounds like an enforcer but rather one that sounds like they really want to help you. 

[pozmu]

I think it's not possible, Paypal policies are one thing, but I think that many Paypal scammers use stolen/hacked Paypal accounts and credit cards and you can simply fix that problem by building 3rd party system/website. Paypal money is really virtual meaning even successful money transfer doesn't really move any money, especially if PP account was funded by credit card.

[eneilwe]

Fraud trumps all of that. you were a victim of fraud, their system facilitated the fraud and my guess is, without doing an ounce of investigation, that you were not the only person defrauded of your funds via PP.   This is a case of fraud, "fraud is deliberate deception to secure unfair or unlawful gain", you were a victim of fraud and Paypal knows it. 

Their attempt to hide behind policy is sad.  If any of the other people that issued him negative feedback also did a transaction via PP you might be able to put more pressure on paypal. 


If you have a few people that were scammed though the PP system it might show some negligence on PP's part.  Focus on the fraud and demand that they reopen the dispute and to give it special handling.  When you call make sure that the person you get is a nice person, not someone who sounds like an enforcer but rather one that sounds like they really want to help you. 

[cwick]

I was scammed by a guy that im dealing with right now. he used all stolen cards it looks like, and im on the hook for over $20k....plus i lost my initial $4500 i had....im so screwed and feel so helpless. i did find the email of the head of operations of paypal explainging what happened, and he actually forwarded it to the suits at paypal. a paypal exec called me and im dealing wiht her directly now, even though i dont think its gonna really make much of a difference cuz' they were stolen cards... i also hired a bitcoin bounty hunter/collections agency company based out of san diego. they think they found him in texas and are supposed to confront him in the next day or 2...

please say a prayer guys...ive never been in this type of situation in my life.....something has to be done about the chargeback loophole that lets paypal get out of not paying or responsible in some way....sigh.

thnx....

[erikalui]

I was scammed by a guy that im dealing with right now. he used all stolen cards it looks like, and im on the hook for over $20k....plus i lost my initial $4500 i had....im so screwed and feel so helpless. i did find the email of the head of operations of paypal explainging what happened, and he actually forwarded it to the suits at paypal. a paypal exec called me and im dealing wiht her directly now, even though i dont think its gonna really make much of a difference cuz' they were stolen cards... i also hired a bitcoin bounty hunter/collections agency company based out of san diego. they think they found him in texas and are supposed to confront him in the next day or 2...

please say a prayer guys...ive never been in this type of situation in my life.....something has to be done about the chargeback loophole that lets paypal get out of not paying or responsible in some way....sigh.

thnx....

I really can't help you out but only can pray for you. PayPal is never considered safe and hence nobody should ever exchange bitcoins for PayPal due to their chargeback policy. The amount of cash you've exchanged is too much and why did you trust this person for such a huge amount? Have you been dealing with him before? Is he from this forum by any chance?

[cwick]

hes not from this site as far as i know. his name is Kevin Kronke...we worked together for over a month and i guess i was just being an idiot or naive or both...and im quite tech smart which makes me look even more like an idiot....sigh

i was able to find some of his info, and as mentioned b4 i hired a bounty hunter/collections agency outta san diego. theyre supposed to get to him in texas in the next day or 2 and confront him. i swear to God this has completely screwed me....

sigh...anyway...im looking into any lawyers that specialize in this type of thing...not that i can afford one realistically anyway.

if anyone has heard of the name kevin kronke from texas, please lemme know...i need any1's help that can actually help....

thanks in advance...

me