[Q] Selling bitcoins using PayPal - What's the risk?

[Adir]

-Seller sold 10 BTC to some guy
-The buyer paid 110$ as a PayPal gift
-The seller withdrew the PayPal funds to his local bank(takes about 3 days)

Is there some hidden risk in this? the buyer can reverse the payment whenever he likes?

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[Gabi]

the buyer can reverse the payment whenever he likes?

More or less yes

Also trading virtual currencies and things like bitcoin is a bit against paypal rules

[dotcom]

I thought you couldn't reverse gifts?

[JoelKatz]

I thought you couldn't reverse gifts?

It wasn't a gift though. The buyer claimed it was a gift, but both the buyer and seller knew that this was a lie. To be a gift, the giver must have intended to transfer it to the recipient for no compensation -- this is called "donative intent". Since there was no donative intent, legally there was no gift. The transfer claiming to be a gift was fraudulent and can be reversed.

[adamstgBit]

I thought you couldn't reverse gifts?

It wasn't a gift though. The buyer claimed it was a gift, but both the buyer and seller knew that this was a lie.

so what?

once you send a gift. you can't revers it... i think!

[JoelKatz]

I thought you couldn't reverse gifts?

It wasn't a gift though. The buyer claimed it was a gift, but both the buyer and seller knew that this was a lie.

so what?

once you send a gift. you can't revers it... i think!

No gift was ever sent. In order to "send a gift" you must intend to transfer it to the recipient for no compensation whatsoever. Legally, no donative intent = no gift.

"A gift, in the law of property, is the voluntary transfer of property from one person (the donor or grantor) to another (the donee or grantee) without full valuable consideration. In order for a gift to be legally effective, the donor must have intended to give the gift to the donee (donative intent), and the gift must actually be delivered to and accepted by the donee."

Here we have a transfer that the recipient knew was not a gift.

[adamstgBit]

I thought you couldn't reverse gifts?

It wasn't a gift though. The buyer claimed it was a gift, but both the buyer and seller knew that this was a lie.

so what?

once you send a gift. you can't revers it... i think!

No gift was ever sent. In order to "send a gift" you must intend to transfer it to the recipient for no compensation whatsoever. Legally, no donative intent = no gift.

"A gift, in the law of property, is the voluntary transfer of property from one person (the donor or grantor) to another (the donee or grantee) without full valuable consideration. In order for a gift to be legally effective, the donor must have intended to give the gift to the donee (donative intent), and the gift must actually be delivered to and accepted by the donee."

Here we have a transfer that the recipient knew was not a gift.

as long as PP doesn't know that it can not be reversed.

no?

[SSSSer]

I thought you couldn't reverse gifts?

It wasn't a gift though. The buyer claimed it was a gift, but both the buyer and seller knew that this was a lie.

so what?

once you send a gift. you can't revers it... i think!

No gift was ever sent. In order to "send a gift" you must intend to transfer it to the recipient for no compensation whatsoever. Legally, no donative intent = no gift.

"A gift, in the law of property, is the voluntary transfer of property from one person (the donor or grantor) to another (the donee or grantee) without full valuable consideration. In order for a gift to be legally effective, the donor must have intended to give the gift to the donee (donative intent), and the gift must actually be delivered to and accepted by the donee."

Here we have a transfer that the recipient knew was not a gift.

as long as PP doesn't know that it can not be reversed.

no?

you can lie and say gift

[adamstgBit]

look here

someone sent a PP gift payment for some bitcoins
and the bitcoin was never sent.
and now he cannot revers the payment

https://bitcointalk.org/index.php?topic=106045.msg1172035#new

[JoelKatz]

you can lie and say gift

Sure, but that's very, very stupid. Not to mention it's fraud.

look here

someone sent a PP gift payment for some bitcoins
and the bitcoin was never sent.
and now he cannot revers the payment

https://bitcointalk.org/index.php?topic=106045.msg1172035#new

He can, he just does not know how to. But I'm not going to help him because he's trying to defraud PayPal. PayPal did exactly what he tricked them into doing, and now he's trying to screw them for it.

[Maidak]

If he paid using a credit card or bank account he can call them to bypass paypal, if he paid with paypal funds then yeah he's screwed. Also its not against Paypal terms of service for virtual goods they just do not have buyer nor seller protection with them, however they will favor with the buyer if there is something stated on the invoice saying "digital goods" or "intangible item"

[Littleshop]

you can lie and say gift

Sure, but that's very, very stupid. Not to mention it's fraud.

look here

someone sent a PP gift payment for some bitcoins
and the bitcoin was never sent.
and now he cannot revers the payment

https://bitcointalk.org/index.php?topic=106045.msg1172035#new

He can, he just does not know how to. But I'm not going to help him because he's trying to defraud PayPal. PayPal did exactly what he tricked them into doing, and now he's trying to screw them for it.

Correct.  In fact paypal has reversed gifts just because a sender or receiver was using gift too many times.  Paypal gets no fee and knows that person is not getting that many gifts.  It is POSSIBLE, but it is not probable.  

Also a gift payment come from a hacked paypal account, and almost all of those payments will be reversed.  

[live627]

look here

someone sent a PP gift payment for some bitcoins
and the bitcoin was never sent.
and now he cannot revers the payment

https://bitcointalk.org/index.php?topic=106045.msg1172035#new

Wrong.

If he paid using a credit card or bank account he can call them to bypass paypal, if he paid with paypal funds then yeah he's screwed. Also its not against Paypal terms of service for virtual goods they just do not have buyer nor seller protection with them, however they will favor with the buyer if there is something stated on the invoice saying "digital goods" or "intangible item"

I used a bank account, as my PayPal acct. is devoid of funds.

[Gabi]

I thought you couldn't reverse gifts?

It wasn't a gift though. The buyer claimed it was a gift, but both the buyer and seller knew that this was a lie.

so what?

once you send a gift. you can't revers it... i think!

Really? It can. They just have to tell pp that the account has been hacked or whatelse

If using gift would be safe then why everyone is not using it? Go ahead and try selling bitcoins and have buyer pay you with paypal via gift 

[DeathAndTaxes]

The issue is PayPal rules are arbitrary and a scammer is going to know how to use them to his advantage is both directions.

For example if a noob pays by gift using a PayPal account with a balance he likely is screwed.  
So never pay by gift.  I would also point out that too sending or receiving too many gift payments can get your account frozen or cause you to lose the ability to make gift payments.
This has nothing to do with "scams" and everything to do with the fact that PayPal doesn't get paid on gift payments.

Oh so if sending by gifts can be reversed, than receiving by gifts must be safe right?
No absolutely not.  A scammer is going to be more than willing to pay by gift using:
a) a hacked/stolen PayPal Account -> auto reverse you lose
b) Claiming his account was hacked/stolen -> auto reverse you lose
c) a $0 balance PayPal account (where tx is funded in realtime by CC) -> charge back on CC -> reverse on PayPal you lose.

PayPal requires complete and absolute trust because it can be used to scam both ways.  A scammer is going to know all the ins and outs and the sucker isn't.  So even if it looks "safe" you probably can get burned.
For example FastCash4Bitcoins uses PayPal payouts but you shouldn't use our service unless you already trust us.  If you can trust us with your coins you can trust our PayPal payouts are legit too.

Sadly no matter how many times this explained people seem to get scammed.

TL/DR:
Paying by gift to an untrusted persons = dangerous.
Accepting payment by gift from an untrsuted person = dangerous.

[Adir]

The issue is PayPal rules are arbitrary and a scammer is going to know how to use them to his advantage is both directions.

For example if a noob pays by gift using a PayPal account with a balance he likely is screwed.  So never pay by gift (you can also get banned simply making too many gift payments).

Oh so gifts are safe to accept right?
No absolutely not.  A scammer is going to be more than willing to pay by gift using:
a) a hacked account - auto reverse you lose
b) claiming his account is hacked - auto reverse you lose
c) a $0 balance PayPal account where tx is funded by CC - charge back on CC -> reverse on PayPal.

PayPal requires completely and absolute trust because it can be used to scam both ways.  For example FastCash4Bitcoins uses PayPal payouts but you shouldn't use our service unless you already trust us. 

Sadly no matter how many times this explained people seem to get scammed.

TL/DR:
Paying by gift to an untrusted persons = dangerous.
Accepting payment by gift from an untrsuted person = dangerous.

Thanks for the explanation man : )

[SSSSer]

yes ty

[Graet]

the risk? Paypal shuts your account and forces you to "repay" the person you sent the coins to
from https://bitcointalk.org/index.php?topic=107161.msg1176641#msg1176641

also
Onetime I bought Bitcoins for paypal (no risk to me) sometime later the money appeared back in my credit card - I had done nothing to start this.
when I contacted the person I bought from they told me they were forced to repay and close their account
I had Bitcoins and money AND I had done nothing to charge back.....
so whilst you might not, PayPal can do as they please - and innocent people lose out...

https://bitcointalk.org/index.php?topic=484.msg1082472#msg1082472

[quattrobente]

PP sucks. PP Monopoly! bitcoiners should boycott PP

[jcpham]

I believe you are at risk for paypal charge-back in general for 180 days; 6 months. Gift, not gift, I do not think it matters. Maybe this is just a myth we spread in -otc but I believe it to be true, myself.

I can tell you that I have been questioned on a large-ish gift transaction, something to the effect of 28 days after the fact, by paypal. I responded and questioned their security practices and the issue slipped away...

Personal transaction -> Payment Owed (or the reverse) is usually considered good practice and above-board, but YMMV, especially if you are a business entity.

[ssateneth]

person that paid with paypal can claim as unauthorized transaction within 180 days of trading and win almost all the time.

[quattrobente]

so, if left with no choice but to use Paypal either to sell or buy. What is the best route or scheme to do? Is there a certain amount that sets up alarms?I have btc that i have problem encashing due to my country has little btc support.

[Bitmanic]

This is very interesting and good to know.

I user PP to sell eve PLEX and my buyers always pay by gift, i do not ask them to they just do it as i have built up good trust with them.

but after reading this i may ask them to pay normaly from now on 

[no_bless12]

tnx for the usefull informations

[no_bless12]

also, being at this topic, what could be your opinion on moneybookers?

ty