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Author Topic: Why is selling bitcoins on eBay/PayPal High Risk??  (Read 3277 times)
fractureproof
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August 29, 2015, 06:41:12 PM
 #1

I'm new to this whole bitcoin thing, finally got my first fraction after waiting a week through coinbase.

I don't understand why selling bitcoin w/ PayPal is high risk. There is the blockchain record of all transactions, so if I want to sell on eBay, I would instruct the winner to send a note in his/her PayPal payment of their wallet address and maybe to include some statement such as "this is a unique wallet address, public bitcoin blockchain record of payment to this address is agreed as proof of delivery".

Am I missing something?
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August 29, 2015, 06:59:01 PM
Last edit: August 29, 2015, 07:13:33 PM by odolvlobo
 #2

The scammer paying with Paypal simply contacts Paypal and says that his account was hacked. Paypal will then deduct the money from the sellers account and return it to the scammer. The scammer keeps the bitcoins.

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August 29, 2015, 06:59:40 PM
 #3

It's very easy to have a Bitcoin Wallet anonymously.
It's very easy to reverse a Paypal transaction.

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August 29, 2015, 07:07:48 PM
 #4

So a scammer just tells PayPal "my account was hacked" and gets money back at sellers penalty with no investigation? If sold on eBay means eBay account was hacked + associated PayPal account hacked + record of actual payment to provided bitcoin address in payment note.

hmmm.. PayPal people must be pretty stupid...
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August 29, 2015, 07:17:24 PM
Last edit: August 29, 2015, 09:11:28 PM by odolvlobo
 #5

So a scammer just tells PayPal "my account was hacked" and gets money back at sellers penalty with no investigation? If sold on eBay means eBay account was hacked + associated PayPal account hacked + record of actual payment to provided bitcoin address in payment note.

hmmm.. PayPal people must be pretty stupid...

No, they aren't stupid. It is purely business. The seller assumes the risk of fraud. PayPal has to side with someone, so they usually side with the buyer. They don't gain much from investigating.

Outside of ebay (craigslist, for example), there are man-in-the-middle scams. The scammer agrees to buy bitcoins from you and to sell something to someone else. They give the other person your paypal account. Then the other person sends you the money and you send the bitcoins to the scammer. When the other person doesn't receive the item they bought, they get contact PayPal and get their money back (note they were actually scammed in this case). The scammer keeps your bitcoins.

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August 29, 2015, 07:19:06 PM
 #6


So a scammer just tells PayPal "my account was hacked" and gets money back at sellers penalty with no investigation? If sold on eBay means eBay account was hacked + associated PayPal account hacked + record of actual payment to provided bitcoin address in payment note.


Paypal almost always side with the buyer regardless of what the product is. When it comes to digital goods they'll be even less inclined to do anything. That's just how they roll. At least you're informed enough to know not to mess with it there.

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August 29, 2015, 08:44:05 PM
 #7

Pretty basic really...

Bitcoin -> Once it is sent it is irreversible

Paypal -> Once payment is made all a buyer has to do is phone Paypay with an excuse why payment need to be reversed. They often comply, especially if the excuse has the word "fraud" in it.

So pretty much what everyone has been telling you, it goes something like this: You put BTC up for sale, an unscrupulous buyer contacts you to negotiate the sale. They may even be willing to buy at a premium, you send them Bitcoin and think you are covering your tracks by putting information in the Paypal note. Buyer receives your BTC, complains to Paypal, either immediately or waits a day or two, and submits a complaint. Paypal reviews the complaint and oftentimes agrees with the Buyer and refunds them the payment. You are out both your Money and Bitcoin.

So basically you are taking 100% risk and the buyer is only taking a small if not 0 risk of Paypal not issuing them their refund. The only way I would see Paypal not siding with the buyer would be if they had a record of such transactions, but in either case the odds are not on your side in such a transaction.
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August 29, 2015, 08:48:09 PM
 #8

Outside of ebay (craigslist, for example), there are man-in-the-middle scams. The scammer agrees to buy bitcoins from you and to sell something to someone else. They give the other person your paypal account. Then the other person sends you the money and you send the bitcoins to the scammer. When the other person doesn't receive the item the bought, they get contact PayPal and get their money back (note they were actually scammed in this case). The scammer keeps your bitcoins.
WoW! I did not know of this. Does similar things take place on LBC as well ?
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August 29, 2015, 08:51:59 PM
 #9

I'm new to this whole bitcoin thing, finally got my first fraction after waiting a week through coinbase.

I don't understand why selling bitcoin w/ PayPal is high risk. There is the blockchain record of all transactions, so if I want to sell on eBay, I would instruct the winner to send a note in his/her PayPal payment of their wallet address and maybe to include some statement such as "this is a unique wallet address, public bitcoin blockchain record of payment to this address is agreed as proof of delivery".

Am I missing something?
It is also I their TOS that they prohibit explicitly the trade of digital/crypto currencies via PayPal. Why? Well they probably see crypto currencies as a danger so they don't want to help a spread and adoption of the cryptos. Also, by doing the chargeback, they give crypto a bad name and a lot of unhappy users.

I know that someone will tell that this is a conspiracy theory above, but if you think about it a bit more, for Paypal, a sale of a digital currency should be an easy money earned. They just check a blockchain and they side with the buyer or seller. No need to check the delivery confirmations, post offices, and investigate further. Few clicks and you investigate everything.

So why don't they do it and earn easy money? They hate Bitcoin.
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August 29, 2015, 08:52:39 PM
 #10

Outside of ebay (craigslist, for example), there are man-in-the-middle scams. The scammer agrees to buy bitcoins from you and to sell something to someone else. They give the other person your paypal account. Then the other person sends you the money and you send the bitcoins to the scammer. When the other person doesn't receive the item the bought, they get contact PayPal and get their money back (note they were actually scammed in this case). The scammer keeps your bitcoins.
WoW! I did not know of this. Does similar things take place on LBC as well ?

I suppose in this example you could at least verify the email address is the same one registered with PayPal, but again in either scenario the scammer is still likely to win-out since Bitcoin can not be reversed. Best policy is simply avoid using PayPal when selling Cryptocurrencies. In fact, the best policy may be to avoid PayPal altogether. Wink
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August 29, 2015, 09:15:17 PM
 #11

Outside of ebay (craigslist, for example), there are man-in-the-middle scams. The scammer agrees to buy bitcoins from you and to sell something to someone else. They give the other person your paypal account. Then the other person sends you the money and you send the bitcoins to the scammer. When the other person doesn't receive the item the bought, they get contact PayPal and get their money back (note they were actually scammed in this case). The scammer keeps your bitcoins.
WoW! I did not know of this. Does similar things take place on LBC as well ?

Yes, it is a very high risk on LBC, and experienced sellers take a lot of precautions to avoid it.

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fractureproof
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August 29, 2015, 09:59:18 PM
 #12

Such short sightedness by PayPal... Sure they could consider bitcoins a competitor to their business... but the need to easily convert between bitcoin & fiat exists and likely to persist "forever".. so providing an easy way for people to trade and convert, they make $$$ on their high fees (which I'm willing to pay for convenience).

To be honest, I've bought and sold tons of stuff on eBay w/ PayPal and had only one problem long long ago where seller didn't send my purchase and disappeared (before the days of guarantees). They work pretty good and IMO offer good service.

However, I'm pretty discouraged that they would always favour the buyer, especially when there is such easy proof of the transaction.

I'm just starting with bitcoin, and I want to buy some.. I want to buy 10 BTC right now from my computer and I can't.

Got my first $200 worth off coinbase.. took a week.. just initiated a wire transfer with coinsetter.. there goes another week..

Hey I was able to buy $25 instantly since my first transaction at coinbase went through.. next week I can do another one..
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August 29, 2015, 10:18:05 PM
 #13

Its a different story for Indian PayPal users.If you haven't linked your credit card,PayPal can not charge back.They have to transfer funds to users linked bank account after 48 hours because of RBI instructions. Once the money reaches your account, PayPal can't charge back it.All they can do is show the amount in negative on your account so that they can deduct it the next time you receive payment

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August 29, 2015, 11:40:03 PM
 #14

What about if you restrict sales to only people with some level of feedback score on eBay? I'd imagine that should mitigate chance for fraud?
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August 29, 2015, 11:55:03 PM
 #15

What about if you restrict sales to only people with some level of feedback score on eBay? I'd imagine that should mitigate chance for fraud?

You would then have people trying to buy using bought or hacked ebay accounts.
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August 30, 2015, 01:22:02 AM
 #16

Such short sightedness by PayPal... Sure they could consider bitcoins a competitor to their business... but the need to easily convert between bitcoin & fiat exists and likely to persist "forever".. so providing an easy way for people to trade and convert, they make $$$ on their high fees (which I'm willing to pay for convenience).

To be honest, I've bought and sold tons of stuff on eBay w/ PayPal and had only one problem long long ago where seller didn't send my purchase and disappeared (before the days of guarantees). They work pretty good and IMO offer good service.

However, I'm pretty discouraged that they would always favour the buyer, especially when there is such easy proof of the transaction.

I'm just starting with bitcoin, and I want to buy some.. I want to buy 10 BTC right now from my computer and I can't.

Got my first $200 worth off coinbase.. took a week.. just initiated a wire transfer with coinsetter.. there goes another week..

Hey I was able to buy $25 instantly since my first transaction at coinbase went through.. next week I can do another one..
PayPal might consider Bitcoin to be a competitor, however PayPal <--> bitcoin trades are very high risk for PayPal because often times PayPal accounts actually are hacked.

The difference between buying a physical item on eBay and buying a digital item is that a physical item can easily be traced, so if an item is shipped to the address associated with your PayPal account (as what sellers should insist on doing), then if you dispute the transaction, you would be told that you need to return the item for PayPal to possibly siding with you (assuming there is proof of delivery). With digital items on the other hand, it is difficult to prove that the actual owner of the account was the one who received the digital item.

If you wish to buy 10 BTC then you should open up a thread in Currency Exchange offering to buy that much BTC and offering Cash-like payment options (e.g. cash deposit into someone's bank account, Western Union, Money Gram, W2W, etc.)......just be sure to use escrow if you do trade because of the large number of scammers.
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January 30, 2016, 10:04:16 PM
 #17

has anyone had an experience with selling bitcoins on ebay+paypal and had one reversed after several weeks r even months.  I've been doing it for a little while, but i know that it is true a buyer and back out up to 60 days later!

That said, I've been requiring copies of drivers licenses AND proof that they live where the paypal account is registered.  So, at least if someone does this to me more than once I could have them arrested for a Felony under state law and it is a crime under Federal law to willfully use the internet and or credit cards in a scheme to commit fraud.  It is punishable by 10 years or more in prison for the fraudulent buyer.
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January 31, 2016, 10:01:18 AM
 #18

I did a deal with someone on ebay / paypal

They put up a hot wheels car worth 50 cents for $100
I bought the 100$ hot wheel and he shipped it to me and
once he got proof I got the hot wheel he then put the btc
in my wallet.

At that point he had proof of delivery of the car. Its a pain in
the butt but the only way its truly safe

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February 03, 2016, 04:23:45 AM
 #19

I did a deal with someone on ebay / paypal

They put up a hot wheels car worth 50 cents for $100
I bought the 100$ hot wheel and he shipped it to me and
once he got proof I got the hot wheel he then put the btc
in my wallet.

At that point he had proof of delivery of the car. Its a pain in
the butt but the only way its truly safe


Can you elaborate on this?  I heard a thread where someone mentioned something like this where you sold btc to someone for paypal and they sent them certified mail and it required the person selling paypal to sign it.  He said if you do this... sounds similar to what you describe here... then paypal cannot get reversed?


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