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Author Topic: Suggestion for dwdollar & other BTC traders: How to fix the SCAM problem  (Read 7044 times)
ShadowOfHarbringer
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October 25, 2010, 10:09:04 AM
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I see that bitcoinmarket registrations are still closed, so I'm proposing a solution which should fix the paypal, moneybookers & other "soft" currencies scam problem, so the site can be opened immediately:

1. Allow trading in "hard", non-drawbackable currencies (such as Pecunix, LibertyReserve, Wester Union etc.) to everybody.

2. Allow trading in "soft" currencies only for users which are trusted. Trusted means:
a) Are registered for 3 months or longer, or are registered & trusted now
b) Have traded at least X BTC minimum and have perfect trade history without any scams or other problems
c) Have verified their credentials through some mechanism - credit card, mail verify code delivery or personal digital signature.
The solution can be composed of all a) b) and c) or their combinations.

3. Force all Paypal & Moneybookers transfers to wait at least 5 days before they can be finalized. This should solve the stolen credit cards reversal problem.

4. Allow paying with paysafecard and such.

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October 25, 2010, 11:05:56 AM
 #2

I see that bitcoinmarket registrations are still closed, so I'm proposing a solution which should fix the paypal, moneybookers & other "soft" currencies scam problem, so the site can be opened immediately:

1. Allow trading in "hard", non-drawbackable currencies (such as Pecunix, LibertyReserve, Wester Union etc.) to everybody.

2. Allow trading in "soft" currencies only for users which are trusted. Trusted means:
a) Are registered for 3 months or longer, or are registered & trusted now
b) Have traded at least X BTC minimum and have perfect trade history without any scams or other problems
c) Have verified their credentials through some mechanism - credit card, mail verify code delivery or personal digital signature.
The solution can be composed of all a) b) and c) or their combinations.

3. Force all Paypal & Moneybookers transfers to wait at least 5 days before they can be finalized. This should solve the stolen credit cards reversal problem.

4. Allow paying with paysafecard and such.

Sounds good to me. I don't see any risk that this would leave.

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October 25, 2010, 11:25:01 AM
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It is still not foolproof. Even trusted, or longstanding members rip a person off every now and then, it would just encourage them to make a few transactions first in order to build a false sense of trust, then make a larger order and claim fraud of some sort with Paypal or credit card. I don't see paypal being a big problem for those who want to withdraw from a market, but deposits are just impossible unless you ABSOLUTELY trust the person, even with verifications. When you are presented with a chargeback, it's up to you to present evidence that shows you actually sent something(which is hard to do with digital goods), evidence that what you sent is correct and as described, and evidence that you have sent to the right person. Even with presenting this information, you might still lose because of PP or your CC unable to grasp the idea of Bitcoin.

It's a good idea, and it would help against fraud, but not entirely.

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October 25, 2010, 01:06:15 PM
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It is still not foolproof. Even trusted, or longstanding members rip a person off every now and then, it would just encourage them to make a few transactions first in order to build a false sense of trust, then make a larger order and claim fraud of some sort with Paypal or credit card.

I suppose - correct me if I'm wrong - that most scams were made with stolen CC or PP accounts... using your own identity while performing a scam like this looks risky.
And for the case of stolen accounts, the thief has to act fast, s/he can't waste time with small transactions.

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jgarzik
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October 25, 2010, 03:39:21 PM
 #5

No system is foolproof, but ShadowOfHarbringer's suggestions are good.  That should eliminate 80% of fraud, which is "hit-and-run" scammers with stolen accounts, who must liquidate in a hurry before account owner notices.

The remaining frauds are
  • person with good reputation, who has their account hacked
  • person with good reputation, who, one day, without warning, "spends" that reputation on a massive fraud

The latter has occurred several times on eBay, where a titanium powerseller (the highest seller ranking) who has been completing sales for happy buyers suddenly switches to "evil mode", where they take customer money but never ship product.

I call this the "sleeper cell" fraud.  An intentional, long-term plan is the most difficult to prevent.

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kiba
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October 25, 2010, 11:53:46 PM
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No system is foolproof, but ShadowOfHarbringer's suggestions are good.  That should eliminate 80% of fraud, which is "hit-and-run" scammers with stolen accounts, who must liquidate in a hurry before account owner notices.

The remaining frauds are
  • person with good reputation, who has their account hacked
  • person with good reputation, who, one day, without warning, "spends" that reputation on a massive fraud

The latter has occurred several times on eBay, where a titanium powerseller (the highest seller ranking) who has been completing sales for happy buyers suddenly switches to "evil mode", where they take customer money but never ship product.

I call this the "sleeper cell" fraud.  An intentional, long-term plan is the most difficult to prevent.


I doubt there are any algorithm or any human being that can detect if somebody is doing this kind of fraud, unless he is a serial fraudster.

ShadowOfHarbringer
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October 26, 2010, 11:01:47 AM
 #7

I doubt there are any algorithm or any human being that can detect if somebody is doing this kind of fraud, unless he is a serial fraudster.

I never said (or did I ?) that it will stop all scams.
But it is MUCH better than nothing.

I only wanted to create a solution which will enable re-opening of the trade websites.

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October 26, 2010, 02:06:30 PM
 #8

A distinction between "hard" and "soft" currencies is an important one.  I already allow sellers the option of a 10-day delay, although it's not enforced.  Regardless, I'm saving all good ideas for the new design.  I'm keeping registration closed so I can focus on this new design.  If it goes on too long, I may hold an open registration day for people who don't have a forum reputation, verifiable ID, or don't know anyone who can vouch for them.  Otherwise, you can email me and I'll set up an account for you.  I'd rather have it open for everyone, but the main concern is to protect those already registered.
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November 16, 2010, 09:18:31 PM
 #9

I see that bitcoinmarket registrations are still closed, so I'm proposing a solution which should fix the paypal, moneybookers & other "soft" currencies scam problem, so the site can be opened immediately:

1. Allow trading in "hard", non-drawbackable currencies (such as Pecunix, LibertyReserve, Wester Union etc.) to everybody.

2. Allow trading in "soft" currencies only for users which are trusted. Trusted means:
a) Are registered for 3 months or longer, or are registered & trusted now
b) Have traded at least X BTC minimum and have perfect trade history without any scams or other problems
c) Have verified their credentials through some mechanism - credit card, mail verify code delivery or personal digital signature.
The solution can be composed of all a) b) and c) or their combinations.

3. Force all Paypal & Moneybookers transfers to wait at least 5 days before they can be finalized. This should solve the stolen credit cards reversal problem.

4. Allow paying with paysafecard and such.
I hope something like this will be implemented, it's too darn hard to get money from the 'real economy' into bitcoins at the moment.
You have to register on some fishy site to buy liberty reserve with your credit card, then another site to swap them for Bitcoins. Going from Paypal/Moneybrokers/etc seems to be completely impossible at the moment.
Although I'd really like to play with this, this is way too much trouble for me. And takes too much time.

Bitcoin Core developer [PGP] Warning: For most, coin loss is a larger risk than coin theft. A disk can die any time. Regularly back up your wallet through FileBackup Wallet to an external storage or the (encrypted!) cloud. Use a separate offline wallet for storing larger amounts.
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November 17, 2010, 05:24:27 AM
 #10

to witchspace: You can buy bitcoins directly from me using Liqpay.com to transfer your money from Visa or Mastercard to my acc. It will take you 5-15 min to do it. All you need is CC and mobile phone to receive SMS with one-time password. If interested send me PM for detailed instructions.
ShadowOfHarbringer
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November 17, 2010, 08:54:10 AM
 #11

to witchspace: You can buy bitcoins directly from me using Liqpay.com to transfer your money from Visa or Mastercard to my acc. It will take you 5-15 min to do it. All you need is CC and mobile phone to receive SMS with one-time password. If interested send me PM for detailed instructions.

Isn't Liqpay a soft currency with reversable transactions the same as Paypal, MoneyBookers or Credit Cards ?
Or am I wrong ?

So this doesn't solve the general problem.

davout
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November 17, 2010, 11:28:31 AM
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to witchspace: You can buy bitcoins directly from me using Liqpay.com to transfer your money from Visa or Mastercard to my acc. It will take you 5-15 min to do it. All you need is CC and mobile phone to receive SMS with one-time password. If interested send me PM for detailed instructions.

Isn't Liqpay a soft currency with reversable transactions the same as Paypal, MoneyBookers or Credit Cards ?
Or am I wrong ?

So this doesn't solve the general problem.

AFAIK liqpay transactions aren't reversible, someone correct me if i'm wrong

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November 17, 2010, 11:52:25 AM
 #13

Any soft money based on a credit card transaction can be reversed.

Liqpay does get chargebacks and they do claw back from those stealer-munkees.

You guys cause me to shake my head. This bitcoin project is designed to address the privacy and fraud problems of tele-commerce. You guys seem to want to thwart that by inviting strangers to check your credit and soliciting money with strings attached.

It's been this same old story since we started e-gold back in 98. There is one particular nationality of people who just can't seem to understand the difference between cash and credit.


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ShadowOfHarbringer
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November 17, 2010, 12:18:29 PM
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It's been this same old story since we started e-gold back in 98. There is one particular nationality of people who just can't seem to understand the difference between cash and credit.

Actually, I'm not talking about "credit" cards, but "payment" cards.
In my country, "payment" cards are very popular, while "credit" cards not so much.

The only difference between both of them is that you cannot take credit with "payment" card.
I do not want to have anything to do with "credit", I just care about easyness of money transfer which is given by credit/payment cards & paypal.

Few minutes after making the payment money are avaiable on the receiver's account - that cannot be beaten by anything at the moment (except bitcoin).

nanaimogold
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November 17, 2010, 12:27:07 PM
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Well sure, but then those people want to pay for the purchase cards with their Visa. lol

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November 17, 2010, 12:29:10 PM
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Liqpay is not chargebackable. Go to the site and check it for yourself!

to Nanaimogold: you just trying to get rid of competitors and use dirty methods for this. Don't post fake information if you don't know this for sure!

If somebody want to make sure the Liqpay transaction is final just try to send as small as 1$ to your friend and then try to rise a dispute to get the money back Wink
ShadowOfHarbringer
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November 17, 2010, 01:22:03 PM
 #17

Liqpay is not chargebackable. Go to the site and check it for yourself!

I just checked it. Seems to be true.

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November 17, 2010, 03:47:54 PM
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Few minutes after making the payment money are avaiable on the receiver's account - that cannot be beaten by anything at the moment (except bitcoin).
In France, payment cards charges are reversible.

As for the liqpay thing I think both points are true :
 - They can't be charged back
 - They do get charge backs,

So as I understand it, they get some of their payments reversed, but these reversals never reach the merchant.
But if that is so, then why did mt gox drop them ? (or why did mt gox get dropped by mt gox ?) too many chargebacks on liqpay's side?


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November 17, 2010, 04:02:56 PM
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Exchangers could maybe use an international clearing service like http://www.clearing-house.net/ if they accept small customers.

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ShadowOfHarbringer
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November 17, 2010, 06:42:28 PM
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But if that is so, then why did mt gox drop them ? (or why did mt gox get dropped by mt gox ?) too many chargebacks on liqpay's side?

Mtgox dropped liqpay ?
I have never seen "liqpay" option on mtgox website.

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