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Author Topic: Offering PayPal for Bitcoin? You're likely to be labeled a scammer - Read why  (Read 27792 times)
Speratom
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May 18, 2013, 04:42:52 AM
 #281

There have been an increasing number of posts from recently registered users wanting to buy bitcoins with PayPal. While new users may indeed be enthusiastic about Bitcoin and be accustomed to using PayPal for prior purchases, this type of request is also exactly what scammers do to steal bitcoins. It is relatively simple to charge back or dispute any PayPal payment after receiving irrevocable bitcoins, and scam purchases are used as a way to empty stolen PayPal accounts.

Traditional payment networks (including PayPal) suffer inherent weaknesses:
  • Some payment fraud is unavoidable,
  • Completely non-reversible transactions are not possible; payment processors are involved in disputes,
  • Identity fraud and remote account takeover using stolen credentials are possible,
  • Payment processors can block funds and freeze accounts,
  • You must provide your credit card or account number to sites, which can be stolen by hackers to spend your money.

Bitcoin has none of these problems:
  • Confirmed Bitcoin payments are absolutely trustable,
  • Payments are non-reversible; money cannot be recalled by the sender,
  • Identity theft is a non-issue - payment recipients don't need to obtain the identity of buyers or store personal information to take payments,
  • Nobody else can interfere with your Bitcoin balance or your ability to send or receive money,
  • You are in control of your money - when you send a payment, the recipient or hackers cannot make other fraudulent withdraws from your wallet.

Why is it difficult to purchase Bitcoins with your old-fashioned money?

If this is the fault of Bitcoin, it is because Bitcoin is too good. If you receive a payment with Bitcoin, you can be 100% sure that the money is yours and it can't be disputed or taken back out of your wallet. PayPal, Credit cards, ACH checking transfer and money wires, Chase Quickpay, Dwolla, and most any other banking payments, however, can be reversed - they are less trustworthy than the Bitcoins you are trying to buy.

This is why even Bitcoin exchanges have rigorous verification procedures - they need to verify your identity thoroughly, not because of Bitcoin, but because they are taking your government currency, transferred through banks and payment processors, which is fundamentally problematic. Exchanges that only deal with Bitcoin-based virtual currencies (such as Bitcoin to Namecoin) have no such identity requirements.

In addition, PayPal specifically disallows currency exchanges, and are Bitcoin-hostile. When you complain that you were ripped off, it's just as likely your account will be frozen.

Quote from: PayPal Acceptable Use Agreement

Prohibited Activities

You may not use the PayPal service for activities that:

...

    relate to transactions that (a) show the personal information of third parties in violation of applicable law, (b) support pyramid or ponzi schemes, matrix programs, other "get rich quick" schemes or certain multi-level marketing programs, (c) are associated with purchases of annuities or lottery contracts, lay-away systems, off-shore banking or transactions to finance or refinance debts funded by a credit card, (d) are for the sale of certain items before the seller has control or possession of the item, (e) are by payment processors to collect payments on behalf of merchants, (f), are associated with the sale of traveler's checks or money orders, (h) involve currency exchanges or check cashing businesses, or (i) involve certain credit repair, debt settlement services, credit transactions or insurance activities.

So how can you obtain bitcoins, if nobody on the Internet can tell the difference between you and a foreign crime syndicate? If you don't wish to go through the lengthy verification procedures on exchanges, I recommend you first investigate local traders who are willing to exchange bitcoins in person. Sites such as https://localbitcoins.com/ or http://www.tradebitcoin.com/ may help you find local Bitcoin users. Also, Bitcoin is for commerce - sell something and accept Bitcoin!

Fair enough, but some people actually buy stuff everyday and actually pay for it. I was done 40 bucks I paid with paypal for btc, and I doubt I'll eve see my money back, and I haven't seen a glimmer of btc. Now, according to "paypal" I have to wait until the 27 of May to be able to escalate, by that time the scammer, that I bet didn't have a single bitcoin, must have cashed out the money.
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Thrash
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May 18, 2013, 05:04:18 AM
 #282

Good post on why PayPal is not the answer.

imaclick
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May 18, 2013, 05:22:46 AM
 #283

Isn't the risk of buying bitcoins with paypal the same risk as buying anything else with paypal?  What is considered to be the safest way to do this other than going to someone in person and making sure you get the cash in hand?

It's not the risk of buying bitcoins with paypal - it's the risk of selling bitcoins for paypal.  Example:  you sell me 1 bitcoin and I buy it by paying you $100 thru paypal.  Once I receive the bitcoin from you I file a dispute on paypal.  Paypal reverses the transaction and gives me back my $100.  Now I have 1 Bitcoin I didn't have to start with, and my $100 in my paypal account.  You on the other hand have lost 1 bitcoin and have no additional money in paypal.

using Paypal for a while, never noticed there's such a policy, thanks for reminding everyone here!
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May 18, 2013, 05:51:23 AM
 #284

Thanks for the useful info! I had no idea that Paypal could issue refunds even for cash gifts.
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May 20, 2013, 03:02:16 AM
 #285

Speratom - you were wise to limit your exposure.  There are a lot of scammers hereabouts for sure, but there are also some good decent people, too. Helpful ones, even.  I recommend you lurk, a lot. Here's some very good advice: https://bitcointalk.org/index.php?topic=119896.0

It's a PITA to convert fiat to BTC, but not impossible.  Getting cash into the exchanges is also a bit spendy with the fees, especially wiring fees.  But it's less spendy than losing a lot to scammers. Take heart that you lost relatively little compared to too many others.  That said, I hope you get your money back from the bastard.

BTC: 1MrNRPo7p8DEyxn87c9BCGwrbatBQeCHc1
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May 20, 2013, 03:14:57 AM
 #286

Personally, I think paypal is good for the consumer, bad for the producer. (consumer can reverse transaction and steal money)

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May 20, 2013, 03:48:52 AM
 #287

I was one of those newbies who recently asked for some kind soul to sell me some bitcoins (which I paid via PayPal).

I think the risk cut both ways, and in all transactions (online or offline), you have to take some risk, and take measures to minimize the risk to an acceptable level.

For example, the seller asked for me to wait a couple of days before he will transfer the bitcoins to me (after PayPal payment). I took a risk because I see that the seller has been a member of this forum for awhile, and it will be unlikely he will risk his reputation here for a couple of hundred bucks (though I will soon know whether my judgement is true).

On the other hand, I am grateful to the seller for taking a chance with me, and I tried my best to put his doubts at risk.

Don't real life transactions work the same way?
milloe
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May 20, 2013, 07:52:31 AM
 #288

Thanks for the useful info! I had no idea that Paypal could issue refunds even for cash gifts. Scary
Speratom
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May 20, 2013, 02:39:59 PM
 #289

Speratom - you were wise to limit your exposure.  There are a lot of scammers hereabouts for sure, but there are also some good decent people, too. Helpful ones, even.  I recommend you lurk, a lot. Here's some very good advice: https://bitcointalk.org/index.php?topic=119896.0

It's a PITA to convert fiat to BTC, but not impossible.  Getting cash into the exchanges is also a bit spendy with the fees, especially wiring fees.  But it's less spendy than losing a lot to scammers. Take heart that you lost relatively little compared to too many others.  That said, I hope you get your money back from the bastard.


I know, we initially talked about 2 BTC, but I wanted to start with a small amount, I bet he didn't have the beginning of a bitcoin, else he could have gone for much more after the first 'test' transaction. As you see it's a kid, scamming me to scam addfocus, I mean.. Anyway I was lucky, I know.

I think maybe going local and meet the people would be a solution...
Speratom
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May 20, 2013, 03:24:34 PM
 #290


I was one of those newbies who recently asked for some kind soul to sell me some bitcoins (which I paid via PayPal).

I think the risk cut both ways, and in all transactions (online or offline), you have to take some risk, and take measures to minimize the risk to an acceptable level.

For example, the seller asked for me to wait a couple of days before he will transfer the bitcoins to me (after PayPal payment). I took a risk because I see that the seller has been a member of this forum for awhile, and it will be unlikely he will risk his reputation here for a couple of hundred bucks (though I will soon know whether my judgement is true).

On the other hand, I am grateful to the seller for taking a chance with me, and I tried my best to put his doubts at risk.

Don't real life transactions work the same way?

I agree but it works differently depending on the nature of the social relations. In a  small village where everybody knows eachother, you will be ostracized, meaning socially punished. In a big city even so-called friends just stop retuning your calls for a fiver.
marykay
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May 24, 2013, 08:03:16 AM
 #291

great way to explain it Smiley
southaussie
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"Newbie"?? Please mods change to "Oldschool"


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May 27, 2013, 02:00:47 AM
 #292

Too many paypal scammers

First BTC purchase $5.25 Aud ea, If only i knew...
Bitcointrrader200
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May 27, 2013, 04:00:55 AM
 #293

paypal is a bit rotten anyway.
There are much better alternatives like skrill or neteller or even sending money trough the mail Wink
radryan
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May 27, 2013, 03:24:10 PM
 #294

Thank you for the advise

pablotextoris
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June 02, 2013, 08:13:13 PM
 #295

So far I had no issue buying stuff via Paypal, but have to say I am using it quite rarely...

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lewisryan639
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June 07, 2013, 03:52:31 AM
 #296

Have you ever had an experience so you can share
 this Theory Or It Is Just Your Theory ?...
simplemachine
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June 16, 2013, 05:51:19 AM
 #297

Its a shame because some of us have our money in paypal.
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June 16, 2013, 06:19:14 AM
 #298

PayPal will always decide against the seller when bitcoins are concerned.
Additionally they have been deleting bitcoin listings and freezing seller accounts recently.
They dont like btc and btc doesnt like them.
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June 16, 2013, 04:42:33 PM
 #299

Bitcoin is for commerce - sell something and accept Bitcoin!

Easier said than done, but some of us are trying our hardest.......

My German Property- facebook.com/mygermanproperty
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June 16, 2013, 04:43:34 PM
 #300

Its a shame because some of us have our money in paypal.

transfer it to your bank account as soon as you can then, because I'd rather have my money in a furnace and hand a 4 year old the on and off switch to play with.

My German Property- facebook.com/mygermanproperty
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