Bitcoin and Fraud

[raphma]

Assuming a merchant accept Bitcoin,

You as a shopper, place an order, and that merchant did not deliver, or sent to the wrong address, or sent a fake product.

You can not reverse the payment, you can get your bitcoins back, and the only thing you can do it leave a negative feedback.

Of course, there are many other scenarios, like phishing websites, fake websites, selective scams, and so on

What are your thoughts and ideas to prevent these scams.

generally, the same thing apply to USD or EUR or any other payment option....
and the solutions could be applied to bitcoin too...

big websites generally offer service like escrow(in case of p2p) or you can buy from a trusted seller.

ps: your history illustrate the buyer side, not the merchant/seller.

[gandame]

Assuming a merchant accept Bitcoin,

You as a shopper, place an order, and that merchant did not deliver, or sent to the wrong address, or sent a fake product.

You can not reverse the payment, you can get your bitcoins back, and the only thing you can do it leave a negative feedback.

Of course, there are many other scenarios, like phishing websites, fake websites, selective scams, and so on

What are your thoughts and ideas to prevent these scams.

As you can see now a many are fraudsters they want to get a easy money. The one thing you do don't trust anyone and  best thing is don't buy online using bitcoin.  You can cash out your bitcoin in real money then go to buy the things you want.

[LittleBitFunny]

It is pretty much possible to scam with every Payment method there is. Bitcoin is not different here, but since it is new people pay extra attention to scams and maybe scammers also test it so that there actually is a bit more scamming going on. However people are using all sorts of payment methods without being perfectly safe, because the wast majority is honest and it works most of the time. For big transactions you take extra measures to be safe.
Right now Bitcoin is developing more into the store of value direction rather then everyday cash, so we might see extensive use of escrow services. It wouldn't surprise me to see to see 2 or 3 big escrow companies in the future that get used for 90% of all transactions.
Escrows do cost more and take some time to, so i would expect that we just use Bitcoin normally and and accept the relatively rare scams as normal.
As a society we can do something against scams, but this is time and cost intensive. Especially to kill off the very last bit from under 1 % to 0 is very hard, time and cost intensive. The extra effort to do this is unproportional high, so we as society accept it. This btw is true for all crimes. 

This is not quite accurate.  Bitcoin is particularly used for scams, in a way which transcends other currencies, because of its nature.  Bitcoin is designed in a way which facilitates scams.  Fortunately, anyone with a bit of scrutiny and intelligence can tell the difference between scams and legitimate businesses (or people) in about 95% of cases with some basic checks.

Fortunately the use of escrow is very convenient with Bitcoin as well with trusted members.  You can also feel secure because you only get scammed out of as much as you send to the seller, so in one way getting scammed with Bitcoin is better for the victim as they don't reveal their private information and are therefore not risking getting their accounts stolen.

I think that the most major companies are quite legitimate and people would assume that these services would scam them.  I don't know a lot of people that buy products from sites other than Amazon, eBay etc, and you know that if these sites starting accepting Bitcoin they wouldn't magically turn into scams.

[Senor.Bla]

It is pretty much possible to scam with every Payment method there is. Bitcoin is not different here, but since it is new people pay extra attention to scams and maybe scammers also test it so that there actually is a bit more scamming going on. However people are using all sorts of payment methods without being perfectly safe, because the wast majority is honest and it works most of the time. For big transactions you take extra measures to be safe.
Right now Bitcoin is developing more into the store of value direction rather then everyday cash, so we might see extensive use of escrow services. It wouldn't surprise me to see to see 2 or 3 big escrow companies in the future that get used for 90% of all transactions.
Escrows do cost more and take some time to, so i would expect that we just use Bitcoin normally and and accept the relatively rare scams as normal.
As a society we can do something against scams, but this is time and cost intensive. Especially to kill off the very last bit from under 1 % to 0 is very hard, time and cost intensive. The extra effort to do this is unproportional high, so we as society accept it. This btw is true for all crimes. 

This is not quite accurate.  Bitcoin is particularly used for scams, in a way which transcends other currencies, because of its nature.  Bitcoin is designed in a way which facilitates scams.  Fortunately, anyone with a bit of scrutiny and intelligence can tell the difference between scams and legitimate businesses (or people) in about 95% of cases with some basic checks.
...

I guess we disagree here. Like i said we might see more scams now because Bitcoin is new. That is why people fall for "the double your money" scam and such. But i would argue that it is no because of the technical aspects. What do you have in mind? No charge backs? We don't have that with cash and they are not so common with bank accounts and credit cards. I don't expect significantly more scams with Bitcoin just because of its nature.

[Lancusters]

Assuming a merchant accept Bitcoin,

You as a shopper, place an order, and that merchant did not deliver, or sent to the wrong address, or sent a fake product.

You can not reverse the payment, you can get your bitcoins back, and the only thing you can do it leave a negative feedback.

Of course, there are many other scenarios, like phishing websites, fake websites, selective scams, and so on

What are your thoughts and ideas to prevent these scams.

As you can see now a many are fraudsters they want to get a easy money. The one thing you do don't trust anyone and  best thing is don't buy online using bitcoin.  You can cash out your bitcoin in real money then go to buy the things you want.

What the Internet don't buy things for other currencies? Scammers do not pay attention to the currency. It does not matter what currency you have selected. On the Internet you need to buy only in the checked areas.

[DomainMagnate]

What are your thoughts and ideas to prevent these scams.

Either do your own due diligence (stick with established, well rated merchants) or use a credit card when shopping somewhere "less than reputable".

Well even reputed merchants can sometimes send wrong products and refuse to acknowledge it.
This has happened with me once.Although it didn't involve bitcoin but the merchant was reputed online e-commerce website.

[BuySomeBitcoins]

My question was about protecting the shopper, the merchant has nothing to worry about, he get his funds, no chargebacks or any lock on his wallet.

For those who answered with "use a credit card", well thank you genius, but the point here is using and promoting bitcoin while keeping both sides of the purchase satisfied.
For those who answered with "Do the same if you paid with another method", Paypal / CC / Wallets / Bank accounts have a solution to report fraud and get your funds back, not the case for Bitcoin.


Escrow is a good solution for digital products, but merchants will not get their funds fast, thus it is not convenient for the merchant to wait days till a shopper receive his order, and if he did, that shopper will probably not confirm.

Will see if somebody have something better to suggest

[ricardobs]

Unfortunately because of anonimity and it's virtual nature, lack of regulations, Bitcoin is very convenient for different kind of scam and fraud. Often, when that happens you don't have much choice to get your coins back or to report someone for fraud so before you get into any kind of business with Bitcoins you have to be very careful, do the due dilligence and check everything twice.

You are right it's rather better to be aware and smart rather than asking changes in the bitcoins while being stubborn of our own. If you don't trust a service provider and you yet want to try it, the best way is to use an escrow.
Yeah, one thing that I sincerely want is the development of an escrow site which is active 24/7

[n691309]

Assuming a merchant accept Bitcoin,
You as a shopper, place an order, and that merchant did not deliver, or sent to the wrong address, or sent a fake product.
You can not reverse the payment, you can get your bitcoins back, and the only thing you can do it leave a negative feedback.
Of course, there are many other scenarios, like phishing websites, fake websites, selective scams, and so on
What are your thoughts and ideas to prevent these scams.

There are lots of scenarios where chargebacks should be applied but in this case if you want to make a platform like shopify or similar to it you have to send the payments after a month or like Google Adsense where the funds of this month sends at the end of next month, by this you can make the chargebacks and other things and not allowing the merchant to withdraw the profit. Check also Aliexpress they handle the disputes of their customers very well.

[Qartersa]

On the seller's side, since you are accepting bitcoins, generally you are safe in the deal if you require your customers to send first. If the customers sent it to the wrong address that is his fault and the seller does not have to send the product. If the seller sends a wrong address that is the sellers fault, and the seller must send the product as he was the one who had a mistake and the customer has already paid.

[naidray]

to ensure security in the bitcoin transactions and prevent fraud, it may be very useful to use escrow. but, it is very difficult to find it. if no escrow, try to see the feedback obtained by the site, whether it is good or not. you can see a site with comments from previous visitors.

Well tell me once site or shop that scammed a buyer, I mean that accepted bitcoins and scammed .. show me please !
Because it's the sellers who are always scammed and another drawback with chargeback is that if chargebacks are enabled then the currency would be of course centralized which is not the case with bitcoins.

While Bitcoin is very easy for fraud due to its pseudonymity and convenience, trusted vendors who begin to accept Bitcoin will always be legitimate.  If, for example, Amazon started accepting Bitcoin payments, it's not like they would scam people just because people are paying with Bitcoin.  What's important is that the site verifies their owners and other details about their business.

You are right the non reversible mode is actually taken as a positive rather than a negative aspect. By the way mate amazon hasn't yet started to accept bitcoins as far as I know, though there are indirect ways available to do that but not directly. I think apart from an escrow there is not much that user's can do to void scammers.

[shinratensei_]

Assuming a merchant accept Bitcoin,

You as a shopper, place an order, and that merchant did not deliver, or sent to the wrong address, or sent a fake product.

You can not reverse the payment, you can get your bitcoins back, and the only thing you can do it leave a negative feedback.

Of course, there are many other scenarios, like phishing websites, fake websites, selective scams, and so on

What are your thoughts and ideas to prevent these scams.

Just try to avoid the suspicious thing, And that's the usefulness of the escrow.

Escrow was providing you with a middle way on your transaction. to keep your transaction is safe and securing your interesting stuff.

[beerlover]

Assuming a merchant accept Bitcoin,

You as a shopper, place an order, and that merchant did not deliver, or sent to the wrong address, or sent a fake product.

You can not reverse the payment, you can get your bitcoins back, and the only thing you can do it leave a negative feedback.

Of course, there are many other scenarios, like phishing websites, fake websites, selective scams, and so on

What are your thoughts and ideas to prevent these scams.

There are less cases where a seller scams as compared to the buyer's scams and hence if chargebacks are allowed almost all the sellers would be worried. This is actually the biggest drawback with paypal and a reason why mos of the people prefer bitcoins over paypal.
And how can a seller scam man ? I mean you would of course buy from genuine and verified users, no ?

[jakelyson]

What you want OP is a charge back which unfortunately is not available with bitcoin. All you can do is purchase only on trusted sellers, use escrow, or use other payment method which have charge back policy. Use paypal instead if you are not sure with the merchandiser. They have chargeback.

[BeGoods]

therefore it would be better if you use an escrow for any transaction in bitcoin dude it will be safe, look bitcoin kept anonymous so better be careful

[Sadlife]

Bitcoin anonymity has its pros and cons also because of it's anonymous Feature criminals can use it in many different illegal ways.
Best method to avoid being scam:
Check the site reviews
Check the websites traffic
Check its alexa

Do the some background research first to the site before purchasing in it just to check the sites legitimacy.

[ASHLIUSZ]

Frauds and hackers are found much when it comes to bitcoin. Even with highly secure trading websites hackers easily getting and stealing bitcoin targeting person who new to the trading business. So its better to buy or sell once after going through a good study all the necessary things need to be considered before making a move.

[BuySomeBitcoins]

pretty much same answers, a bit useless.

Escrow : That will not apply since you are buying from the merchant directly.
Paypal : We are talking about Bitcoin here, can we avoid the terms "Credit card / Paypal / Whatever" ?
Seller protection : We know that BTC payment are irreversible, hence how to protect the shopper from scam sellers.

I am glad to see that most of you agree on Escrow.

[RoommateAgreement]

Assuming a merchant accept Bitcoin,

You as a shopper, place an order, and that merchant did not deliver, or sent to the wrong address, or sent a fake product.

You can not reverse the payment, you can get your bitcoins back, and the only thing you can do it leave a negative feedback.

Of course, there are many other scenarios, like phishing websites, fake websites, selective scams, and so on

What are your thoughts and ideas to prevent these scams.

there is a big difference here!

when the payment system has charge back it means any random person on the internet with complete anonymity can use any payment method and charge it back.

when it doesn't have it (like using bitcoin) if the merchant pulls a scam you can find him because it is one person not just a random anonymous person on the internet. they can be registered, give their information have a real physical shop,.... and lots of other things to make the trust and people easily use them.

[Capradina]

to ensure security in the bitcoin transactions and prevent fraud, it may be very useful to use escrow. but, it is very difficult to find it. if no escrow, try to see the feedback obtained by the site, whether it is good or not. you can see a site with comments from previous visitors.

Escrow now emerging, but there are indeed only escrow that was out of line from their goals while opening the service. but you don't have to worry anymore about escrow in this forum, because now there are already some very trusted escrow and give something good. You need to know the comments are not necessarily provided by others, they can just make another account and doing the commentary in order to provide a confidence level of a person.