Secured payments, consumer protection and buyer recourse...

[Bitcoinorama]

Credit Cards, secured payments and what you as buyers should be looking for...

Over the last few months there have been an increasing number of fraudulent companies appearing, and disappearing, leaving many forum members burnt along the way.

There are also an increasing amount of seemingly genuine companies that despite all the evidence suggesting they are indeed legitimate, don't want to share the same risk as a genuine company in a standard operating environment.

This is a huge concern, as due to the very nature of 'pre-ordering' your funds are tied up and inaccessible until either you receive your goods, or you don't. No company's own 'buyer protection' can help you if they fail to deliver on time and cannot afford the overheads to operate. None. They will have entered administration and your non-secured funds (mostly BTC) are gone until which point if you are organised enough to pursue some form of legal recourse, you may if lucky see a small percentage of what you gave.

In short unless there is some form of Independent third party consumer protection via credit card payment you would be insane to purchase ANY pre-orders.

How many times do you need to lose funds and be burnt to learn otherwise?

The Butterfly Labs customers stand a chance to be reimbursed if they paid by credit card (not debit card) dependant on their country of origin and card issuer. The Bitsyncom/Avalon guys (and girls) don't.

Issuing banks, payment processors, Paypal, etc. goto huge lengths to perform background checks and verify the business practices of a prospective partner before allowing their company to trade with their name. Butterfly Labs have made this a lot harder for prospective companies entering an agreement with Paypal. To a great degree this is very helpful. It's very time intensive for the prospective company, as the checks are very thorough if Paypal are going to offer their brand and consumer protection to a worthwhile partner.

Any ASIC manufacturer not pursuing this route is not worth considering. They aren't taking theor customers welfare seriously. They want an easy get out clause and are not committed to seeing your side of the deal through fairly. I cannit stress this enough. They neither have invested the time, nor effort required, cannot meet Paypal's stringent criteria, do not care about their customers purchase, or don't have the faith in their own abilities, or ability to deliver their product on time.

In essence without card payment protection you are diving naked with sharks and an open wound. You're crazy. Fact.

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What do you need to be aware of?

Each country has various consumer protection laws and it would be ideal if in this thread we can share what they are, so please post what you know about where you are situated below.

Each card issuer in each country can also have their own terms and conditions, length of protection, etc. So share some of the best deals below.

Not all companies here have gone to the lengths to prove they are financially capable to undertake such pre-ordering to recognised payment processors, let alone to us on this forum. Payment processors are very strict and don't just pair with anyone. Believe it or not Paypal has some of the most stringent requirements.

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Fraud

Many companies to compete are offering to enter production directly in receipt of their chips from the foundry. This is a speculative which risk game, irrespective of design talent. It's make or break and without consumer protection, you will be the one to foot the bill.

This is totally unnecessary when a  company can simply offer a more secure payment method, by applying to accept credit card payment. There is no reason not to, unless they are forcing buyers into a high pressure sales situation where buyers purchase before thinking about the consequences. The company walks away unscathed, you won't.

Bitcoin as fantastic as it is as a digital cash, is not fit for the realm of pre-ordering, it's not a secure payment method, hence almost all of the Bitcoin pre-orders have resulted on a loss and no one accountable. Companies only offering non-secure payment methods, such as Bitcoin, or wire-transfer only must be avoided unless you are willing to lose all you invest.

No matter what they promise you with respect to refunds, unless you are protected by an independent third party, forget it, walk away, a better more legitimate company that will make the effort to appease payment processors, Paypal etc. will eventually surface, especially *if* they are a serious contender.

Hedging bets, and making several payments by card over several companies with the explicit purpose of dropping purchases is fraud in your part, and illegal by breach of contract. This has to be taken seriously as in the realm of pre-orders companies are relying on that cash for non-reoccurring engineering costs. NRE is also the reason that should they not succeed and have taken payment by non secure payment means (BTC, wire transfer) you will never see your funds again.

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False refund promises, the requisite for third party protection, due diligence and common sense.

Regardless of whether a vendor offers you a no quibble refund, the practice of agreeing payment for an exchange of goods with no intention to see the purchase through is fraudulent. In any case this can be avoided if you take the time to do your own research, due diligence and make an informed choice.

In any case with respect to pre-orders, no credit card payment as a payment choice, means no strict company background and verification by a recognised third party (issuing bank, payment processor), no third party insuring the purchase, and definitely no deal.

Real companies will take the step of accepting card payment if they care about their customers and want to be taken seriously.

Use your head and apply some common sense, instead of diving blindly into the pool of sharks circling below.

Stay safe. Only pay by credit card if pre-ordering.  Peace.

[Bitcoinorama]

Great UK based info:


http://www.moneysavingexpert.com/shopping/consumer-rights-refunds-exchange

DO: Pay by credit card if it's over £100

Pay for £100+ goods on a credit card and the card company's jointly liable with the retailer if something goes wrong. This applies to gift cards and vouchers too, provided each denomination is at least £100. Though only do this if you can clear the card in full next month to avoid interest.

This gives you extra legal rights, but for full details see the Section 75 Refunds guide.

Section 75 refunds - Free protection for ALL spending;

http://www.moneysavingexpert.com/shopping/section75-protect-your-purchases

Section 75 (UK)

The law behind this

This all comes from Section 75 of the Consumer Credit Act 1974, hence why this is sexily named Section 75. It rather impenetrably says…

75. — (1) If the debtor under a debtor-creditor-supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor. Read it in full

(2) Subject to any agreement between them, the creditor shall be entitled to be indemnified by the supplier for loss suffered by the creditor in satisfying his liability under sub-section (1), including costs reasonably incurred by him in defending proceedings instituted by the debtor.

(3) Sub-section (1) does not apply to a claim:
(a) under a non-commercial agreement,
(b) so far as the claim relates to a single item to which the supplier has attached a cash price not exceeding £100 or more than £30,000, or
(c) under a debtor-creditor-supplier agreement for running-account credit:
(i) which provides for the making of payments by the debtor in relation to specified periods which, in the case of an agreement which is not secured on land, do not exceed three months, and
(ii) which requires that the number of payments to be made by the debtor in repayments of the whole amount of the credit provided in each such period shall not exceed one.

(4) This section applies notwithstanding that the debtor, in entering into the transaction, exceeded the credit limit or otherwise contravened any term of the agreement.

(5) In an action brought against the creditor under sub-section (1) he shall be entitled, in accordance with rules of court, to have the supplier made a party in the proceedings.

75A (1)If the debtor under a linked credit agreement has a claim against the supplier in respect of a breach of contract the debtor may pursue that claim against the creditor where any of the conditions in subsection (2) are met.

(2)The conditions in subsection (1) are—
(a)that the supplier cannot be traced,
(b)that the debtor has contacted the supplier but the supplier has not responded,
(c)that the supplier is insolvent, or
(d)that the debtor has taken reasonable steps to pursue his claim against the supplier but has not obtained satisfaction for his claim.

(3)The steps referred to in subsection (2)(d) need not include litigation.

(4)For the purposes of subsection (2)(d) a debtor is to be deemed to have obtained satisfaction where he has accepted a replacement product or service or other compensation from the supplier in settlement of his claim.

(5)In this section “linked credit agreement” means a regulated consumer credit agreement which serves exclusively to finance an agreement for the supply of specific goods or the provision of a specific service and where—
(a)the creditor uses the services of the supplier in connection with the preparation or making of the credit agreement, or
(b)the specific goods or provision of a specific service are explicitly specified in the credit agreement.

(6)This section does not apply where—
(a)the cash value of the goods or service is £30, 000 or less,
(b)the linked credit agreement is for credit which exceeds £60, 260, or
(c)the linked credit agreement is entered into by the debtor wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him.

(7)Subsections (2) to (5) of section 16B (declaration by the debtor as to the purposes of the agreement) apply for the purposes of subsection (6)(c).

(8)This section does not apply to an agreement secured on land.

NOTE: As of mid-June, the UK government has decided to overhaul our consumer rights to better clarify aspects and bring the 1974 ruling in line with modern digital purchases via the Internet;

https://www.gov.uk/government/publications/draft-consumer-rights-bill

Police; http://content.met.police.uk/Home
Office of Fair Trading; euroteam@oft.gsi.gov.uk

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Business to business sales, are consumer rights applicable?!

In short, yes, unless the company you are dealing with has specifically underwritten terms in their Terms and Conditions negating aspects of your consumer rights. This is known as an exclusion clause, and is yet another reason why Terms and Conditions should always be read and thoroughly discussed in your respective thread.

How do you know if the contract (business to business) takes away your statutory rights?

If the person who sold you the goods or services has taken away your statutory rights, there should be something in your contract about this. For example, it might say  the seller isn't responsible for goods that are unsatisfactory, don't match their description or aren't fit for purpose. Or it might say that the seller isn't responsible for any loss you've suffered because of their lack of care or skill. This type of content in a contract is called an exclusion clause.


http://www.adviceguide.org.uk/england/consumer_e/consumer_problems_with_business_to_business_services_e/consumer_protection_for_businesses.htm

"Advance fee fraud is when fraudsters target victims to make advance or upfront payments for goods, services and/or financial gains that do not materialise."

http://www.actionfraud.police.uk/fraud-az-advance-fee-fraud

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US Based Info

What to do if you are a victim

Write to the Federal Trade Commission: spam@uce.gov - copy them on the email and explain what has occurred since.

If you have lost money

If you believe you are a victim of advance fee fraud, the coalition members strongly encourage you to file a complaint with your local police. If you are in the United States consider filing a complaint with the Federal Beaureau of Investigation's Internet Crime Complaint Center.

http://www.affcoalition.org/victim.html

Complaints with any US or Canadian business: Better Business Bureau - Contact the Better Business Bureau in the US State the company is located.

State and Local Consumer Protection Agencies Master List for the United States

http://www.consumerfraudreporting.org/stateconsumeragencieslist.php

The Internet Crime Complaint Center (IC3) is a partnership between the Federal Bureau of Investigation (FBI) and the National White Collar Crime Center (NW3C).

http://www.ic3.gov/default.aspx

All types of frauds: There are some NON-government organizations that can help: You can also report the problem to law enforcement agencies through the complaint form at the National Fraud Information Center/Internet Fraud Watch or 800-876-7060, TDD 202-835-0778. The information you provide helps to stop identity theft.

National Fraud Information Center and Internet Fraud Watch, USA

http://www.fraud.org/

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International (including China)

INTERPOL is the world’s largest international police organization, with 190 member countries including the US and China. Their role is to enable police around the world to work together to make the world a safer place. Their high-tech infrastructure of technical and operational support helps meet the growing challenges of fighting crime in the 21st century.

http://www.interpol.int/Crime-areas/Financial-crime/Fraud

http://www.interpol.int/Contact-INTERPOL

http://www.interpol.int/Member-countries/Asia-South-Pacific/China

http://www.interpol.int/Member-countries/Americas/United-State

How to report Internet crime that has occurred in each country including China;

http://www.consumerfraudreporting.org/reporting.php


Belgium
spam@privacy.fgov.be.
Brazil
mail-abuse@cert.br to report Brazilian spam, also see Brazilian CERT-BR
Canada
Better Business Bureau; http://www.bbb.org/#
Industry Canada Consumer Connection (Scams); http://strategis.ic.gc.ca/eic/site/icgc.nsf/eng/home
China
spam@ccert.edu.cn  and abuse@anti-spam.cn . Also see Anti-spam CN
Denmark
spam@fs.dk - Include a brief description of your complaint, your name, address and email address.
New Zealand
Commerce Commission; http://www.comcom.govt.nz/
Consumers' Institute of New Zealand, Inc.; http://www.consumer.org.nz
Ministry of Consumer Affairs, New Zealand; http://www.consumer-ministry.govt.nz
NZ Serious Fraud Office; http://www.sfo.govt.nz/
Germany
mailbox@datenschutz-berlin.de . Also see Daten Schutz.
Hong Kong
webmaster@ofta.gov.hk.
Korea
spamcop@kisa.or.kr. Also see the Korea Spam Response Center
Malaysia
Malaysian Communications and Multimedia Commission for Malaysian spam
Netherlands
meldpunt@spamvrij.nl.
Norway
Police Economic Crime Unit, Norway  (press "Bedragerier"); http://www.okokrim.no/

[aoshea]

Sound advice. +1

However if you do pay with CC and do not pay the balance immediately in full, be ready to pay interest charges (10-30%APR! in the US, not sure about elsewhere). Any refund you eventually receive will be less this interest.

[Xian01]

Great post, and excellent advice.

Cheers.

[Bitcoinorama]

Sound advice. +1

However if you do pay with CC and do not pay the balance immediately in full, be ready to pay interest charges (10-30%APR! in the US, not sure about elsewhere). Any refund you eventually receive will be less this interest.

In the UK we have the first 56 days interest free, subsequent you will pay your agreed %APR, however it' a small price to pay to protect from fraud, seemingly innocent or otherwise...

Credit card payment for pre-orders are the only secure payment means. The third party protection is underwritten and you are insured as long as you query the purchase and check with your card issuer first.

NO company can promise to protect your payment themselves with such huge NRE costs unless they are self-funded.

In which case, why the pre-order. It's unnecessary.

[Bitcoinorama]

Sweden - purchases from (will include as obv. this was uncovered as and when I looked into KnC)

Swedish law. You have an open return law in Sweden of 14 days after delivery when buying goods over internet and/or telephone. You have a right to cancel any order for refund which has not been delivered in timely fashion from promised delivery date. 1 year warranty, free repair or exchange if goods fault within the first six months.

There is a very capable state consumer agency that can help anyone if they have any trouble (http://www.konsumentverket.se/otherlanguages/English/About-the-Swedish-Consumer-Agency/ )

Note: Thanks Spelon, I just stole your paragraph from here;

https://bitcointalk.org/index.php?topic=251775.msg2747026#msg2747026

[Bitcoinorama]

Can peeps help advise w.r.t. US law? How is that affected state to state? I will update above with any succinct relevant material as and when it's shared below. Thanks!

[driksson]

Can peeps help advise w.r.t. US law? How is that affected state to state? I will update above with any succinct relevant material as and when it's shared below. Thanks!

Take note, swedish regulations differ B2C And B2B rights. If we as clients purchase a complete miner, its b2c. But if we only buy chips, its B2B company to company have different set of rules.
KonsumentVerket = The consumer Agency. Which only regulates the end client.

[Bitcoinorama]

Can peeps help advise w.r.t. US law? How is that affected state to state? I will update above with any succinct relevant material as and when it's shared below. Thanks!

Take note, swedish regulations differ B2C And B2B rights. If we as clients purchase a complete miner, its b2c. But if we only buy chips, its B2B company to company have different set of rules.
KonsumentVerket = The consumer Agency. Which only regulates the end client.

However if you have paid by card within the UK (and EU) at least;

Business to business sales, are consumer rights applicable?!

In short, yes, unless the company you are dealing with has specifically underwritten terms in their Terms and Conditions negating aspects of your consumer rights. This is known as an exclusion clause, and is yet another reason why Terms and Conditions should always be read and thoroughly discussed in your respective thread.

How do you know if the contract (business to business) takes away your statutory rights?

If the person who sold you the goods or services has taken away your statutory rights, there should be something in your contract about this. For example, it might say  the seller isn't responsible for goods that are unsatisfactory, don't match their description or aren't fit for purpose. Or it might say that the seller isn't responsible for any loss you've suffered because of their lack of care or skill. This type of content in a contract is called an exclusion clause.

http://www.adviceguide.org.uk/england/consumer_e/consumer_problems_with_business_to_business_services_e/consumer_protection_for_businesses.htm

[ProfMac]

SUMMARY as it will be read by outsiders.

The bitcoin community should not use bitcoins for payments.

[Bitcoinorama]

SUMMARY as it will be read by outsiders.

The bitcoin community should not use bitcoins for payments.

On pre-orders, or for payments exceeding the equivalent of $100 for an online purchase with an unknown entity as advised by the renown MoneySavingExpert.com, and anyone with any common sense!

[Bitcoinorama]

I've updated with general US info, and *some* countries. Not all.

Please add any info you may have to hand, pref with supporting links.

Assuming you've all looked into this before purchasing anything, right?

[aoshea]

SUMMARY as it will be read by outsiders.

The bitcoin community should not use bitcoins for payments.

Why would anyone pre-order in bitcoins anyways. You mine with the assumption the price is going up....

However, if no one is willing to readily spend their BTC it will be hard for a large scale adoption to take place. We don't want people hoarding BTC.

I do agree with OP though, CC seems to be the way to go if you want to gamble on pre orders; glad to see this stickied.

[jspielberg]

SUMMARY as it will be read by outsiders.

The bitcoin community should not use bitcoins for payments.

So if we are trying to build up a fledgeling currency, what do you do with them if you don't use them for payments. 

Please don't say speculation.  If they are purely a vehicle of speculation, might as well collect comic books, or magic cards... or Juniper stock.

[Bitcoinorama]

SUMMARY as it will be read by outsiders.

The bitcoin community should not use bitcoins for payments.

Why would anyone pre-order in bitcoins anyways. You mine with the assumption the price is going up....

However, if no one is willing to readily spend their BTC it will be hard for a large scale adoption to take place. We don't want people hoarding BTC.

I do agree with OP though, CC seems to be the way to go if you want to gamble on pre orders; glad to see this stickied.

Please can we stay on topic and provide local consumer protection rules and avenues to pursue fraudulent activity.

*** knows this site needs them.

It's deeply concerning we've got this far without having access to this information in tap, so here's your chance.

 

[alfabitcoin]

OP
Maybe you should made selfmoderated topic to remove all off topic posts (my included,lol) Maybe mod can change it for you.
Great job.

[Bitcoinorama]

OP
Maybe you should made selfmoderated topic to remove all off topic posts (my included,lol) Maybe mod can change it for you.
Great job.

Nah, my hearts in the right place, and I *trust* yours is too!

Seriously though I cannot possibly delve into the laws of every country and state, so this is very much work in progress and requires ongoing support from the community...

[bitcoiner49er]

Seems to me like driving around your Porsche by putting it in a trailer to protect it and hauling it around with your Fiat.

Trusted escrows should be the norm. Contract agreed upon by both parties and held by the 3rd.

[ProfMac]

Seems to me like driving around your Porsche by putting it in a trailer to protect it and hauling it around with your Fiat.

Trusted escrows should be the norm. Contract agreed upon by both parties and held by the 3rd.

Trusted escrow does use bitcoin.  This solution makes the bitcoin economy grow.  A credit card solution competes with the bitcoin economy.

[Bitcoinorama]

Seems to me like driving around your Porsche by putting it in a trailer to protect it and hauling it around with your Fiat.

Trusted escrows should be the norm. Contract agreed upon by both parties and held by the 3rd.

Trusted escrow does use bitcoin.  This solution makes the bitcoin economy grow.  A credit card solution competes with the bitcoin economy.

For the sake of the speed at which these wannabe companies appear, and unfortunately disappear, the right card issuing bank offers a minimal fuss means of recourse resolved very quickly.

Corrupt, fraudulent, incompetent and companies uncertain in their delivery ability embrace BTC payments currently...