LocalBitcoins.com: New wave of scams! Steps to protect yourself (digital trades)

[BTCforJoe]

There is definitely a new wave of scammers and hackers on www.LocalBitcoins.com, and while I'm savvy when it comes to selling my Bitcoin, I am reluctantly (and shamefully) posting this to help others protect themselves from what I've gone through.

The last three transactions that I've conducted on LBC for digital trades (PayPal) have all had their payments reversed. The hackers/scammers are getting extremely creative, and starting to mimic the actions and character of authentic great traders...

With that said, if you don't feel like reading the rest of this post, take this away from it: TAKE EXTREME CAUTION WHEN SELLING YOUR BITCOIN FOR PAYPAL. In fact, consider not selling your Bitcoin for PayPal at all.

So with that, here is a quote of some advice I gave to another user; I thought it could help protect you. Yes, most of it is just common sense, but reminders could prove to be helpful. Don't let that trade request for someone buying bitcoin at 20% above market price cloud your judgment!

If you have any more questions outside of what I've posted below, feel free to post here or send me a private message.

I've had successful transfers, and I've had fraudulent transfers where the payments were reversed on my payment processing accounts.

Be extremely cautious when dealing with Bitcoin buyers via PayPal. I used to think that the payment was safe if sending as "Friends or Family" via PayPal, but I had a payment that was reversed because the PayPal account that was used to send me the funds for the Bitcoin I sold ended up being hacked. I actually had a conversation with the owner of the account (the hacker didn't have access to his mark's email address), and the dude got screwed for tens of thousands of dollars because of the PayPal hack.

LocalBitcoins.com is best for face-to-face meetups. Be EXTREMELY CAUTIOUS when dealing with digital transfers or bank wires. Make sure to ask for documentation for EVERYTHING, and look out for the following things (as a seller):

• 1. If the buyer is a new account, insist that they send you documentation to prove their identity and that they are who they say they are.
• 2. If the buyer's account is verified, look through their feedback history to ensure that there are not any large gaps in between trades. If there are gaps, this could indicate that the buyer's account was purchased from the original owner (who may not have a need for their account any longer)
• 3. Check their feedback history and sort it by "Negative" feedback. If any of the recent negative feedback pertains to a digital payment of any kind, avoid the trade at all costs, no matter how much above market price they are offering.
• 4. Ask the buyer to provide you with their PayPal address, and that you will send them an invoice to that address for the amount that you've entered the trade for.
• 5. Instruct the buyer to answer an email that you send to that address, or to send you an email from the email address of their PayPal account.
• 6. Google the email address and see what pops up. If anything looks fishy, then avoid the trade. (example: the last time I initiated a trade with someone on LBC, the email address showed results for a 79-year old farmer from Georgia. Chances are that 79-year old farmers don't know anything about cryptocurrency...

I know that this sounds tedious, but trust me; it will help protect you in the end. Even if your trade is only for $100 or less, it would suck to be charged back or have a payment reversed for that $100... Protect yourself when dealing with digital payment options on LocalBitcoins.com

Additional tips from other members:

NEVER RELEASE BITCOINS FROM THE ESCROW BEFORE YOU RECEIVE YOUR PAYMENT.

Some traders will have what looks like a solid reputation: thousand over trades, huge volumes and great feedback. And they use that to try and bully you into releasing escrow right after they mark payment as complete. Do not ever do this. They might say "lol I trade for 5 years and people have no problems to do this" or try and make it seem they don't need your business but don't ever release escrow until you confirm payment. I have run into a few such people, and at least once I've come back across the same name, accused of never sending payment.

[akamit]

Paypal is not only the risky thing in LBC, but other payment systems can be tricky. I mean scammers tries to trick the victims.
But reversible payment systems are most dangerous and one should know how to fight back with it.

I have an awful experience in LBC while I traded btc for western union and moneygram.
I've made couples of trades for western union & moneygram with different traders, but one of them was a scammer and wasted my 4-5+ hrs.
That scammer just tried to trap me with his word-traps, so that I release the bitcoin before he sends me the payment. Newbies can fall into this traps very easily, so they need to be more cautious.

NEVER RELEASE BITCOINS FROM THE ESCROW BEFORE YOU RECEIVE YOUR PAYMENT.

[magneto]

My rule of thumb is that I never deal with paypal & reversible payments on localbitcoins. It can be deceptive because you think that you're safer on localbitcoins than if you traded without an escrow, but in fact, escrow can't help you on chargebacks.

Either do your research & only trade with people that have at least 1000 positive feedbacks with reversible methods, or prepare for your payments to get reversed at the end of the day. Just because someone sounds legit doesn't mean they are, do your own due diligence.

Thanks for coming out with this excellent info.

I find though that paxful has a lot more scammers than LBC, and generally if you deal with non-reversible methods on LBC with a tursted seller you aren't going to see any issues.

[warningsigns]

In my 4 years here I have been posting here about the risks and dangers of reversible payment methods. Avoid taking PayPal payments from strangers. Give it a wide berth and only accept it if you are trading with an extremely trusted person.

Scammers are adapting to times and circumstances. They know how to talk the talk and they are extremely versatile in the way they communicate their scams.

The best solution to this dilemma is to never accept PayPal payments from untrusted sources, even if they can provide adequate documents evidencing account ownership. Documents can be tampered with and scammers know how to manipulate them to make them look authentic to the untrained eye.

Scammers will entice you with insane offers, sometimes even double the published price on exchanges. Don't fall for it.

[Patatas]

I would rather put it this way "Be careful with Paypal trades on LocalBitcoins"
I have been using LBC for ages and without any problems till date.In my region,most of the payment methods are done though Bank Transfers and there is not much a scammer can do because I will only release the escrow if the payment is credited in my bank account.Bank account deposits are not reversible so if I confirm money is credited in my account,we're good to go.

On the other side,the case is not the same with Paypal.

[timerland]

I would rather put it this way "Be careful with Paypal trades on LocalBitcoins"
I have been using LBC for ages and without any problems till date.In my region,most of the payment methods are done though Bank Transfers and there is not much a scammer can do because I will only release the escrow if the payment is credited in my bank account.Bank account deposits are not reversible so if I confirm money is credited in my account,we're good to go.

On the other side,the case is not the same with Paypal.

Bank transfers are still reversible. Anything centralized, is.

Just because it's not common for it to be reversed, doesn't mean it can't ever happen.

Generally I prefer to deal with nothing that can trace who I am and who the seller is on localbitcoins. That includes bank transfers. If the seller uses a hacked account to buy your bitcoins, then you may be in serious trouble by law enforcement. That's why I like cash deposits, cash in mail to a p.o. box, etc.

But paypal's a no brainer. If you need paypal you should use coinbase, even people on currency exchange board on this forum is probably going to be more trustworthy to deal with paypal, since if anything goes wrong you can report them. Localbitcoins won't care after escrow is done. Even if they do there is nothing they can do about it, they don't have the money in escrow any more.

[buwaytress]

Sorry to hear about your experience with LBC, I wasn't aware of a new wave of scammers but I am extremely wary of many around there. I've never had a single problem with any trades, but that's only because as soon as I feel something is off, I don't go ahead with the trade. Since this is about helping people navigate the trickiness of some traders, here's what I'd like to share.

Some traders will have what looks like a solid reputation: thousand over trades, huge volumes and great feedback. And they use that to try and bully you into releasing escrow right after they mark payment as complete. Do not ever do this. They might say "lol I trade for 5 years and people have no problems to do this" or try and make it seem they don't need your business but don't ever release escrow until you confirm payment. I have run into a few such people, and at least once I've come back across the same name, accused of never sending payment.

My rule of thumb is that I never deal with paypal & reversible payments on localbitcoins. It can be deceptive because you think that you're safer on localbitcoins than if you traded without an escrow, but in fact, escrow can't help you on chargebacks.

Either do your research & only trade with people that have at least 1000 positive feedbacks with reversible methods, or prepare for your payments to get reversed at the end of the day. Just because someone sounds legit doesn't mean they are, do your own due diligence.

Thanks for coming out with this excellent info.

I find though that paxful has a lot more scammers than LBC, and generally if you deal with non-reversible methods on LBC with a tursted seller you aren't going to see any issues.

I've done a few paypals, but only when I REALLY need it (both ways buying and selling). But yes, I think in general, if you trade all the time and are in no hurry, stick with online trades. I use SEPA and local bank transfer in another country - both are actually reversible, but require >10 days, and the sender to contact the bank and provide some kind of proof. That does make it not foolproof, but I suspect the trouble to go through that at the risk of having negative feedback on an old trading account ain't worth it.

Also, I do sell (never buy) to new accounts every now and then but only if they're willing to provide full verification to me + phone call. When I started out, someone had to trust me, so I like to think I should help new traders gain reputations.

[Patatas]

Bank transfers are still reversible. Anything centralized, is.

Just because it's not common for it to be reversed, doesn't mean it can't ever happen.

How lol ? The country where I live in,if account is credited into your Bank account,there is no way you can reverse it until you explicitly write a mail to the bank after which Bank initiates an investigation.

Generally I prefer to deal with nothing that can trace who I am and who the seller is on localbitcoins. That includes bank transfers. If the seller uses a hacked account to buy your bitcoins, then you may be in serious trouble by law enforcement. That's why I like cash deposits, cash in mail to a p.o. box, etc.

Correct.However these are rare cases and hence you should be dealing with profiles which have verified their details and maybe you can call them before initiating a trade.

[UsernameBitcoin]

NEVER RELEASE BITCOINS FROM THE ESCROW BEFORE YOU RECEIVE YOUR PAYMENT.

You are right that no one should ever release bitcoins from escrow before receiving payment.

But in some cases the scammers use make the payment, the seller releases the escrow and then after that the release they make chargebacks from paypal or other methods.

That is the most dangerous.

[sarijaya4444]

Some traders will have what looks like a solid reputation: thousand over trades, huge volumes and great feedback. And they use that to try and bully you into releasing escrow right after they mark payment as complete. Do not ever do this. They might say "lol I trade for 5 years and people have no problems to do this" or try and make it seem they don't need your business but don't ever release escrow until you confirm payment. I have run into a few such people, and at least once I've come back across the same name, accused of never sending payment.

I've done with traders that have "solid reputation" but still got chargebacks in the end. AVOID LBC dan Paxful. Too may SCAMMERS 

[jerry0]

What is the primary reason you guys sell btc on localbitcoin as oppose to coinbase/gdax/gemini where they withdraw funds to your bank account?  Is it mainly due to documentation?  Or is it because people pay a premium over market rate?  Can someone tell me how much over the market rate people on average pay on lbc?  So if someone wants to sell 1000 dollars worth of btc, how much do they generally pay in paypal or similar bank transfer?  It is almost always higher than 1000 dollars?


The other thing is this.  If you use lbc, then what is the best payment form?  Is it cash person to person?  Of course if you do that, obviously you dont want to take like even 2k in cash etc in person in public place right?  The other thing is wouldn't you have to check to make sure its not counterfeit and thus use a pen to check every single one?


Thus the best way probably would be meet them at a bank and have them deposit the cash into your bank account or they give you the cash to deposit into bank and then the teller confirms the money is real and gives you receipt?  And to those that have the buyer deposit cash in the bank, do you generally meet them in person or not?  And if you do meet them, do they generally deposit the cash in bank and then they give you the receive?  Or they give you the cash and you deposit it and then get receipt?  Because its certainly possible for the buyer to be at the teller and speak to them and look like hes taking out money and then be done with it but the issue is the receipt wouldnt match.  However if they deposit the cash in your bank account and give you receipt, you just need to log into your online banking on your phone to show the cash has been deposited and then you are good to go right?  The other thing im curious about is generally what amounts do people do this with around?  I assume at least 1k to say 5 figures right?


The other thing is i heard from a while back there was a scam where someone would deposit cash in bank of america and then send the receipt to the seller by phone/email.  Then once that happens, they release the coins as they saw the receipt and could check online banking there was a deposit.  Then the buyer would go back to bank and said they made mistake and withdraw the money.  I read back then that was very easy.  But now this is not possible right?  I also read if you let someone deposit cash into your bank account, you don't send them btc until the end of the banking day or next day since that way they cant reverse it?


I certainly would like to sell bitcoin for cash for a markup.  So what are the best options to do this?  And how much percentage on top are you guys getting?  I assume its at least 2-3 percent right?  Im guessing it could go as high as 10 percent but its probably 2 to 5 percent? 

[BTCforJoe]

NEVER RELEASE BITCOINS FROM THE ESCROW BEFORE YOU RECEIVE YOUR PAYMENT.

This is quite obvious, but you're absolutely correct. Some scammers have the gift of gab and can easily trap someone into releasing the escrow before the payment has been made. I'm adding this to my original post; hope you don't mind.

Some traders will have what looks like a solid reputation: thousand over trades, huge volumes and great feedback. And they use that to try and bully you into releasing escrow right after they mark payment as complete. Do not ever do this. They might say "lol I trade for 5 years and people have no problems to do this" or try and make it seem they don't need your business but don't ever release escrow until you confirm payment. I have run into a few such people, and at least once I've come back across the same name, accused of never sending payment.

I hope you don't mind; I'm going to add this to my top post, as well. It sounds to me like the account was purchased from the original owner. I've had a few acquaintances that got scammed by account buyers. Without giving too many details, they basically continued operating like the original owner for a few months, and then apparently claimed identity theft. He started conversing with the actual person that the hacker was using as verification for the purchased LBC account and together, they sourced the crime back to a family member who had sold the information to some Indians overseas for 1BTC (at the time, it was worth about $1,000/BTC). Can't even trust your own family...

Bank transfers are still reversible. Anything centralized, is.

Just because it's not common for it to be reversed, doesn't mean it can't ever happen.

How lol ? The country where I live in,if account is credited into your Bank account,there is no way you can reverse it until you explicitly write a mail to the bank after which Bank initiates an investigation.

You just answered your own question.

What is the primary reason you guys sell btc on localbitcoin as oppose to coinbase/gdax/gemini where they withdraw funds to your bank account?  Is it mainly due to documentation?  Or is it because people pay a premium over market rate?  Can someone tell me how much over the market rate people on average pay on lbc?  So if someone wants to sell 1000 dollars worth of btc, how much do they generally pay in paypal or similar bank transfer?  It is almost always higher than 1000 dollars?

For me, it's because although I'm a U.S. citizen, I live abroad and no longer have a U.S. bank account. And none of the exchanges have options for any of the banks in the country that I'm currently living in. As far as the rates, you'll see some advertisements for trades up to 10% over market value. I've even seen instances of 20% over market value (for small trade amounts). I personally do not deal with anyone that offers more than a 5% rate. My average trade is conducted around a 2.5% premium.

The other thing is this.  If you use lbc, then what is the best payment form?  Is it cash person to person?  Of course if you do that, obviously you dont want to take like even 2k in cash etc in person in public place right?  The other thing is wouldn't you have to check to make sure its not counterfeit and thus use a pen to check every single one?

One of my friends deals with $25,000+ transactions on a regular basis from LBC. He has an armed off-duty officer buddy that goes with him every time. He has a cash counting machine and it's very easy to check every bill to see if it's counterfeit or not. Just fan out the stacks of money and draw a big line across the bills.

The other thing is i heard from a while back there was a scam where someone would deposit cash in bank of america and then send the receipt to the seller by phone/email.  Then once that happens, they release the coins as they saw the receipt and could check online banking there was a deposit.  Then the buyer would go back to bank and said they made mistake and withdraw the money.  I read back then that was very easy.  But now this is not possible right?  I also read if you let someone deposit cash into your bank account, you don't send them btc until the end of the banking day or next day since that way they cant reverse it?

Banks can reverse charges anytime if you can prove that you didn't authorize the transfer or if you can show that you never received a product or service that warranted the transfer. Every bank has different rules, but reversing bank wires is an option that happens more commonly than people think.

I certainly would like to sell bitcoin for cash for a markup.  So what are the best options to do this?  And how much percentage on top are you guys getting?  I assume its at least 2-3 percent right?  Im guessing it could go as high as 10 percent but its probably 2 to 5 percent?

Use your best judgment. The way that I sort the list of buyers on LBC now is by trade volume and feedback score. I could give a shit less if they're buying at market value or at a premium. I have a private buyer that I now work with, so I've really slowed down on my trades on LBC.

[jerry0]

Hi there thanks for the response.  Im also a US citizen but outside the US at the moment.  That is why i ask you this.  I know i could use coinbase/gemini etc but i have issues with verification there.  But would it be possible to use lbc with someone from the US such as they deposit btc into your bank of america or similar us bank account and then you release the btc?  I assume as long as they deposit cash in bank and then you wait next business day, that is safe?


About the market price... so anyone that pays over 5 percent is generally a scammer then right? 


About the friend you have who brings an armed off duty officer.  Im curious but since he does 25k usd+ tranactions, where does he meet the potential buyer?  Im curious like when he puts the cash on the cash machine like where is this.  This is obviously not starbucks etc.  Where do transactions like this take place?  Is it a bank?  Also is almost every time he met someone it was a legit buyer?  How did you meet your private buyer?  And how does he pay you?  Is it in cash in whichever country you are or they deposit cash in your other country bank account?  Also what country are you in now by the way?  Thanks.  About the reversals.  Well if someone deposit cash in your bank account and then end of business day, that cannot be reversed right?

[magneto]

-snip-

There are going to be a ton of risks for the seller.

Your offer can be picked up by anyone. And yes you can sell outside of the US if you've got a US bank account that you want the users to deposit to. I would suggest ticking all the boxes where it says the buyer must be ID verified, or has a trust level of at least 99% or something like that.

Usually, cash deposits are irreversible. At least in my country, I've never seen anyone do this scam and I've been around on LBC for a while doing casual trades. It's a huge generalisation to say that everyone who pay above 5% premium will be a scammer. If you're looking to sell, offer a fair premium like 3-5%, alongside with some filters for trust, and make sure that the payment you're accepting is mostly irreversible then you should be alright. Plenty of people who want the convenience over the rates that are willing to pay 5%+ and are legit as well.

[buwaytress]

I hope you don't mind; I'm going to add this to my top post, as well. It sounds to me like the account was purchased from the original owner. I've had a few acquaintances that got scammed by account buyers. Without giving too many details, they basically continued operating like the original owner for a few months, and then apparently claimed identity theft. He started conversing with the actual person that the hacker was using as verification for the purchased LBC account and together, they sourced the crime back to a family member who had sold the information to some Indians overseas for 1BTC (at the time, it was worth about $1,000/BTC). Can't even trust your own family...

Of course, and that's usually what happens. You see people even on this forum offering to buy aged LBC accounts. In general it's just to access the big network they've taken years to build up... and with LBC never changing their ranges to "level up" on accounts, aged accounts trading mere thousands of dollars already rack up 100s of BTCs to their name. Family and business never work. I've learnt that the hard way.

What is the primary reason you guys sell btc on localbitcoin as oppose to coinbase/gdax/gemini where they withdraw funds to your bank account?  Is it mainly due to documentation?  Or is it because people pay a premium over market rate?  Can someone tell me how much over the market rate people on average pay on lbc?  So if someone wants to sell 1000 dollars worth of btc, how much do they generally pay in paypal or similar bank transfer?  It is almost always higher than 1000 dollars?


The other thing is this.  If you use lbc, then what is the best payment form?  Is it cash person to person?  Of course if you do that, obviously you dont want to take like even 2k in cash etc in person in public place right?  The other thing is wouldn't you have to check to make sure its not counterfeit and thus use a pen to check every single one?

My "journey" on LBC was simply due to the nature of my situation. I'm often traveling between countries and LBC gives me equal access to local trading in local currency. I guess I've grown to like the nature of p2p and often transact with people I already trust and know there. The price happens to be better overall as a seller, in my experience, especially if I'm just in no hurry to trade and leave open offers that adjust to market rates. It varies but I personally see 2-4% better rates selling over LBC - and because the modes I choose are instant (online bank transfer), I get it immediately.

Best payment is always online as I mentioned above. I'd probably never do a face-to-face (that's another common scam method, even organised robberies in India and BD got a lot of media attention from this) but I know some people who do that often enough for very large amounts they don't want to be traced back to them. As you yourself see though, just so much risk to face-to-face. I'd never, ever recommend it.

[akamit]

NEVER RELEASE BITCOINS FROM THE ESCROW BEFORE YOU RECEIVE YOUR PAYMENT.

This is quite obvious, but you're absolutely correct. Some scammers have the gift of gab and can easily trap someone into releasing the escrow before the payment has been made. I'm adding this to my original post; hope you don't mind.

I won't mind at all, rather it's our duty to warn people.. You are doing the right thing.

Some traders will have what looks like a solid reputation: thousand over trades, huge volumes and great feedback. And they use that to try and bully you into releasing escrow right after they mark payment as complete. Do not ever do this. They might say "lol I trade for 5 years and people have no problems to do this" or try and make it seem they don't need your business but don't ever release escrow until you confirm payment. I have run into a few such people, and at least once I've come back across the same name, accused of never sending payment.

The bold sentences from your post matches exactly with my own case as mentioned in my post. But my post maybe not clear enough to understand.
They even show cash image, so that you can fall into the trap like "Oh, this guy has huge cash with him, he will pay me for sure if I release the escrow"... Total BS.
Another thing I forgot to mention that their price is little more than others, in my case the price was about 1.5k+ more.
The interesting part was, when I didn't released the escrow, I became a scammer to him. He was just using slang, calling me scammer etc. Then I had nothing to do except to contact LBC support.

[countryfree]

Banks can reverse charges anytime if you can prove that you didn't authorize the transfer or if you can show that you never received a product or service that warranted the transfer. Every bank has different rules, but reversing bank wires is an option that happens more commonly than people think.

A lot depends from your bank, and your country.

There's no point in using LBC if you're living in the US or the EU. It's cheaper to trade with a normal exchange. And outside of the first world, making an online bank transfer often requires to upload some document to explain what the transfer is. Some banks also send an SMS and require the account owner to write down the code he just received, so that makes it quite difficult to do for a scammer.

I know it's not perfect, but bank transfers are the safest option by far when using LBC.

[Wipro]

Banks can reverse charges anytime if you can prove that you didn't authorize the transfer or if you can show that you never received a product or service that warranted the transfer. Every bank has different rules, but reversing bank wires is an option that happens more commonly than people think.

A lot depends from your bank, and your country.

There's no point in using LBC if you're living in the US or the EU. It's cheaper to trade with a normal exchange. And outside of the first world, making an online bank transfer often requires to upload some document to explain what the transfer is. Some banks also send an SMS and require the account owner to write down the code he just received, so that makes it quite difficult to do for a scammer.

I know it's not perfect, but bank transfers are the safest option by far when using LBC.

I am not belongs to the first world country but I did not find all the traders request for the document to upload and open the trade. I also have noticed that some of the traders always expecting to get the passport details, taxation documentation and require charges for the low amount of the transaction on banking. This is pretty normal every exchange sites.

Even from US or other european country also you can go with LBC. None of the exchange traders will have the high cost than the LBC traders price.

[gentlemand]

A lot depends from your bank, and your country.

There's no point in using LBC if you're living in the US or the EU. It's cheaper to trade with a normal exchange.

In the UK if you're in a hurry there aren't many alternatives. There are no exchanges with rapid banking. I'm not sure what the deal is with Coinbase and cards, but if you do a bank transfer to them it has to go to Estonia.

When I used LBC in 2013 it was a lot more casual than it sounds now. I wouldn't have too many issues buying on there. I really don't think I'd ever consider selling no matter what the method other than cash in the post, not deposited in a bank. Scammers will only become more creative and skilled.

I'm finding this whole thread a tad weird. People still do stuff with Paypal and BTC?

[timerland]

A lot depends from your bank, and your country.

There's no point in using LBC if you're living in the US or the EU. It's cheaper to trade with a normal exchange.

In the UK if you're in a hurry there aren't many alternatives. There are no exchanges with rapid banking. I'm not sure what the deal is with Coinbase and cards, but if you do a bank transfer to them it has to go to Estonia.

When I used LBC in 2013 it was a lot more casual than it sounds now. I wouldn't have too many issues buying on there. I really don't think I'd ever consider selling no matter what the method other than cash in the post, not deposited in a bank. Scammers will only become more creative and skilled.

I'm finding this whole thread a tad weird. People still do stuff with Paypal and BTC?

Same with in my country. There are bitcoin exchanges but they aren't quick and the ID verification process isn't that desirable to go through either. Thus, localbitcoins is pretty much the primary way I get and sell my bitcoins at least.

And yeah, Paypal and BTC on any platform is just not going to mix well.

It's not just paypal with localbitcoins. It's paypal on any platform, with the seller paying in bitcoins. Since paypal is reversible, and bitcoin isn't, there's a high likelihood something bad's gonna happen.