More crap to deal with - Dwolla Reverses TradeHill Transactions

[JoelKatz]

So from a bank's perspective - if they have what appears to be a valid legal claim (affidavit?) that a transaction was fraudulent, I guess they work on the basis that the merchant will have the relevant information as to who actually initiated the transaction and so is best positioned to follow it up.

That's ridiculous. Dwolla interacted with the party that supplied the money and the party that claimed the transaction was fraudulent, they are in the best position to figure out pusue the claims. The merchant had no contact whatsoever with the money source except through Dwolla. The merchant didn't necessarily ever interact with anyone.

The fraud claim must be that the person who initiated the transfer (who interacted only with Dwolla) wasn't authorized to perform the transfer by the person who owned the funds (who interacted only with Dwolla). Who does the merchant follow up with? Two people he interacted with only through Dwolla?

I don't see anything in their user agreement that says that can reverse transactions. Dwolla has gone, in my opinion, from useful to useless. I'll raise my opinion of them a bit if I see what information they provided when they reversed a transaction. If the released literally all information they had from both contacts, I'll revise my opinion a bit.

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[tvbcof]

right now it looks like anonymity works in favor for scammers knowing they can pull this shit without any consequences

I would trade security for anonymity (preferring the latter.)

I have been prepared to get ripped off on all of the perhaps 20 or 30 of the BTC purchases I have done so far.  I break my purchases into a fraction of the total I want, and keep that fraction to something I can afford to lose.  So far I have not been ripped off.

When I spend BTC I will be similarly prepared to get ripped off.  I've spent significant time researching the providers of certain services I want.  When I have time to deal with the fallout of acquiring the services (VPS, DNS, etc) I'll balance between the vendor's reputation and whatever other details I can find.  And I'll be prepared to be ripped off anyway.

To me BTC is a brave new world.  I am comfortable with the things I lose vs. the things I gain when compared to Visa, PayPal, etc.  So, no complaints.  My attitude tends to be along the lines of "If you can't stand the heat, stay out of the kitchen.", but I can certain understand and empathize with those who don't share this attitude.

[sequence]

Dwolla suspended my account a long time ago they don't "f " around!  If they suspect fraud and u are innocent... call them , email them , and call them some more its the only way!

[Smalleyster]

Well, this is a huge black eye to the entire bitcoin community.

I'm grateful this happened before my meetings with the local bankers.

I sincerely hope Dwolla straightens this out quickly and publicly.

EDIT:
*************
Please make me feel you are "doing the right thing" in reference to the following line of discussion in the bitcoin community.

http://forum.bitcoin.org/index.php?topic=31712.0

I am a relatively new client of yours and I used your services to interact with TradeHill, among others. I am at this moment extremely nervous about using your services unless and until this matter is cleared up.

Thank you
************

Posted both as an open question and "emailed" to the following link:

http://help.dwolla.com/customer/portal/emails/new

[mc_lovin]

Dwolla scandal update: Camp BX is not affected by this, and every dollar is accounted for.

Hoping the same for other Bitcoin sites!

Thank you,
     Keyur
     www.CampBX.com

+1 for CampBX!  Sucks that scandals reduce the bitcoin value, though.

[Smalleyster]

Dwolla scandal update: Camp BX is not affected by this, and every dollar is accounted for.

Hoping the same for other Bitcoin sites!

Thank you,
     Keyur
     www.CampBX.com

Of course you are affected by this foolishness, because at this moment I don't dare try to send you any more funds as I was planning to do.

What other method do you propose I use that costs and acts about the same?

[julz]

So from a bank's perspective - if they have what appears to be a valid legal claim (affidavit?) that a transaction was fraudulent, I guess they work on the basis that the merchant will have the relevant information as to who actually initiated the transaction and so is best positioned to follow it up.

That's ridiculous. Dwolla interacted with the party that supplied the money and the party that claimed the transaction was fraudulent, they are in the best position to figure out pusue the claims. The merchant had no contact whatsoever with the money source except through Dwolla. The merchant didn't necessarily ever interact with anyone.

The fraud claim must be that the person who initiated the transfer (who interacted only with Dwolla) wasn't authorized to perform the transfer by the person who owned the funds (who interacted only with Dwolla). Who does the merchant follow up with? Two people he interacted with only through Dwolla?

I don't see anything in their user agreement that says that can reverse transactions. Dwolla has gone, in my opinion, from useful to useless. I'll raise my opinion of them a bit if I see what information they provided when they reversed a transaction. If the released literally all information they had from both contacts, I'll revise my opinion a bit.

Sure - In this case - Dwolla is the merchant.
(edit: the customer effectively  purchased 'dwolla'  - so I agree with you.)

[Jered Kenna (TradeHill)]

So from a bank's perspective - if they have what appears to be a valid legal claim (affidavit?) that a transaction was fraudulent, I guess they work on the basis that the merchant will have the relevant information as to who actually initiated the transaction and so is best positioned to follow it up.

That's ridiculous. Dwolla interacted with the party that supplied the money and the party that claimed the transaction was fraudulent, they are in the best position to figure out pusue the claims. The merchant had no contact whatsoever with the money source except through Dwolla. The merchant didn't necessarily ever interact with anyone.

The fraud claim must be that the person who initiated the transfer (who interacted only with Dwolla) wasn't authorized to perform the transfer by the person who owned the funds (who interacted only with Dwolla). Who does the merchant follow up with? Two people he interacted with only through Dwolla?

I don't see anything in their user agreement that says that can reverse transactions. Dwolla has gone, in my opinion, from useful to useless. I'll raise my opinion of them a bit if I see what information they provided when they reversed a transaction. If the released literally all information they had from both contacts, I'll revise my opinion a bit.

Sure - In this case - Dwolla is the merchant.
(edit: the customer effectively  purchased 'dwolla'  - so I agree with you.)

If Dwolla steps up, comes clean and makes a clear statement if their transfers are reversible or not then we may be able to continue doing business with them.
At this point I would be weary as a merchant.

I'm trying to consolidate the Dwolla reversal issues in to this thread http://forum.bitcoin.org/index.php?topic=31753.0 or comments on our blog at www.tradehillblog.com so we can respond to as many questions as possible.

Jered

[Aggro]

I thought Dwolla can't be reversed? (I've never used it and don't know much about it)

that's what everyone thought, apparently dwolla changed their ToS without any notice

You thought wrong. Everything based in the US can (and will) be reversed if it is fraudulent. Even if it is not, if the customer complains to his/her bank, etc... things will get reversed.

This is exactly why we don't take credit card payments, nor any other payment than international wire transfers when we sell e-currencies.

Roberto

[Aggro]

I thought Dwolla can't be reversed? (I've never used it and don't know much about it)

that's what everyone thought, apparently dwolla changed their ToS without any notice

Actually, they had a "dispute resolution" service from the get go. When there is dispute resolution, there is the chance for chargeback. The other day I saw an article tittled "Dwolla passes the million dollar a day". As soon as I read that, my initial thought was the bigger they get, the more like paypal they will become. They have to actually, they have no other choice operating out of the US.

[Jered Kenna (TradeHill)]

I thought Dwolla can't be reversed? (I've never used it and don't know much about it)

that's what everyone thought, apparently dwolla changed their ToS without any notice

You thought wrong. Everything based in the US can (and will) be reversed if it is fraudulent. Even if it is not, if the customer complains to his/her bank, etc... things will get reversed.

This is exactly why we don't take credit card payments, nor any other payment than international wire transfers when we sell e-currencies.

Roberto

It's fine you have chargebacks but don't list non-reversible transactions as one of your features. http://www.dwolla.org/blog/retail-merchants-rejoice-web-kiosk-online/

[Aggro]

I thought Dwolla can't be reversed? (I've never used it and don't know much about it)

that's what everyone thought, apparently dwolla changed their ToS without any notice

You thought wrong. Everything based in the US can (and will) be reversed if it is fraudulent. Even if it is not, if the customer complains to his/her bank, etc... things will get reversed.

This is exactly why we don't take credit card payments, nor any other payment than international wire transfers when we sell e-currencies.

Roberto

It's fine you have chargebacks but don't list non-reversible transactions as one of your features. http://www.dwolla.org/blog/retail-merchants-rejoice-web-kiosk-online/

Jared,

Don't get me wrong. I am 100% with you. I always felt that Dwolla was sort of a hack kind of put together half assed. They grew up too fast and a couple of scammers quickly wised up on how to get free money. I was reading at that article somebody posted here. It starts like this:

"If a transaction on your account has been reversed it is possible one of the following scenarios has occurred:

1. The-sending party has filed a dispute with their bank, which has resulted in an automatic reversal of a transaction."

Anybody that banks in the US knows how INCREDIBLY EASY is to reverse an ACH transfer. More or less, you just pick up the phone and go "I didn't authorized it / I am not happy with the service and/or product I bought / I changed my mind / my cat is sick and I would rather use the money on that ) and the list goes on.

The possibilities to scam like this are ENDLESS. I have been exchanging e-currencies since before bitcoin was only a thought and I have learned my lesson. We have been scammed with transfers from $100 to €65,000 which we are still battling in a european court.

Here is an example of something that can be done with Dwolla (this was done to us with a direct bank transfer in the UK):

Joe is a scammer. Joe lists a car for sale on ebay. Martin likes the car and wants to buy it. Joe instructs Martin that he receives payment only through Dwolla. Joe instructs Martin to pay for the car through Dwolla to his account on Tradehill. Of course Martin does not know anything about bitcoin/tradehill/etc, so he goes with the instructions Martin gave him and happily pays Joe through Dwolla. Joe get's the money credited in Tradehill, buys bitcoins, withdraw, and then .... GOOD LUCK finding Martin and / or the car!!

This has actually happened to us. Replace dwolla with Barclays bank and bitcoin with Liberty Reserve (100% irrevocable). We lost the funds (because there was a crime involved) and on top of everything had to spend a lot of time providing information and answering questions to the police.

[JoelKatz]

You thought wrong. Everything based in the US can (and will) be reversed if it is fraudulent. Even if it is not, if the customer complains to his/her bank, etc... things will get reversed.

The issue is *what* gets reversed. Sure, the bank transaction can get reversed. The issue is whether the Dwolla transaction can be reversed. Dwolla says no.

Say you have a piece of furniture you want to sell on consignment. You put it in a consignment shop for $400. The agreement with the shop is you get $350 if it's sold. Then one day the shop says, "Sorry, we sold your furniture but the transaction was reversed. So you're out $350. Oh, and we're not going to give you any more details. Sorry about your furniture."

Sure, the credit card transaction can be reversed. But unless the consignment shop had some agreement that explicitly made you liable in that case, that's between them and their bank. Dwolla is acting like the consignment shop trying to get the money back from the furniture owner just because they were defrauded.

[Serge]

I thought Dwolla can't be reversed? (I've never used it and don't know much about it)

that's what everyone thought, apparently dwolla changed their ToS without any notice

Actually, they had a "dispute resolution" service from the get go. When there is dispute resolution, there is the chance for chargeback. The other day I saw an article tittled "Dwolla passes the million dollar a day". As soon as I read that, my initial thought was the bigger they get, the more like paypal they will become. They have to actually, they have no other choice operating out of the US.

Anyone operating in US under money transmitting business license will have reversible procedures in place for buyer protection against fraud. I was unbelievably surprised when I heard of Dwolla service with their claim to have no chargebacks as a benefit for merchants.

I guess for non reversible USD transactions in US only way to go is to use wire transfers, I'm not even so sure about checks, unless it's certified check which costs more than domestic wire and only ensures that specific amount is available for deposit. and maybe money orders (welcome back to 90s)

[Jered Kenna (TradeHill)]

Aurumxchange,

I agree with you 100% and chargebacks are always going to be a problem when you deal with products or services that are non reversible.


All we ask and I assume everyone can agree:

1) If chargebacks exist don't claim your payment is non reversible
2) If you're doing a chargeback tell the merchant. Don't just debit the account and then act like it didn't happen.

All it takes is clear communication.


Jered

[RandyFolds]

Man, this is ultra-scandalous. Another case of amateur hour getting too big for their britches?

Dwolla is bleeding rep like a stuck pig right now and they haven't said a damn thing to stem the flow. I am very interested for them to weigh in and make good with TradeHill...speaking of which, I applaud your announcements and attempts to save other exchanges and us consumers from the same BS. I think everyone here fully supports you.

[JoelKatz]

Anyone operating in US under money transmitting business license will have reversible procedures in place for buyer protection against fraud.

The issue isn't Dwolla protecting the buyer from fraud. They can certainly do that if they want to by refunding their money. That's not what happened here.

It looks like this:

Scammer <- Transaction A -> Dwolla <- Transaction B -> TradeHill

Now, if Dwolla wants to reverse transaction A due to fraud to protect the buyer, they certainly can. But there's no fraud in transaction B, and Dwolla has no grounds to reverse *that* transaction.

I was unbelievably surprised when I heard of Dwolla service with their claim to have no chargebacks as a benefit for merchants.

Exactly. The whole point of Dwolla is that TradeHill doesn't have to go through the risk and expense of entering into a transaction with a possible scammer. They can just take Dwolla and deal only with Dwolla. I sincerely hope that this was simply a mistake on Dwolla's part and they'll correct it immediately as soon as they can. Otherwise, they've just eliminated their entire purpose.

And I agree with RandyFolds amateur hour comment. I don't see how Dwolla can exist on just 25 cents per transaction. If one out of ten thousand transactions is fraudulent, they'll go broke. Dwolla's business model seems impossible to me. They've agreed to take the entire fraud risk, and yet they don't charge enough to cover those costs.

[Jered Kenna (TradeHill)]

Man, this is ultra-scandalous. Another case of amateur hour getting too big for their britches?

Dwolla is bleeding rep like a stuck pig right now and they haven't said a damn thing to stem the flow. I am very interested for them to weigh in and make good with TradeHill...speaking of which, I applaud your announcements and attempts to save other exchanges and us consumers from the same BS. I think everyone here fully supports you.

Thanks Randy. Hopefully the other exchanges can learn from this and be on the lookout for it. A lot of our funds come in through Dwolla, that should be enough for credibility alone.
The support we're receiving has been motivating.

Jered

[bitcon]

i don't know about anyone else, but this is conjuring feelings of being GOXED all over again...........

[Trader Steve]

Dwolla scandal update: Camp BX is not affected by this, and every dollar is accounted for.

Hoping the same for other Bitcoin sites!

Thank you,
     Keyur
     www.CampBX.com

+1 for CampBX!  Sucks that scandals reduce the bitcoin value, though.

This actually illustrates the fact that bitcoin is a superior currency - people will lie, cheat and steal to get it. Dwolla has shown its' inferiority in this regard because it is reversible.