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Author Topic: TradeHill - Why we no longer accept Dwolla and an open letter to Ben Milne  (Read 35806 times)
geek-trader
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July 27, 2011, 01:11:52 AM
 #21

Take it to Dwolla's FaceBook!  I just posted there.

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CryptoCommodity
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July 27, 2011, 01:15:33 AM
 #22

Huge mistake on Tradehills part making this such a public issue.  Not only gives the scammers information but limits what Dwolla can and will be willing to do to make things right with Tradehill since you are basically tarnishing their name to the Bitcoin community.

The way business works, right or wrong, is Dwolla will assess the situation and calculate how long it will take them to recover money that they would have to eat to cover the fraudulent transactions to tradehill.  At $.25 a transaction this would be a hell of a lot.  Being that Tradehill made this such a public issue I would assume they will be less willing to come to any type of settlement and might just want to distance themselves from Bitcoin entirely.

Normal business practices are that if you have a problem with a b2b vendor you make sure it doesn't affect your customers.  Tradehill collects a commission on each sale and that commission should be enough that Tradehill can withstand any type of problem they have with their vendors.  If the commission isn't enough to alleviate this this risk then they aren't charging enough, aren't doing enough to limit their risk, or both.

Very amatuerish on Tradehills part to make this such a public issue.
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July 27, 2011, 01:19:04 AM
 #23

Very amatuerish on Tradehills part to make this such a public issue.

How did you expect them to tell people why they all of a sudden do not accept Dwolla?

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July 27, 2011, 01:23:53 AM
 #24

Huge mistake on Tradehills part making this such a public issue.  Not only gives the scammers information but limits what Dwolla can and will be willing to do to make things right with Tradehill since you are basically tarnishing their name to the Bitcoin community.

The way business works, right or wrong, is Dwolla will assess the situation and calculate how long it will take them to recover money that they would have to eat to cover the fraudulent transactions to tradehill.  At $.25 a transaction this would be a hell of a lot.  Being that Tradehill made this such a public issue I would assume they will be less willing to come to any type of settlement and might just want to distance themselves from Bitcoin entirely.

Normal business practices are that if you have a problem with a b2b vendor you make sure it doesn't affect your customers.  Tradehill collects a commission on each sale and that commission should be enough that Tradehill can withstand any type of problem they have with their vendors.  If the commission isn't enough to alleviate this this risk then they aren't charging enough, aren't doing enough to limit their risk, or both.

Very amatuerish on Tradehills part to make this such a public issue.
Exactly, Tradehill was very stupid on their part to make this a public issue. This is a private vendor security issue which will now reach other scammers with a checklist of how to defraud other exchanges.

The question I would be asking is what was Tradehill's Fraud Prevention Plan before this happened. It sounds like they just relied on Dwolla to eat their fraud unconditionally. Thants just plain wrong, hire a professional and buy insurance.
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July 27, 2011, 01:32:19 AM
 #25

Exactly, Tradehill was very stupid on their part to make this a public issue. This is a private vendor security issue which will now reach other scammers with a checklist of how to defraud other exchanges.
You can't keep secrets from the scammers. All you can do is keep the good guys ignorant of what they need to protect themselves from. It's not just the big exchanges who accept Dwolla.

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The question I would be asking is what was Tradehill's Fraud Prevention Plan before this happened. It sounds like they just relied on Dwolla to eat their fraud unconditionally. Thants just plain wrong, hire a professional and buy insurance.
It's not clear what you're saying, but I can't find any way to have it make sense. Are you asking what TradeHill's plan was if Dwolla defrauds them? When you say "their fraud", whose fraud are you talking about?

If Dwolla is defrauded by their customers, they should hire a professional, buy insurance, and all the other things you say. But nobody defrauded TradeHill, except arguably Dwolla. The whole purpose of Dwolla is (or at least, they were saying it was until this happened) to make these exchanges like cash.

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July 27, 2011, 01:48:18 AM
 #26

Exactly, Tradehill was very stupid on their part to make this a public issue. This is a private vendor security issue which will now reach other scammers with a checklist of how to defraud other exchanges.
You can't keep secrets from the scammers. All you can do is keep the good guys ignorant of what they need to protect themselves from. It's not just the big exchanges who accept Dwolla.

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The question I would be asking is what was Tradehill's Fraud Prevention Plan before this happened. It sounds like they just relied on Dwolla to eat their fraud unconditionally. Thants just plain wrong, hire a professional and buy insurance.
It's not clear what you're saying, but I can't find any way to have it make sense. Are you asking what TradeHill's plan was if Dwolla defrauds them? When you say "their fraud", whose fraud are you talking about?

If Dwolla is defrauded by their customers, they should hire a professional, buy insurance, and all the other things you say. But nobody defrauded TradeHill, except arguably Dwolla. The whole purpose of Dwolla is (or at least, they were saying it was until this happened) to make these exchanges like cash.
The issue on privacy. This is important to all of us who use Tradehill or thinking about using Tradehill in the future. Because of the public display of the Dwolla issue I can no longer feel secure that that Tradehill will keep my account details 100% private. They have shown that when the chips are down they will go public at the drop of a hat. I feel the majority of us wouldn't want that at all. Tradehill is being VERY childish be discussing it and I won't give me money to children.

What I wasn't clear on. From what it looks like it looks like chargebacks happened. There are many accounts that get affected from the originating bank to Dwolla to Tradehill. The company at the end of the link is Tradehill that is where the "bad" money was supposed to go and ultimately its up to Tradehill to make sure that money is acceptable for use on their system. Dwolla is an intermediary they are not responsible for Tradehills losses only to refund the originating bank if a call for fraud or chargeback is requested. Again, this shows Tradehill's immaturity in financial transactions. They should be insured against fraudulent transactions if/when they happen in the future. This isnt a Dwolla issue, they are just stuck in the middle and no longer want to pay for fraudulent transactions going to Tradehill.
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July 27, 2011, 02:02:59 AM
 #27

The issue on privacy. This is important to all of us who use Tradehill or thinking about using Tradehill in the future. Because of the public display of the Dwolla issue I can no longer feel secure that that Tradehill will keep my account details 100% private. They have shown that when the chips are down they will go public at the drop of a hat. I feel the majority of us wouldn't want that at all. Tradehill is being VERY childish be discussing it and I won't give me money to children.
That's a load of nonsense. We're talking about people committing fraud here. They have absolutely no right to expect their identity to be kept secret. In any event, though most people probably won't say so, they don't want the business of someone who insists they be permitted to secretly defraud them. So I don't think your business will be missed.

Quote
What I wasn't clear on. From what it looks like it looks like chargebacks happened. There are many accounts that get affected from the originating bank to Dwolla to Tradehill. The company at the end of the link is Tradehill that is where the "bad" money was supposed to go and ultimately its up to Tradehill to make sure that money is acceptable for use on their system.
I have no idea what you mean by "acceptable for use on their system" and I suspect you don't either. And you are wrong, the company on the end of the link of the fraudulent transaction was Dwolla, not TradeHill.

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Dwolla is an intermediary they are not responsible for Tradehills losses only to refund the originating bank if a call for fraud or chargeback is requested.
Umm, no. An intermediary is 100% responsible for losses. It has to be this way or no contracts could ever work -- you'd just launder the contract through an intermediary who would then say "sorry, I not responsible. I just intermediary."

Here's the example in case you missed it: Jack wants a graphics card. He hires Jeff to buy one from NewEgg for him. Jeff gives $200 to NewEgg to buy a graphics card and gives it to Jack. Oops, Jack takes the graphics card and refuses to pay Jeff. Now Jeff wants the $200 back from NewEgg, since Jack didn't pay him, he's out the money and the graphics card, and he was "just an intermediary" between Jack and NewEgg.

An intermediary is only not responsible if the agreement is directly between the two parties. If, say, Jeff drove Jack to NewEgg where Jack paid with a credit card. Then, yes, Jeff would not be responsible if Jack committed fraud. But in this case, the agreement with both parties was with Dwolla. Dwolla didn't bring the two parties together so they could make a deal with each other, Dwolla made a deal with each party. Dwolla didn't watch two other people exchange money, Dwolla handed the money to TradeHill.

Quote
Again, this shows Tradehill's immaturity in financial transactions. They should be insured against fraudulent transactions if/when they happen in the future. This isnt a Dwolla issue, they are just stuck in the middle and no longer want to pay for fraudulent transactions going to Tradehill.
This is a Dwolla issue. It's Dwolla that charged back the transaction between Dwolla and TradeHill, despite no evidence that that transaction was fraudulent.

Dwolla's whole point in existing is to make electronic payments "just like cash". That is what they are paid for. That is what they told everyone they did. That is precisely what they failed to do, surprising everyone, in this case.

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July 27, 2011, 02:06:34 AM
 #28

To call me a troll is laughable.  Anyone with real world business experience will realize that my observations are 100% spot-on.

How do you inform the public that you no longer accept Dwolla.  No need, you simply remove it from the funding/withdrawal methods.

It amazes me that 99% of the Bitcoin businesses seem to be run by people with no business acumen.
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July 27, 2011, 02:25:26 AM
 #29

I would just like to point out that I appreciate TradeHill's openness on this issue and feel it has been handled reasonably and professionally.
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July 27, 2011, 02:33:51 AM
 #30

To call me a troll is laughable.

I dunno...sounded right to me at first glance to say the truth.

Anyone with real world business experience will realize that my observations are 100% spot-on.

How do you inform the public that you no longer accept Dwolla.  No need, you simply remove it from the funding/withdrawal methods.

It amazes me that 99% of the Bitcoin businesses seem to be run by people with no business acumen.

Tradehilll didn't lose me as a customer.  In fact, I have found their actions thus far to have been about the best that could be done under a very trying set of circumstances.  (Of course we've only heard there side of the story...nothing yet from Milne...)

Had Tradehill dropped Dwolla with no explanation and refused to provide one (and if I as a non-Dwolla user had noticed) I would have been pretty suspicious.  I'm suspicious of everyone, including Tradehill, but less so now.  I still keep as little $$$/BTC as practical with them however out of general principle.

I was not inclined to get a Dwolla account, but if I had been I would be extra thankful to Tradehill for the useful information about their practices and methodologies.  If Tradehill is 50% accurate in their reports, it is hard to see how Dwolla survives.  The main question is who eats the losses...the users or the angel investors.


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July 27, 2011, 02:44:16 AM
 #31

If asked why they were no longer allowing Dwolla transfers all Tradehill needed to say was a "business decision".  You as a customer have no right to know why they change using a payment processor.

I am not saying Dwolla is not wrong here, I am just saying that Tradehill acted in a way that was not in their own best interest.  We are talking about two Corporations based in the US.  If Tradehill felt they were wronged they have multiple avenues of recourse.  Trying to hold court on the Bitcoin.org forum isn't one of them.

This tells me a lot of Tradehill

1. They have no business experience
2. They have no legal counsel
3. They do not consider their business dealings to be private and confidential
geek-trader
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July 27, 2011, 02:47:38 AM
 #32

I linked to Trade Hill's blog on Dwolla's Facebook page and they blocked me.  I didn't even say anything mean, just brought it up.

We should all post on Dwolla's Facebook page.  Let them know they can't get away with this.

https://www.facebook.com/dwolla?sk=wall

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July 27, 2011, 02:58:47 AM
 #33

I linked to Trade Hill's blog on Dwolla's Facebook page and they blocked me.  I didn't even say anything mean, just brought it up.

We should all post on Dwolla's Facebook page.  Let them know they can't get away with this.

https://www.facebook.com/dwolla?sk=wall

This is a ridiculous course of action that can only harm the Bitcoin community.

This is something that only happened two weeks ago where it is unknown what Dwolla will do to rectify the situation.  Your course of action almost gaurantees that Tradehill will have to shoulder the loss and probably causes Dwolla to quit dealing with Bitcoin companies.
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July 27, 2011, 03:08:15 AM
 #34

I linked to Trade Hill's blog on Dwolla's Facebook page and they blocked me.  I didn't even say anything mean, just brought it up.

We should all post on Dwolla's Facebook page.  Let them know they can't get away with this.

https://www.facebook.com/dwolla?sk=wall

This is a ridiculous course of action that can only harm the Bitcoin community.

This is something that only happened two weeks ago where it is unknown what Dwolla will do to rectify the situation.  Your course of action almost gaurantees that Tradehill will have to shoulder the loss and probably causes Dwolla to quit dealing with Bitcoin companies.

So far they are being very cordial with me. I posted on their page, and simply asked them for some clarification. I didn't demonize them, I didn't try to imply that they had done something improper, and I did not link back to this open letter. My post is still there, but I did notice that posts from others have disappeared. I extended the olive branch to them of responding in a private message if they'd like. So far, so good. I made it a point to let them know I am local and that I bank with their investors. We'll see where it goes.

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July 27, 2011, 03:37:37 AM
 #35

Tradehill is performing admirably in this situation.  By spreading the word about the fraud it allows other merchants dealing with Dwolla to do their own audits, and probably find additional fraud. This hopefully prevents more fraud.  As a leading edge industry and technology, businesses must self police and support their industry.

From Tradehill's side of the story it seems like they spent quite a lot of time getting stonewalled before they went public. I think not only was it honorable to go public, but business savvy as well, for a couple of reasons:

1. It may motivate Dwolla to deal with them before this thing get legal (ie. only the lawyers win)
2. It serves the dwolla and bitcoin communities very well by doing what Dwolla SHOULD have done (now they dont get to control the message)
3. IMO (and for me personally) it engenders public support by showing they are open and honest and willing to communicate with the community about what is happening.  Granted this can be a tricky strategy but I think they did well.

@joelkatz

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Could you or anyone else explain to me exactly what it is that Dwolla does that TradeHill could not do themselves?

just my .02 btc
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July 27, 2011, 03:45:44 AM
 #36


Could you or anyone else explain to me exactly what it is that Dwolla does that TradeHill could not do themselves?

Accept money through an ACH i believe. Tradehill's only option is Wire Transfers which are 10$ a pop WAY more expensive than 25cents a pop they had before.

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July 27, 2011, 03:47:53 AM
 #37

F.B Post regarding Dwolla's incident ?

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July 27, 2011, 03:48:29 AM
 #38

Lying and deception and keeping quiet is exactly what is WRONG with most businesses and why I am totally uneasy around all salesmen and businessmen.

Bitcoin is the light at the end of a shining tunnel out of that shitpile system and one with alot more transparency and honesty I thought... I think tradehill being open about their problems is a hugely positive thing for their reputation.

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July 27, 2011, 04:16:51 AM
 #39

F.B Post regarding Dwolla's incident ?



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July 27, 2011, 04:18:52 AM
 #40


Could you or anyone else explain to me exactly what it is that Dwolla does that TradeHill could not do themselves?

Accept money through an ACH i believe. Tradehill's only option is Wire Transfers which are 10$ a pop WAY more expensive than 25cents a pop they had before.
I get that part. I mean whats stoppiong TH from accepting through ACH?? Membership in some organization?  A license?

Also, isn't dwolla just trying (and failing) to do exactly what bitcoin does (apart from the denominated in USD part)?

just my .02 btc
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