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Author Topic: TradeHill - Why we no longer accept Dwolla and an open letter to Ben Milne  (Read 35784 times)
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July 27, 2011, 10:01:57 AM
 #61

I haven't seen any statement by Dwolla that they are now allowing chargebacks so my assumption is that they haven't identified why transactions are going from credited back to pending. 

They did respond, they stated they were investigating and would get back to Tradehill with clarification.

The right move for Tradehill would have been to remove Dwolla as a payment option for the time being and wait to hear back from them one way or another. 

Public statement about chargebacks (Bruce having that Dwolla guy at the phone):
http://www.youtube.com/watch?v=88zTVzT2vL0&start=1745
That Dwolla guy at first denied that they have chargebacks, and later acknowledging they have and apologized for lying to Bruce.
So basically Dwolla was afraid telling TH that they do chargeback, exactly the same like PayPal, Visa, etc.
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July 27, 2011, 10:16:29 AM
 #62

The right move for Tradehill would have been to remove Dwolla as a payment option for the time being and wait to hear back from them one way or another.
That's what they did. They also explained why they removed Dwolla as a payment option and alerted the community to a serious fraud risk. Big exchanges are not the only things that take Dwolla.

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July 27, 2011, 10:30:44 AM
 #63

I can see the benefit of making the community aware that Dwolla transactions are reversable.  I still don't think Tradehill acted professionally and definitely hurt their chances of prevailing when this goes to court or arbitration.
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July 27, 2011, 10:51:24 AM
 #64

Regarding Dwolla's facebook page: Do you guys think that a bomb of 10k postings from different facebook users there pointing to this thread would give them any chance to delete them?  Roll Eyes
That CAN be arranged! The 10k number can even be multiplied several times Wink

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July 27, 2011, 11:11:38 AM
 #65

Regarding Dwolla's facebook page: Do you guys think that a bomb of 10k postings from different facebook users there pointing to this thread would give them any chance to delete them?  Roll Eyes
That CAN be arranged! The 10k number can even be multiplied several times Wink
I would really like to see the bitcoin community to take the high road on this. We want to keep it easy for Dwolla to do the right thing and resolve this. (There's a huge market for $0.25 transactions. But they have to pass off their fraud costs. It can't work any other way.)

I am an employee of Ripple.
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July 27, 2011, 11:55:15 AM
 #66

Dwolla and CampBX are discussing a solution to the problem and everything seems to be going fine. MtGox is ok with this (I haven't heard anything from them). Why is TradeHill the only one being ignored? This doesn't make much sense to me...
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July 27, 2011, 12:04:52 PM
 #67

Dwolla and CampBX are discussing a solution to the problem and everything seems to be going fine. MtGox is ok with this (I haven't heard anything from them). Why is TradeHill the only one being ignored? This doesn't make much sense to me...
We don't know. Perhaps the scammers hit TradeHill first/hardest and Dwolla doesn't yet have an answer to whether they're going to reimburse them or come up with some excuse not to.

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July 27, 2011, 12:15:40 PM
 #68

Dwolla and CampBX are discussing a solution to the problem and everything seems to be going fine. MtGox is ok with this (I haven't heard anything from them). Why is TradeHill the only one being ignored? This doesn't make much sense to me...

Maybe MtGox and CampBX are just "experienced businessmen" and just know when to be discrete (as in just keeping their mouth shut, accepting a little fraud as part of the way business is done, and keeping everyone else—including customers—in the dark about it.)  Tongue

Why am I not terribly surprised?

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July 27, 2011, 12:21:06 PM
 #69

F.B Post regarding Dwolla's incident ?



Yup, they deleted my post. No more messages, nothing. I guess that's all the answer I needed.

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July 27, 2011, 02:51:39 PM
 #70

I get that part. I mean whats stoppiong TH from accepting through ACH?? Membership in some organization?  A license?
The fraud risk mostly, I think. ACH transactions are very definitely reversible and have a somewhat high fraud risk attached; if TradeHill were to start accepting them directly they'd be out a lot of money they'd never see again every time a fraudster used an ACH transfer from some random victim's bank account to buy bitcoins and transferred them out. (What's more, you're not going to find any payment method that's as cheap or easy that's not also reversible: non-reversible transactions require considerably more security, which costs both money and time.)

Dwolla seemed to offer a perfect solution: they appeared to swallow the substantial fraud risk associated with accepting ACH transfers for the low, low fee of $0.25 a transaction. Of course, if it sounds too good to be true it probably is.

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July 27, 2011, 03:24:31 PM
 #71

Dwolla and CampBX are discussing a solution to the problem and everything seems to be going fine. MtGox is ok with this (I haven't heard anything from them). Why is TradeHill the only one being ignored? This doesn't make much sense to me...

That seemed very odd to me as well.

As I hypothesized on another thread, perhaps there are NSL's involved.

http://en.wikipedia.org/wiki/National_Security_Letter

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July 27, 2011, 03:56:07 PM
 #72

Dwolla and CampBX are discussing a solution to the problem and everything seems to be going fine. MtGox is ok with this (I haven't heard anything from them). Why is TradeHill the only one being ignored? This doesn't make much sense to me...

That seemed very odd to me as well.

As I hypothesized on another thread, perhaps there are NSL's involved.

http://en.wikipedia.org/wiki/National_Security_Letter

Mt Gox confirmed some transactions have gone missing on IRC and possibly a post. exchangebitcoin.com confirmed it and isn't accepting Dwolla, Bitcoin7 isn't accepting Dwolla and I've been told they confirmed the chargebacks.

It's 100% possible that CampBX didn't receive any chargebacks. If I have to guess it's because they didn't have the open orders to justify defrauding 5k or they thought they would get caught faster with lower volume to hide in. If that's the case good for them. Dealing with fraud isn't fun. I'm assuming if they continue to accept Dwolla and nothing changes they will see fraud.

Jered

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July 27, 2011, 04:05:35 PM
 #73

Dwolla and CampBX are discussing a solution to the problem and everything seems to be going fine. MtGox is ok with this (I haven't heard anything from them). Why is TradeHill the only one being ignored? This doesn't make much sense to me...

That seemed very odd to me as well.

As I hypothesized on another thread, perhaps there are NSL's involved.

http://en.wikipedia.org/wiki/National_Security_Letter

Mt Gox confirmed some transactions have gone missing on IRC and possibly a post. exchangebitcoin.com confirmed it and isn't accepting Dwolla, Bitcoin7 isn't accepting Dwolla and I've been told they confirmed the chargebacks.

It's 100% possible that CampBX didn't receive any chargebacks. If I have to guess it's because they didn't have the open orders to justify defrauding 5k or they thought they would get caught faster with lower volume to hide in. If that's the case good for them. Dealing with fraud isn't fun. I'm assuming if they continue to accept Dwolla and nothing changes they will see fraud.

Jered

Excuse the repeated question Jered, but did any of your customers lose money in this?  That's really the only concern I have.
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July 27, 2011, 04:18:51 PM
 #74

Dwolla and CampBX are discussing a solution to the problem and everything seems to be going fine. MtGox is ok with this (I haven't heard anything from them). Why is TradeHill the only one being ignored? This doesn't make much sense to me...

That seemed very odd to me as well.

As I hypothesized on another thread, perhaps there are NSL's involved.

http://en.wikipedia.org/wiki/National_Security_Letter

Mt Gox confirmed some transactions have gone missing on IRC and possibly a post. exchangebitcoin.com confirmed it and isn't accepting Dwolla, Bitcoin7 isn't accepting Dwolla and I've been told they confirmed the chargebacks.

It's 100% possible that CampBX didn't receive any chargebacks. If I have to guess it's because they didn't have the open orders to justify defrauding 5k or they thought they would get caught faster with lower volume to hide in. If that's the case good for them. Dealing with fraud isn't fun. I'm assuming if they continue to accept Dwolla and nothing changes they will see fraud.

Jered

Excuse the repeated question Jered, but did any of your customers lose money in this?  That's really the only concern I have.

Valid question, we are willing to pay out of our own pockets. Had this been higher and we couldn't cover it ourselves yes they would have.
If another exchange is down 50k 100k or 500k and can't afford it then they could go under and their (which a lot are also ours) customers will be hit hard.
It's possible that our mutual customers are going to lose money but it's too soon to say for sure.

To sum it up: We're not going to pass the fraud on to our customers like Dwolla has done. It stops with us because we will eat it if Dwolla doesn't do the right thing.

Jered

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July 27, 2011, 04:40:02 PM
 #75

Dwolla and CampBX are discussing a solution to the problem and everything seems to be going fine. MtGox is ok with this (I haven't heard anything from them). Why is TradeHill the only one being ignored? This doesn't make much sense to me...

That seemed very odd to me as well.

As I hypothesized on another thread, perhaps there are NSL's involved.

http://en.wikipedia.org/wiki/National_Security_Letter

Mt Gox confirmed some transactions have gone missing on IRC and possibly a post. exchangebitcoin.com confirmed it and isn't accepting Dwolla, Bitcoin7 isn't accepting Dwolla and I've been told they confirmed the chargebacks.

It's 100% possible that CampBX didn't receive any chargebacks. If I have to guess it's because they didn't have the open orders to justify defrauding 5k or they thought they would get caught faster with lower volume to hide in. If that's the case good for them. Dealing with fraud isn't fun. I'm assuming if they continue to accept Dwolla and nothing changes they will see fraud.

Jered

Excuse the repeated question Jered, but did any of your customers lose money in this?  That's really the only concern I have.

Valid question, we are willing to pay out of our own pockets. Had this been higher and we couldn't cover it ourselves yes they would have.
If another exchange is down 50k 100k or 500k and can't afford it then they could go under and their (which a lot are also ours) customers will be hit hard.
It's possible that our mutual customers are going to lose money but it's too soon to say for sure.

To sum it up: We're not going to pass the fraud on to our customers like Dwolla has done. It stops with us because we will eat it if Dwolla doesn't do the right thing.

Jered

well thats laudable.
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July 27, 2011, 04:44:04 PM
 #76

If another exchange is down 50k 100k or 500k and can't afford it then they could go under and their (which a lot are also ours) customers will be hit hard.
It's possible that our mutual customers are going to lose money but it's too soon to say for sure.
So does Gox not even know how much it's in the hole for yet?

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July 27, 2011, 04:47:31 PM
 #77

If another exchange is down 50k 100k or 500k and can't afford it then they could go under and their (which a lot are also ours) customers will be hit hard.
It's possible that our mutual customers are going to lose money but it's too soon to say for sure.
So does Gox not even know how much it's in the hole for yet?

He's going to have to speak for himself on that one. Could be a little or a hell of a lot.

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July 27, 2011, 05:02:39 PM
 #78



Excuse the repeated question Jered, but did any of your customers lose money in this?  That's really the only concern I have.
[/quote]

Let me also clarify.

We do not intend to pay for Dwolla's mistakes. Tradehill will not be responsible for the mistakes of others. We only take full responsibility for our own mistakes. Dwolla needs to make good with us and the community.

Dwolla has already refused to respond and only admitted in one email - right before we went public - that 'charge-backs' did/do occur. After which, they promptly changed their TOS on July 25th (the day we went public). Everyone knew they promoted and marketed 'no charge-backs' and this is what made them so attractive to Bitcion exchanges. Why? Because exchanges could credit customer accounts 'instantly' without the risk of loss. Note that none of this explains why transactions just disappear/appear on past statements. Gox, Bitcoin Exchange, and others have now stated they also found errors in Dwolla data.

If Dwolla does not cover the losses incurred from their inappropriate advertising and data inaccuracies, then we will take legal action. In the meantime, we will make good with our customers from our own pockets. We hope people realize what this means to us.

Adam  

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July 27, 2011, 05:08:27 PM
 #79


If Dwolla does not cover the losses incurred from their inappropriate advertising and data inaccuracies, then we will take legal action. In the meantime, we will make good with our customers from our own pockets. We hope people realize what this means to us.

Adam  

Noted.  Thank you Adam.  Given the circumstances, I can't see how you could take any action other than to cover the trades surrounding this fiasco.  Still, the question had to be asked.
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July 27, 2011, 05:17:01 PM
 #80

[POLL] Will you reverse your Dwolla transactions?
http://forum.bitcoin.org/index.php?topic=32354.0

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