TradeHill - Why we no longer accept Dwolla and an open letter to Ben Milne

[Jered Kenna (TradeHill)]

Why we no longer accept Dwolla and an open letter to Ben Milne  also posted on http://tradehillblog.com/

TradeHill no longer accepts Dwolla payments because there are chargebacks occuring.

We have witnessed 9 cases where a Dwolla payment we received (and credited) was reversed days or even weeks later. In another 8 cases, Dwolla payments simply disappeared from the transaction history a few weeks after they were completed.  In all cases these were payments which were listed as CREDITED on our statements and were confirmed via email and the downloadable statement.

In none of these cases did Dwolla notify us of any issues. Instead, the transaction record was silently edited and our account balance simply dropped by a few thousand dollars each time.

The individuals who sent the payment, once credited on TradeHill, immediately bought BTC and disappeared. Our evidence suggests these individuals were well aware of Dwolla’s weaknesses and were explicitly exploiting them.

Our claims are supported by past CSVs, statements, emails, and recorded telephone conversations which we have systematically collected over the last two weeks.

Unfortunately we are currently on the hook to cover these losses and continue to receive no cooperation or explanation from Dwolla.



Therefore we announce An Open Invitation for Dwolla CEO Ben Milne to Call TradeHill:


Ben,

Please call us.

Over the last 2 weeks we’ve been trying to reach someone C-Level at Dwolla so that we could bring to your attention the problems we have found with your service.

Unfortunately with every contact we’ve been stone-walled and given promises that your company would get back to us with clarification.  Never has a telephone call been returned.

We have emailed your customer service rep Ben Murga regarding this issue on the following dates: July 14th, July 15, July 19th, July 21st, July 22nd, July 25th.

We have called your office 15 times over the same time period. Nearly each time we were told that you’d get back to us after we’d described the problem we were experiencing.

To help you take our concerns more seriously, we even provided your representatives with data packages irrefutably demonstrating the bug we see in your system.

However, we have been consistently brushed off and given wrong information. Our interpretation, either:
- Dwolla is well aware of the problem but working to cover it up.
- Your customer service representatives are not escalating the issue.

So, our request is simple. Please contact us and setup a time to speak so that we can make our case for why your system is broken.
Hopefully we can find a way to move forwards to protect your other customers from experiencing the same fraud that we have.

Regards,
TradeHill






Edit: http://www.dwolla.org/blog/retail-merchants-rejoice-web-kiosk-online/ shows their "no chargeback" policy and is getting some interesting comments, feel free to join in.

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[Bruce Wagner]

Re-Tweet it:

#Bitcoin Show: TradeHill clms Dwolla malfeasance, incommunicado & reversed transactions w/o notificatn. http://t.co/ADJ5w2S

[evoorhees]

Thanks for the note Jered. It's always encouraging to see your frequent communication here on these forums.

[tvbcof]

I thought that it was interesting that a blogger was, apparently, able to get right through to Dwolla and obtain fairly detailed information about what the problem is:

  "I contacted Dwolla Customer Service who explained to me it was TradeHill improperly crediting the accounts of users prior to confirmation that the transactions had cleared. "

  From: http://fmqinc.com/tradehill-bitcoin-exchange-fraudulent-scandal/

Hopefully if/when Milne responds, he'll be able to explain the apparent discrepancies between the above statement and the CSVs and/or a little bit more on how the CSVs, balances, etc were supposed to have been interpreted and why.

Failing that, I would add to the list of complaints against Dwolla, defamation and libel.

[bitcoinminer]

What is the story with withdrawals?  I have a pending withdrawal of USD->Dwolla I'm waiting on.

[Yankee (BitInstant)]

I thought that it was interesting that a blogger was, apparently, able to get right through to Dwolla and obtain fairly detailed information about what the problem is:

  "I contacted Dwolla Customer Service who explained to me it was TradeHill improperly crediting the accounts of users prior to confirmation that the transactions had cleared. "

  From: http://fmqinc.com/tradehill-bitcoin-exchange-fraudulent-scandal/

Hopefully if/when Milne responds, he'll be able to explain the apparent discrepancies between the above statement and the CSVs and/or a little bit more on how the CSVs, balances, etc were supposed to have been interpreted and why.

Failing that, I would add to the list of complaints against Dwolla, defamation and libel.

Um, firstly, if you read above Jered mentioned that he has no problem reaching low level customer service, which anyone can do.

This is a stupid blog post which has no merits.
Obviously, if the blogger read tradehillblog.com she would see she's incorrect.

""I contacted Dwolla Customer Service who explained to me it was TradeHill improperly crediting the accounts of users prior to confirmation that the transactions had cleared. ""

So if you read the blog (http://tradehillblog.com/2011/07/25/tradehill-audit-discovers-dwolla-transactions-are-reversible/)

July 11th
Transaction ID 169552 shows “credit”



On July 11th we received an email from Dwolla stating that the transfer was good and could be credited.



If we look at the CSV 3 days later it shows “pending” by this point the scammer had already converted their funds to BTC and removed them.



We have asked specifically if a transaction can go from “credited” to “pending” in their system and if we should wait to credit these transactions.  Dwolla has repeatidly assured us that this is not possible and TradeHill should credit anything showing “credited” on their statement / CSV or if we receive an email.

[Jered Kenna (TradeHill)]

What is the story with withdrawals?  I have a pending withdrawal of USD->Dwolla I'm waiting on.

Withdrawals are processing fine. We are manually doing everything to make sure we don't cash out a scammer so there may be a slight delay.
Shoot an email to info@tradehill.com if it's not taken care of half an hour.

Jered

[bitcoinminer]

What is the story with withdrawals?  I have a pending withdrawal of USD->Dwolla I'm waiting on.

Withdrawals are processing fine. We are manually doing everything to make sure we don't cash out a scammer so there may be a slight delay.
Shoot an email to info@tradehill.com if it's not taken care of half an hour.

Jered

It's been 3.5 hours already.  I'll email, thanks

[Serge]

I wish you'd have lawyers get involved in this.   

[bitcoinminer]

On another note, if you guys are their second biggest customer, they will I'm sure notice the sudden lack of money on their side.

I think I should just open a service for changing dollars into bitcoins lol... Cash only!!!  It's crazy how much all of these various merchants (paypal, banks, etc) are slanted towards tolerating scamming.

It's not even just one way - PayPal has managed to f*ck me as a buyer and a seller on numerous occasions.  I always ask them the same question - "I can take someones money through paypal, and you guys wont give it back to them?  AWESOME!"

[bitcoinminer]

I wish you'd have lawyers get involved in this.   

You'd have a decent case considering they have no terms and conditions listed on their website.

You'd also be tied up for months/years trying to get money.

He's doing the right thing - by refusing to allow deposits from them, he is hitting them in the wallet, where they will feel it the loudest and the quickest.

[matonis]

I wonder if Dwolla's investors are even aware of this situation,

Veridian Group and TMG investment:
https://www.veridiancu.org/
http://www.themembersgroup.com/

[bitcoinminer]

I wonder if Dwolla's investors are even aware of this situation,

Veridian Group and TMG investment:
https://www.veridiancu.org/
http://www.themembersgroup.com/

Why would they care?  If it were DWOLLA having to shell out the thousands in bogus transactions, they'd care.  When they see income drop from Tradehill not accepting them, then they'll care.

[joulesbeef]

This could be a huge screw up for them, especially how they are handling it.
News just said dwolla hit 1 million transactions and a good bit of that comes from bitcoin and I'm sure tradehill.

heck I'm on there I dont know too many people who trade coins who arent. I wonder if they know how many people are watching this crap and are getting pretty damn annoyed, even if they havent been directly effected.

[tvbcof]

Um, firstly, if you read above Jered mentioned that he has no problem reaching low level customer service, which anyone can do.

I've followed the details with interest.  Tradehill's statements leaves the impression that an explanation of the problem, much less and acceptable solution, was not forthcoming.  Yet some random blogger can get the details about a third-party's issues out of tech support with no problem?

If the info given to a blogger by Dwolla was factually incorrect, did harm to Tradehill, and was published, that strikes me as 'pretty wrong' on the part of Dwolla.  How wrong?  Time will tell.

[Yankee (BitInstant)]

Um, firstly, if you read above Jered mentioned that he has no problem reaching low level customer service, which anyone can do.

If the info given to a blogger by Dwolla was factually incorrect, did harm to Tradehill, and was published, that strikes me as 'pretty wrong' on the part of Dwolla.  How wrong?  Time will tell.

I am in 100% agreement with you! Time will tell, let's wait for Dwolla's response.

[jwzguy]

Dwolla went back and altered their account statements, and didn't even notify them?

That's FRAUD. Lawsuit time, guys.

[JoelKatz]

I wish you'd have lawyers get involved in this.  

I believe you would win at arbitration. Dwolla cannot interplead out of the dispute because they don't have the funds anymore. All Dwolla can do is claim fraud. TradeHill will ask Dwolla to show any evidence that they engaged in fraud. They will have none.

That Dwolla was defrauded by a third party explains their breach, but it doesn't legally excuse it. It creates an obligation on TradeHill to minimize the damages as best they reasonably can once Dwolla notifies them, which it sounds like TradeHill did even though Dwolla never notified them. Dwolla is not liable for the full amount of the transfers, but they are liable for the full amount of TradeHill's damages.

Even Dwolla's change in their ToU doesn't change this. Dwolla retaining a right to chargeback just means they can take the money back before they go to arbitration. It doesn't mean they get to keep it unless they can prove they're entitled to it. I believe they will still lose in arbitration. To be entitled to keep the amount charged back, Dwolla would to prove fraud, unjust enrichment, or the like. There is still no provision of law or in their agreement that makes one customer liable for another customer's fraud or breach. There is no "your money was fraudulently taken from me" defense. That Jill defrauded you out of Jack's money is no defense when Jack wants his money back.

Credit card chargebacks don't work that way only because of specific Federal consumer protection laws. To my knowledge, no such laws help Dwolla. Dwolla is going to learn a hard lesson -- there's a good reason everyone else isn't doing what they're doing.

[bitrebel]

Its Tradehill they tried to fuck, by trying to pass on the buck. It's all Dwolla's fault for being greedy. They should have to pay.

[Bitcoin Swami]

Bastards! I went on their facebook page (I was the only one making a fuss on there) and posted a direct link to the open letter and asked them to please tell their side.  They replied by saying, "we are not a member of that forum, do you have any specific questions that we can answer"

I said yes, I guess my main question would be why are you guys ignoring Tradehills attempts to clarify a huge problem (something like that I dont know exactly what I typed.... I also said that "there are hundreds if not thousands of Dwolla users on that forum, that doesn't bother you? "

I came home to see if they responded and they blocked me from their page or deleted it all together cause I can't access it anymore through facebook.

EDIT TO ADD: if you use facebook it wouldn't hurt to "like" their page and give them a little push.