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

[enmaku]

Just strike a deal with one/many of many low cost wire transfer/exchange players like xe.com. Pass the discount to customers. Here you go, problem solved. There still will be some fees but much more reasonable than what banks charge. Probably not suitable for sending 20$ but for 500$+ it would do.

Leave it to vlad to pose a solution that doesn't work for the little guy 

In all seriousness it's a good idea and I'd take it and run with it but we do still need a Dwolla-esque solution for the $20 spenders or we're about to see some serious liquidity problems.

[1714890351]

1714890351

[1714890351]

1714890351

[1714890351]

1714890351

[SteveFL]

Someone claiming to be from Dwolla just called me to "verify details of my account" from a 515-422-xxxx number.  They wanted me to give my name and address.  I declined and said I don't know who you really are.  I've never done a single deposit to them, only withdrawls from Mt Gox and TradeHill.  

They may be quiet on this issue, but they're doing something to cover their ass now.

[Smalleyster]

[

From Paxum's web site, main page:

Transaction   Personal Account   Business Account
ATM Withdrawal   $2.00   $2.00
Peer to Peer   $0.25   $1.00
Wire Transfer   $50   $50

Granted you'd have a visa/mastercard that you can use to spend money from your Paxum account, but $50 is a bit much to move cash from one place to another.

From their fee page https://www.paxum.com/payment/fees.php?view=views/fees.xsl

Loading Funds By ACH $5.00

Jered

Does that then translate to:

I load funds into my paxum account by ACH; costs me $5.00

I then send to my peer (Tradehill, business account); costs me $1.00

Total cost to send money from bank to TH is then $6.00?

[Smalleyster]

Where is my head? This is all a bunch of childish stupidity!

TradeHill, or any other business in the USA can sign up for a service that allows them to accept checks by fax/email/phone by using the ACH themselves! I was doing it 20 years ago in my little AutoCAD consulting business.

I pay my cable bill, cell phone bill and three different credit card accounts by paying check by phone *every* month at *no* cost to me and they all credit my account within 2-3 days.

Problem solved.

Jered, get to work! 8^)

[Jered Kenna (TradeHill)]

Where is my head? This is all a bunch of childish stupidity!

TradeHill, or any other business in the USA can sign up for a service that allows them to accept checks by fax/email/phone by using the ACH themselves! I was doing it 20 years ago in my little AutoCAD consulting business.

I pay my cable bill, cell phone bill and three different credit card accounts by paying check by phone *every* month at *no* cost to me and they all credit my account within 2-3 days.

Problem solved.

Jered, get to work! 8^)

Smalleyster, I always appreciate your responses =)

I think this would make us vulnerable to the same problems Dwolla is facing. Worth looking in to for sure though.

In regards to Paxum it's $5 to load your Paxum account. Then to send that to TradeHill is 25 cents.
If you want to load $10 in Paxum it's going to cost $15, if you want to load $5000 it's going to be $5005.
You can also receive transfers from other Paxum users (like Paypal allows user to user) with out most of the downsides we complain about.

If you have say $1000 in your Paxum balance and want to move $20 or the whole $1000 balance to TradeHill that costs 25cents. For us to send funds to your Paxum account there is a $1 fee but we are waiving that the first month and may reduce it in the future.

Jered

[Serge]

Please whitelist Paxum rep to allow to answer some of the questions. He can easily be verified through company email.
http://forum.bitcoin.org/index.php?topic=32604.msg407102#msg407102

[Jered Kenna (TradeHill)]

Please whitelist Paxum rep to allow to answer some of the questions. He can easily be verified through company email.
http://forum.bitcoin.org/index.php?topic=32604.msg407102#msg407102

I'll vouch for him as well. "paxumchris" correct?

[Serge]

Please whitelist Paxum rep to allow to answer some of the questions. He can easily be verified through company email.
http://forum.bitcoin.org/index.php?topic=32604.msg407102#msg407102

I'll vouch for him as well. "paxumchris" correct?

indeed,  PaxumChris

[BitcoinRigs.com]

I really, really hate CC companies, they are allowed to operate a ZERO risk business (and charge a % for it) while always pushing the liability on the merchant/payment-processor.

Not only do they push the liability onto the merchant, but they offer essentially ZERO security to help the merchant protect against fraud.

[Mistafreeze]

Someone claiming to be from Dwolla just called me to "verify details of my account" from a 515-422-xxxx number.  They wanted me to give my name and address.  I declined and said I don't know who you really are.  I've never done a single deposit to them, only withdrawls from Mt Gox and TradeHill.  

They may be quiet on this issue, but they're doing something to cover their ass now.

515 is a Des Moines, Iowa area code. Thats where they are located. They called me yesterday as well to ask if i was happy with the service and if I had any questions. I had to cut him short because I was at work and couldn't talk, asked if he could call back in an hour. He never did.

[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.

I heard mention on Bruce's show about this comment and it stirred my interest.  Looking back at 'Lanie Grace's blog, I see that he has not yet lived up to his promise to provide updates or defend his plainly wrong assertion that Tradehill was not responsive.  It's right there in the comments for God's sake!

If I had to guess, I would suppose that after facilitating apparent libel on the part of Dwolla, he must have decided to shut up...or been told to do so.  Probably a wise move.

[nealmcb]

I figured it would make sense to update the bitcoin wiki with the news that chargebacks could happen.  So I went to

 Dwolla - Bitcoin

and was surprised to see this text.  It was added back on 2011-01-08 in this edit:

 

Risks

ACH fraud can occur (e.g., stolen account used to make payments, account holder falsely disputes a transaction they had authorized, etc.) so there is the risk of ACH chargebacks. In some circumstances, an ACH chargeback can occur within 180 days of the transaction. Payment cards (neither credit card nor debit card) are not used to fund Dwolla accounts thus the relatively common payment card chargeback is not a factor for Dwolla transactions.

I wonder what the source for this claim was.

Here is a link about ACH chargebacks

[Yeti]

Here's a crazy "future" scenario:

Say Alice wants to send money to Bob. She types his bank account number and bank code into her bank's online banking website, sends the funds. It's free. She has a regular account, so she pays somewhere around $5 per month for that and nothing per transaction. She could also opt for no monthly fee and $.25 per transaction, but since rent, utilities, insurance, groceries, etc. all goes through that account, she's better off with the former. So the transaction is free and it is non-reversible, once sent it can only be refunded by the payee. Sufficient funds are checked before the transfer is initiated by the bank.

Now when is this going to be a reality? Wow, this has been actually possible for the last 28 years! In a far away country called Germany. And even if you didn't own one of those fancy BTX terminals back in 1983, you could send money on a slip of paper, also free of charge or with a small fee. And what's a check (or cheque)? I've only once got one, in the late 1990s. It felt ancient.

Since 2008 Alice can also live in Finland while Bob lives in Portugal and it's still free.

No need for any of those services (Dwolla, Paxum) here. Why is the US banking system still stuck in de Medici times? You don't need VC money, you need a 21st century banking system. Why would anybody still need to physically bring their paycheck to the bank?

[coblee]

Jared, does Paxum shield you guys from fraud? In other words, will they uncredit a user to user transfer if the ACH transfer was reverted? (like what Dwolla did)

[JoelKatz]

Say Alice wants to send money to Bob. She types his bank account number and bank code into her bank's online banking website. And it's free. She has a regular account, so she pays somewhere around $5 per month for that and nothing per transaction. She could also opt for no monthly fee and $.25 per transaction, but since rent, utilities, insurance, groceries, etc. all goes through that account, she's better off with the former. So the transaction is free and it is non-reversible, once sent it can only be refunded by the payee. Sufficient funds are checked before the transfer is initiated by the bank.

Now when is this going to be a reality? Wow, this has been actually possible for the last 28 years! In a far away country called Germany. And even if you didn't own one of those fancy BTX terminals back in 1983, you could send money on a slip of paper, also free of charge or with a small fee. And what's a check (or cheque)? I've only once got one, in the late 1990s. It felt ancient.

So, to be 100% clear, you are saying that if the system tells me that I received some money from Alice, there is no way for Alice to get that money back from me other than to sue me? It doesn't matter if she claims someone hacked into her account? It doesn't matter if she says I promised to ship her a product and never did? The transction is irreversible within the system even if she alleges fraud?

If that's true, that's amazing. But I find that very hard to believe.

[Serge]

Jared, does Paxum shield you guys from fraud? In other words, will they uncredit a user to user transfer if the ACH transfer was reverted? (like what Dwolla did)

This is what they said in another thread:

Regarding reversals - here is the exert from our terms of service regarding this.

(e) User acknowledges and accepts that in case of any Transaction disputes, Paxum presumes that all Transactions by User are authorized by and are the liability of the User;
(g) User agrees that all Transactions initiated are final and not reversible;
(i) User agrees that any disputes that arise between Users are not the responsibility of Paxum;

http://forum.bitcoin.org/index.php?topic=32604.msg407528#msg407528

[Smalleyster]

Say Alice wants to send money to Bob. She types his bank account number and bank code into her bank's online banking website. And it's free. She has a regular account, so she pays somewhere around $5 per month for that and nothing per transaction. She could also opt for no monthly fee and $.25 per transaction, but since rent, utilities, insurance, groceries, etc. all goes through that account, she's better off with the former. So the transaction is free and it is non-reversible, once sent it can only be refunded by the payee. Sufficient funds are checked before the transfer is initiated by the bank.

Now when is this going to be a reality? Wow, this has been actually possible for the last 28 years! In a far away country called Germany. And even if you didn't own one of those fancy BTX terminals back in 1983, you could send money on a slip of paper, also free of charge or with a small fee. And what's a check (or cheque)? I've only once got one, in the late 1990s. It felt ancient.

So, to be 100% clear, you are saying that if the system tells me that I received some money from Alice, there is no way for Alice to get that money back from me other than to sue me? It doesn't matter if she claims someone hacked into her account? It doesn't matter if she says I promised to ship her a product and never did? The transction is irreversible within the system even if she alleges fraud?

If that's true, that's amazing. But I find that very hard to believe.

That's the way it works in Costa Rica too. As soon as I hit <Enter> the money is in your account. They all brag that it is a Microsoft Banking program. No way to get it back without going to court. And you will not get it back even then unless it is really big and the newspapers are behind you.

The US system is a scam designed to allow the bankers to fool around with your money while it is in "limbo".

[Yeti]

So, to be 100% clear, you are saying that if the system tells me that I received some money from Alice, there is no way for Alice to get that money back from me other than to sue me? It doesn't matter if she claims someone hacked into her account? It doesn't matter if she says I promised to ship her a product and never did? The transction is irreversible within the system even if she alleges fraud?

If that's true, that's amazing. But I find that very hard to believe.

Yup, wire transfers are irreversible since November 2009. As they say, "it's the law". BGB §675p says that transactions are irreversible if issued by the payer (regular wire transfer). BGB §675u states that if fraud occurs, it's the bank that eats the loss. So they are very eager to protect against fraudulent transactions. BGB is the German Civil Code, it is the book of law.

[borgfish]

Hey Yeti,

i am not into lawbooks or changes from 2009 there, but i am german and i remember some woman laundering phishing money to westernunion who ended up with -32k eur when the phishing victim banks charged back. it was before 2009 but she sued her bank and still has -32k there...

http://www.computerbetrug.de/sicherheit-im-internet/phishing-betrug-mit-daten/phishing-urteile-zu-haftung-und-finanzagenten/


"Die hier streitgegenständlichen Gutschriften waren fehlerhaft, weil eine wirksame Überweisung nicht vorlag, denn die berechtigten Kontoinhaber hatten einen Überweisungsauftrag nicht erteilt."

why shouldnt this ruling apply if the scammer used another ones account or claimed phishing since 2009 ?!

[Yeti]

Western Union is as far and if I remember correctly, a service to send cash to other countries. It is not in any sense a bank with "Girokonto" and wire transfers. It's much like Dwolla, but with offices all around the globe. Basically you give the WU guy in Germany 100 € and another WU guy in Uganda or whereever gives $100 in local currency to your folks there. So, yeah, they are probably easy to scam. Now, there is a Western Union International Bank, but until you say otherwise, I am going to assume that it's their prominent cash transfer service that was employed in this scam.

Edit: Oh, now I know what you're talking about. Yeah, that's a very common scam. Evildoers look for gullible people that want to "work from home". They send the money in a bank transfer that was phished and they are supposed to send it on. If those launderers are caught, they of course are liable for any losses, even though they might not be aware of any laundring or that it it's not a legal "job" they're doing. This forced some poor people into bankruptcy, when the phishing and laundering was uncovered and fell back on them. The people behind all this make the real profit but they stay unharmed of course. Small guys that were hoping for a new chance in life are a Bauernopfer for them.