Best practices for Bitcointalk escrow providers

[Quickseller]

Well it is the escrow's job to ensure the trade goes smoothly, and if it doesn't to see that the scammer does not end up with the money. That is what they are getting paid to do. If the escrow is not willing to do basic due diligence before releasing the money, I don't see the point of using them.

The amount in question in this case is $50k. I don't think it is unreasonable to use a little bit of care when dealing with that much of other people's money.

How would you care more when the same person (here same account) is telling you to make a change in the deal? If there was no hack involved we would not see the scam. The situation was real tricky and anyone would have been victim of it. MJ did not keep the money after all.

When the terms are changed after money has been sent to the escrow address, the escrow agent needs to be sure that everyone is on the same page. MJ should have delayed releasing the money. This might be inconvenient for the parties involved, but it is the escrow agent's job to ensure a safe transaction.

If the delivery is in-person you don't need escrow.

Unless if you are afraid of might you going to meet/ see in your meeting point.

You mean like getting robbed? Online escrow won't help with that.

Yes. Probably won't help but it depends on how anyone thinks of it. For some, it might sound like a safety measure while for others a useless action.
The thing is that here the scammer has the mine trap setup and ready to blow. I doubt that there is anyone who would be able to notice it or think that the account was compromised and freeze the deal. Unfortunately, it might happen to anybody.

No, using escrow for an in-person transaction will not protect you. There will still be the potential one party gets robbed. It will also be impossible for the escrow agent to determine which party should get the money in the event of a dispute. 

[BitcoinGirl.Club]

The thing is that here the scammer has the mine trap setup and ready to blow. I doubt that there is anyone who would be able to notice it or think that the account was compromised and freeze the deal. Unfortunately, it might happen to anybody.

That's where all gone wrong. It was like the escrow was talking to the same person but it was not. The person behind the account was changed. This could happen to anybody.

I refuse to believe that, otherwise no trades can ever take place anymore. It is possible for an escrow to (learn from this and) impose escrow rules that can prevent this.

Whoever gone through this experience (by watching or being in discussion or just a quick read) I am pretty much confirm that from now on they will check account logs. I will ask from a bitcoin signed address for sure in every conversation especially when the time to make the trade.

When the terms are changed after money has been sent to the escrow address, the escrow agent needs to be sure that everyone is on the same page. MJ should have delayed releasing the money. This might be inconvenient for the parties involved, but it is the escrow agent's job to ensure a safe transaction.

I think I already said, nothing was alarming as the instructions were coming from the same account.

I can only imagine explaining everyone how to use multisig, as I bet that most of the people never even tried it with testnet let alone mainnet.

It is very easy to do. Try it with Electrum from the same device to get the idea. You do not need multiple device to create a practice wallet.

[LoyceV]

nothing was alarming as the instructions were coming from the same account.

Changing the deal is the alarming part! Even if they really met in person, the buyer could have been held at gunpoint and forced to send this message.

Let me rephrase the question. Let's assume a honest seller wants to sell collectible coins worth $50,000. Would a honest seller send them directly to the buyer after escrow gets paid, knowing he may not receive his payment if the buyer (who's relatively new to the forum) claims to have received an empty box? I didn't follow many trades in Collectibles, but has any honest seller ever taken this risk?

[BitcoinGirl.Club]

Let me rephrase the question. Let's assume a honest seller wants to sell collectible coins worth $50,000. Would a honest seller send them directly to the buyer after escrow gets paid, knowing he may not receive his payment if the buyer (who's relatively new to the forum) claims to have received an empty box?

No.
The best practice considering the amount risked in the trade. Escrow receive the coins from the buyer, escrow receive the delivery from seller, escrow post the delivery to buyer, escrow release the funds to the seller. Using this process escrow knows that the item was delivered to the person.

I think this flow should be followed even if the item worth $50 or less. Without the touch escrow do not know if the item truly delivered to the buyer.

[Quickseller]

Let me rephrase the question. Let's assume a honest seller wants to sell collectible coins worth $50,000. Would a honest seller send them directly to the buyer after escrow gets paid, knowing he may not receive his payment if the buyer (who's relatively new to the forum) claims to have received an empty box? I didn't follow many trades in Collectibles, but has any honest seller ever taken this risk?

This is a common practice. I have both bought and sold physical coins, and bitcoin miners using escrow. In all cases, everyone involved wanted the shipment to be sent directly to the buyer by the seller. As an escrow agent, I had facilitated the sale of physical goods, and all parties had always wanted the goods to be sent directly from the seller to the buyer.

There are some cases when one party wants the goods to be sent to an escrow agent, for example when one party especially doesn’t trust the other party.

[LoyceV]

This is a common practice. I have both bought and sold physical coins, and bitcoin miners using escrow. In all cases, everyone involved wanted the shipment to be sent directly to the buyer by the seller. As an escrow agent, I had facilitated the sale of physical goods, and all parties had always wanted the goods to be sent directly from the seller to the buyer.

How does that protect the buyer if the seller sends a fake? Or how that it protect the seller if the buyer claims he received a fake?

[Quickseller]

This is a common practice. I have both bought and sold physical coins, and bitcoin miners using escrow. In all cases, everyone involved wanted the shipment to be sent directly to the buyer by the seller. As an escrow agent, I had facilitated the sale of physical goods, and all parties had always wanted the goods to be sent directly from the seller to the buyer.

How does that protect the buyer if the seller sends a fake? Or how that it protect the seller if the buyer claims he received a fake?

The seller, ideally should have posted (or provided) pictures of what they are selling. So there should be a baseline amount of evidence that the item in question exists.

In the event of a dispute, it will be up to the buyer and seller to provide as much evidence as they can to prove they are in the "right" and that the other party is in the "wrong". This may include providing video evidence of packing the box the item is being shipped in (or in the case of the buyer, of opening the box the item was shipped in). Other evidence may include photos of the item that is claimed to have been received.

I have a special folder in my PM inbox for templates for escrow agreements that I used years ago when I would act as an escrow agent. Below is one template that I would use, and both parties would need to agree to these terms:

Alright, please consider this the escrow agreement:

BTC/fiat trade:

BTC buyer:
Seller:

Exchange rate: $
Payment method:
Fiat amount being traded:

Special conditions:

Amount seller should send to the escrow address:
Amount buyer will receive upon the release of escrow:
Escrow Address:
Escrow fee: 1%

Buyer, once you see a transaction for the above amount confirmed on the blockhain, you are clear to send fiat to the seller.

Seller, once you have receive the fiat, and any special conditions, at listed above have been meet, you should confirm your authorization to release escrow to the buyer.

In the event that either party become non-response for 72 hours, then the other party has the right to have escrow released in their favor within 24 hours of their request, less the escrow fee.

In the Event of a dispute, then I will attempt to mediate it to ensure a fair resolution, however if I am unable to be very certain that I am making the correct decision, then I will consult the moderators, and community via the scam accusations section.

Regards
QS

[suchmoon]

In the event of a dispute, it will be up to the buyer and seller to provide as much evidence as they can to prove they are in the "right" and that the other party is in the "wrong". This may include providing video evidence of packing the box the item is being shipped in (or in the case of the buyer, of opening the box the item was shipped in). Other evidence may include photos of the item that is claimed to have been received.

This won't work if one of them is a scammer. Seller can have a studio-quality single take video of packing a $5000 widget and then ship a brick off-camera. Buyer likewise can open the package on video and "find" a brick, after previously removing the actual item.

If you ever resolved any disputes based on this type of "evidence", chances are that you helped a scammer.

[LoyceV]

The seller, ideally should have posted (or provided) pictures of what they are selling. So there should be a baseline amount of evidence that the item in question exists.

That doesn't prove anything if the scammer can get the real owner to post a picture with the scammer's name. But even if he has it, that doesn't prove sending it.

In the event of a dispute, it will be up to the buyer and seller to provide as much evidence as they can to prove they are in the "right" and that the other party is in the "wrong". This may include providing video evidence of packing the box the item is being shipped in (or in the case of the buyer, of opening the box the item was shipped in). Other evidence may include photos of the item that is claimed to have been received.

It's trivally easy to make changes to the content of the box after filming and before shipping. Or the buyer can reseal the box and then start filming.

I have a special folder in my PM inbox for templates for escrow agreements that I used years ago when I would act as an escrow agent. Below is one template that I would use, and both parties would need to agree to these terms:

~
In the Event of a dispute, then I will attempt to mediate it to ensure a fair resolution, however if I am unable to be very certain that I am making the correct decision, then I will consult the moderators, and community via the scam accusations section.

That doesn't sound airtight, and it's not even a physical item.

I stand by this:

This is what I would have expected:

• Buyer and seller provide payment and shipping details to escrow.
• If all agree on all terms, buyer pays escrow and seller sends product to escrow.
• Escrow verifies product.
• Escrow releases product and payment only if everything is okay.

[Quickseller]

There is no way to *guarantee* there will be no risk of getting scammed in any transaction. Additional measures to reduce risk would result in additional costs and will probably not reduce the scope of people that will succeed in pulling off a successful scam. The procedures are clear to anyone involved, and those involved agree to the procedures before sending anything of value.

If there are unique markings on a box, underneath tape, and near the opening, it will not be trivial to reseal the box, as there will be evidence the box was previously opened.

I might point out that out of the dozens of transactions I have acted as an escrow agent for in the past, there was only on in which there was any kind of dispute, and in that case, the scammer did not even try to argue his point, nor provide any kind of evidence.

I have traded using at last a half-dozen different escrow agents, and all of them use a procedure similar to mine, and I have not seen any reports of a scammer successfully tricking an escrow agent into releasing funds in escrow to the wrong person as a result of sending an empty box, or anything similar. If it was trivial to scam this way, you would see the scam accusations page filled with reports of these types of scams.

[suchmoon]

If there are unique markings on a box, underneath tape, and near the opening, it will not be trivial to reseal the box, as there will be evidence the box was previously opened.

What "unique markings"... they can open the bottom of the box or even show you a completely different box and you have no way of telling which one is the correct one unless you trust one person more than the other. Which is the opposite of what an impartial escrow should be.

Sure the little bit of effort required, plus the risk of getting doxed etc, may scare off some lazy scammers but it's disingenuous to present it as a real escrow because it isn't.