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Author Topic: Paypal Woes  (Read 1107 times)
alexbishops
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April 02, 2012, 04:03:28 PM
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I just wanted to share my story in case it will help anyone else.

I've recently been selling bitcoins on eBay (you can probably guess where this is going). Just today I received a message from paypal saying that one of the winners of my bitcoins had had their account hacked into. I attempted to provide paypal with my side of the story but they instantly went in favour of the bitcoin buyer.

There were two things that got me worried about this buyer: the first was that they were registered in Hong Kong (I was actually quite impressed at first with the fact that I'd managed to export something to Hong Kong!) and the second was that the account, which has about 30 feedback, closed soon after they received the bitcoin.

I have sent an email to paypal threatening them with the Financial Ombudsman (a British government run institution that deals with complaints about companies) if they don't listen to me. What really annoys me is paypal's arbitrary dismissal of my evidence and the fact the bitcoin buyer was quite likely a fraudster. From the things I've heard about paypal here and elsewhere I'm not surprised by their behaviour however I plan to cause them trouble over this hopefully costing them more than the £7 I have lost due to this problem.

Has anyone else had similar experiences?

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DeathAndTaxes
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April 02, 2012, 04:07:24 PM
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Hundreds of people have similar experiences and Papypal doesn't really care what you threaten them with.

The outcome was completely predictable.  If you hadn't been scammed with this sale you would have on some future sale. It was never going to end well.

Your were naive and foolish.  Now (hopefully) you know better.



Sicks3144
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April 02, 2012, 04:22:25 PM
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Quote
I've recently been selling bitcoins on eBay

We need a template of some sort based around these words.

Bad luck OP - learning from experiences and all that!

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April 02, 2012, 08:27:20 PM
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Was it ebay user Charluli? He's in Hong Kong and stole $116 worth of BTC from me using the exact method as you were victim to - telling PayPal his account was hacked. eBay sucks. PayPal sucks. BTCs sell for a big premium on eBay, but prepare to be scammed and scammed and scammed again without the common sense protection one should expect from such an expensive escrow. My advice : don't sell bitcoins on eBay. If you do, require a money order or local cash pickup. Good luck.

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April 02, 2012, 11:09:15 PM
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don't sell bitcoins on eBay. If you do, require a money order or local cash pickup.

I really like this HipSwap concept.  Nobody has given any feedback on it yet, but I think it would be useful for something like this.  Essentially their service might be useful simply as a local delivery service to get cash from the buyer delivered inexpensively to the seller.
 - https://bitcointalk.org/index.php?topic=74912.0

So the listing could still exist on eBay but the checkbox would be marked indicating local pickup only.  And then the listing doen't allow PayPal, credit card or any other payment method (that can be done yet, right?).

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April 02, 2012, 11:21:52 PM
 #6

Sorry for your loss in funds and nerves, but you should had not start dealing with Paypal before running a google check on what you intended to do. Like another poster said, a lot of people got scammed in the same way, and unfortunately there is not so much to do.
In the Paypal Term of Service that you agreed on when you register your Paypal account its stated that is prohibited for a Paypal user to use Paypal to buy or sell financial instruments, including electronic money such as Bitcoin. This is why they do not care no matter what you say or do, because if the matter comes to court they will bring their TOS and you are liable for the loss.

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April 03, 2012, 02:42:22 AM
 #7

I think it is interesting how people keep losing money that way.

I don't really think there's much that you can do about safely selling bitcoins online at other than dedicated exchanges (like BTC-e or vircurex).

It might be possible to find a buyer offline, which would allow you to still sell bitcoins without Paypal being involved.

Just out of curiosity, is there a reason why you didn't sell the coins at a dedicated exchange?

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CecilNiosaki
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April 03, 2012, 05:17:53 AM
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Technically, BitCoins are a virtual good, and typically paypal's policy on virtual goods is that they will side with the buyer, because they cannot make any verification that goods were actually delivered, or some drivel like that. If you can prove that you sent it to the user and that they accepted it with knowledge (I won a virtual good case on an E-Gift Card this way), otherwise, you may be out of luck :/
Woet
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April 03, 2012, 09:02:58 AM
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Which is why you should not sell BTC through eBay/PayPal or any other service that has chargebacks or disputes.
alexbishops
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April 03, 2012, 11:34:38 AM
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I think it is interesting how people keep losing money that way.

I don't really think there's much that you can do about safely selling bitcoins online at other than dedicated exchanges (like BTC-e or vircurex).

It might be possible to find a buyer offline, which would allow you to still sell bitcoins without Paypal being involved.

Just out of curiosity, is there a reason why you didn't sell the coins at a dedicated exchange?

The reason I was selling on eBay was just for experimentation. I do have a MtGox account but turning bitcoins from MtGox into real cash requires a wire transfer i.e. a large transaction fee. So far unless I get more chargebacks I'm still making a profit out of my experiment. I even sold one bitcoin for over £12!

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April 03, 2012, 11:52:08 AM
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The reason I was selling on eBay was just for experimentation. I do have a MtGox account but turning bitcoins from MtGox into real cash requires a wire transfer i.e. a large transaction fee. So far unless I get more chargebacks I'm still making a profit out of my experiment. I even sold one bitcoin for over £12!

(guessing you're UK-based by use of £)

Move coins to Intersango for final sale. They have fee-free withdrawal to UK bank accounts (although their fees are incredibly high, it is still cheaper than bank wire fees for small amounts)

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mimarob
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April 03, 2012, 12:19:20 PM
 #12

I've been quite successful on the bitcoin-otc site, but also there there there is a risk of fraud, even though the rating system has protected me so far. (Also I use the "spend the money quick, mr Bond" approach :-)


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April 03, 2012, 12:23:43 PM
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You can try the #bitcoin-otc on freenode. 

You might keep using E-bay if you wanted to expose bitcoin to more people.  If you want sucessful transactions #bitcoin-otc. 

Now that you learned your lesson, you know that you shouldn't do mid to large transactions on E-bay.

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alexbishops
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April 03, 2012, 12:27:28 PM
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I've not done any proper research into it yet but it is possible to send a bitcoin as a physical item isn't it? i.e. You can send the wallet code or whatever on a piece of paper via registered mail. This would protect you against chargebacks as you would be covered by paypal seller protection. It would kind of negate the whole point of a digital currency though...

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DeathAndTaxes
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April 03, 2012, 12:34:01 PM
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I've not done any proper research into it yet but it is possible to send a bitcoin as a physical item isn't it? i.e. You can send the wallet code or whatever on a piece of paper via registered mail. This would protect you against chargebacks as you would be covered by paypal seller protection. It would kind of negate the whole point of a digital currency though...

Not really.  Some people have tried but ultimately Paypal prohibits selling digital currencies.  End Stop.

So when the person disputes the items as "not as described" saying the code doesn't work, or no code was included or simply sends it back (after taking value off it) Paypal will side with them.

People seem to be missing the larger issue.
Paypal COULD change their policies to be Bitcoin friendly.  Paypal has INTENTIONALLY chosen policies which make it prohibitively risky for sellers to use their network to sell digital currency.  This isn't some accidental oversight this is 100% intentional move.

Trying to get around Paypal INTENTIONAL embargo is simply doomed to failure.
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April 03, 2012, 12:38:56 PM
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It does not work anyway. Somebody sending a wallet by paper mail or by any other means could still remove the bitcoins in it, while the wallet is on its way.

Remember it may only be a copy of the wallet that is being sent, essentially a copy of the private key. The person who transfers the bitcoins out of that wallet first is likely to win the conflict.
alexbishops
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April 03, 2012, 01:00:06 PM
 #17

So when the person disputes the items as "not as described" saying the code doesn't work, or no code was included or simply sends it back (after taking value off it) Paypal will side with them.

Have you come across any cases where this has actually happened?

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Raoul Duke
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April 03, 2012, 01:19:07 PM
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It does not work anyway. Somebody sending a wallet by paper mail or by any other means could still remove the bitcoins in it, while the wallet is on its way.

Remember it may only be a copy of the wallet that is being sent, essentially a copy of the private key. The person who transfers the bitcoins out of that wallet first is likely to win the conflict.

Paypal doesn't give a shit if the Bitcoins were removed or not.
If you sell a piece of paper with a private key on it and you send the piece of paper with tracking number, you've kept your end of the bargain.
If they don't accept blockexplorer to prove Bitcoins were delivered they also can't accept it to prove otherwise.
Just make sure you'll not process refunds Wink

I must add this: Don't even try to do what I just described or you'll get burned.

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Gerald Davis


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April 03, 2012, 01:42:00 PM
 #19

Have you come across any cases where this has actually happened?

Yes people have reported it here. 

I have also had people try to scam me out of GPUs on ebay.  They send back a different GPU saying it didn't work (and the one they returned didn't work).  It was only because I had extensive feedback history, had taken a photo of the GPU sold along with the serial #, and included those in the auction listing that I won the dispute. 

The photo was pure luck.  I hadn't even though about someone returning a different broken GPU.
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