Best practices for Bitcointalk escrow providers

suchmoon

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Quote from: Quickseller on December 31, 2021, 11:38:31 AM

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.

Quickseller

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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.

LoyceV

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Quote from: Quickseller on December 28, 2021, 08:56:00 PM

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.

Quote from: LoyceV on October 29, 2021, 07:33:44 AM

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.

suchmoon

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Quote from: Quickseller on December 28, 2021, 08:56:00 PM

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.

Quickseller

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Quote from: LoyceV on December 28, 2021, 04:45:39 AM

Quote from: Quickseller on October 31, 2021, 04:51:12 PM

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:

Quote from: Quickseller on July 16, 2015, 02:06:03 AM

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

LoyceV

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Quote from: Quickseller on October 31, 2021, 04:51:12 PM

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

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Quote from: LoyceV on October 30, 2021, 12:49:12 PM

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.

BitcoinGirl.Club

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Quote from: LoyceV on October 30, 2021, 12:49:12 PM

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.

LoyceV

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Quote from: BitcoinGirl.Club on October 30, 2021, 12:10:11 PM

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

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Quote from: condoras on October 29, 2021, 07:12:36 PM

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.

Quote from: LoyceV on October 30, 2021, 04:16:35 AM

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.

Quote from: Quickseller on October 30, 2021, 10:59:21 AM

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.

Quote from: dkbit98 on October 30, 2021, 08:54:38 AM

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.

Quickseller

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Quote from: BitcoinGirl.Club on October 29, 2021, 09:55:44 AM

Quote from: Quickseller on October 29, 2021, 09:50:43 AM

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.

Quote from: condoras on October 29, 2021, 07:12:36 PM

Quote from: suchmoon on October 29, 2021, 05:58:34 PM

Quote from: condoras on October 29, 2021, 05:22:36 PM

Quote from: suchmoon on October 29, 2021, 11:05:49 AM

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.

dkbit98

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Quote from: suchmoon on October 29, 2021, 05:58:34 PM

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

Maybe people who use new metaverse virtual thing would need to use some kind of special escrow approved by Mark Suckerberg, when they meet in virtual space.

Quote from: condoras on October 29, 2021, 05:22:36 PM

Or to use a multi-sig wallet...? So, in any case, you will need at least two parties involved for moving funds.

That is fine and good option for Bitcoin, but I am not sure that multisig would be so easy in case of altcoins like monero.
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.

condoras

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Quote from: LoyceV on October 30, 2021, 04:16:35 AM

Quote from: condoras on October 29, 2021, 07:12:36 PM

it might 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.

It's a fact brother, even if we choose not to believe it.

Trades will continue as they used to no matter how many scammers will try (and sometimes succeed) to scam. This trap was set in such a way that nobody (unless he was very lucky) could avoid it and not fall in. Perhaps if the escrow waits for both parties to confirm the changes or to have another way of communication like an extra layer of security measure. Eg. To proceed in any change/ major decision the escrow will ask for both parties to send a "message" to his WickrMe (since this app needs signature to verify the user) or some other. Perhaps some of you guys (since I'm not a techie/ dev guy) in your spare time can create something to use...
Exactly as you say it in your next sentence. We learn, even if it's the hard, painful, crappy way, and establish better ways for the safety of us all.

LoyceV

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Quote from: condoras on October 29, 2021, 07:12:36 PM

it might 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.

condoras

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Quote from: suchmoon on October 29, 2021, 05:58:34 PM

Quote from: condoras on October 29, 2021, 05:22:36 PM

Quote from: suchmoon on October 29, 2021, 11:05:49 AM

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.

suchmoon

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Quote from: condoras on October 29, 2021, 05:22:36 PM

Quote from: suchmoon on October 29, 2021, 11:05:49 AM

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.

condoras

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Quote from: suchmoon on October 29, 2021, 11:05:49 AM

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.

Quote from: LoyceV on October 29, 2021, 10:12:33 AM

If anything changes, a good default would be to delay the release of escrowed funds quite a bit.

Or to use a multi-sig wallet...? So, in any case, you will need at least two parties involved for moving funds.

Quote from: LoyceV on October 29, 2021, 10:12:33 AM

Maybe a better solution would have been to refund the buyer if anything changes. If they agree to meet in person instead of shipping, that requires a new agreement in which buyer has to fund escrow again to a new address. But that requires strict rules from the escrow, known upfront, which wasn't the case here.

This will be safe enough if it was agreed from the start. Still, the buyer would have an objection to getting back his funds because something is changed. After all, he agree to this change right? Undecided

BitcoinGirl.Club

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Quote from: LoyceV on October 29, 2021, 10:12:33 AM

I'd say: "Rule One: Never change the deal."

Agree. We would not see these mess at the end.

Quote from: suchmoon on October 29, 2021, 11:05:49 AM

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

True. But did not hit me until you stated it. Damn!

Quote

I disagree. It was MJ's responsibility to ensure a safe transaction and being a presumably experienced trader and escrow he should have been able to see the red flags. Granted we're looking at this with the benefit of hindsight but it's a lot of money to be so careless about.

Man! It's over $50k worth of deal. Yeah MJ should have done more to ensure that the deal goes smooth. It really is messed up.

Let's get back to the topic.
I would agree with LoyceV in this

Quote

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.

Other than this, it's always very risky to perform an escrow service.

suchmoon

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Quote from: BitcoinGirl.Club on October 29, 2021, 09:55:44 AM

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.

I disagree. It was MJ's responsibility to ensure a safe transaction and being a presumably experienced trader and escrow he should have been able to see the red flags. Granted we're looking at this with the benefit of hindsight but it's a lot of money to be so careless about.

Quote from: LoyceV on October 29, 2021, 10:12:33 AM

Maybe a better solution would have been to refund the buyer if anything changes. If they agree to meet in person instead of shipping, that requires a new agreement in which buyer has to fund escrow again to a new address. But that requires strict rules from the escrow, known upfront, which wasn't the case here.

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

LoyceV

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Quote from: dkbit98 on October 29, 2021, 08:15:42 AM

Quote from: LoyceV on October 29, 2021, 06:29:03 AM

Shouldn't it be the escrow's responsibility to make absolutely sure the trade can't go wrong in any possible way?

I would say yes, and what is even more surprising is the fact that escrow had very chill attitude about all situation, he pretty much ignored his client, replied to him only once, and it took long time for him to post that timeline from his PMs.

I was surprised by that too. I know his reputation precedes him, but this is far less thorough than I expected.

Quote from: LoyceV on October 29, 2021, 07:11:32 AM

Exactly. What's the point of using an escrow with those terms?

No point, except to give you some false sense of security.

Even worse: this false sense of security made the victim let his guard down:

Quote from: eseayan on October 26, 2021, 11:26:44 PM

~ I suspected this may be scam. But I like monero physical coins and I wanna buy it. I thought that I can use escrow service , my money will be safe even if I don't receive the physical coins. So I contact MJ for escrow.

Quote from: dkbit98 on October 29, 2021, 08:15:42 AM

I think that escrow should always check BPIP website for possible changes in accounts like password resets, and cancel/pause any trade if they notice anything suspicious.

That would not have helped in this case: the scammer changed the password only minutes after minerjones sent him the funds:

Quote from: minerjones on October 28, 2021, 07:58:20 PM

Aug 29 2021 014725PM: minerjones releases funds.

By not changng the password instantly, the scammer could stay under the radar for as long as he needed.

Quote from: BitcoinGirl.Club on October 29, 2021, 09:39:59 AM

Cluster F**K

This sums it up nicely.

Quote from: BitcoinGirl.Club on October 29, 2021, 09:39:59 AM

There was a term change which was meeting in person and that information came from the same account.

Quote from: BitcoinGirl.Club on October 29, 2021, 09:55:44 AM

How would you care more when the same person (here same account) is telling you to make a change in the deal?

I'd say: "Rule One: Never change the deal." applies (quote taken from The Transporter movie). If anything changes, a good default would be to delay the release of escrowed funds quite a bit.
Maybe a better solution would have been to refund the buyer if anything changes. If they agree to meet in person instead of shipping, that requires a new agreement in which buyer has to fund escrow again to a new address. But that requires strict rules from the escrow, known upfront, which wasn't the case here.

Topic: Best practices for Bitcointalk escrow providers (Read 548 times)