Topic: More crap to deal with - Dwolla Reverses TradeHill Transactions (Read 12197 times)

I just got another non-response from dwolla:

Dwolla Support
JUL 27, 2011  |  05:28PM CDT
David,

We'd be happy to answer any questions you have.

If you could please let me know which questions you would like me to answer, I would be happy to do so.


David
JUL 26, 2011  |  06:42PM CDT
http://tradehillblog.com/


Charise
JUL 26, 2011  |  12:27PM CDT
David,

We'd be happy to walk you through our processess.

Dwolla has a return and dispute process which is pretty straight forward but in the past has been fairly manual.

Is there any specific question I could possibly answer? I'd be happy to do so.


David
JUL 26, 2011  |  08:46PM CDT
Original message
Please make me feel you are "doing the right thing" in reference to the following line of discussion in the bitcoin community.

http://forum.bitcoin.org/index.php?topic=31712.0

I am a relatively new client of yours and I used your services to interact with TradeHill, among others. I am at this moment extremely nervous about using your services unless and until this matter is cleared up.

Thank you

*********************
EDIT

My response to them just now:

When will you refund TradeHill's money?

When will you announce in public what you have done and why?

Thank you

Ironically, that's exactly what bitcoins is trying to solve. Transferring bitcoins is non-reversible. But then that also means if someone breaks into your wallet and steals your coins, you are screwed. I'm not sure if there will ever be a solution that can satisfy both needs at the same time.

There's actually no reason the banks couldn't create a system where transactions really are irreversable. The trouble is that no-one would want to use it: either they'd have to require all transactions to be made at branches after presenting proof of ID and paying a fee to cover the associated costs, or customers would have to accept that their account could be emptied out by crooks at any time for reasons beyond their control. There's no way they could swallow the cost of fraud otherwise.

It turns out that it's cheaper for everyone involved if they skip the really expensive security measures and just include a way to reverse transactions.

[POLL] Will you reverse your Dwolla transactions?
http://forum.bitcoin.org/index.php?topic=32354.0

If the results of this poll are accurate, there are more reversals coming. If I were running an exchange, I would disconnect my bank account from Dwolla ASAP, changing banks if necessary. Let Dwolla sleep in the bed they made.

Not to mention that the way Dwolla did this seems to completely violate generally accepted accounting principles. Dwolla is in some deep shit even if they DO give TradeHill's money back.

This, this and more this.  We've got a middleman more than willing to stick their big customers with the costs of fraud after convincing them otherwise.

Really, what Dwolla is doing is no less fraudulent than the guys running the scams.  Dwolla scammed TH out of $47000 at the moment.  Any business, big or small, would have communicated with their customer about a loss that big by now.  I work for a fortune 500 company and any customer with a $47000 dollar dispute would have been escalated to VP level by now.

The sad fact is: Dwolla can't cover fraud with their business model.  They're keeping silent and hoping this all blows over and uninformed people keep using them.

I, for one, am extremely glad TH brought this public.  If they're willing to burn a big account's butt like this what's to say they simply won't pack up and take the small fry funds next?  Definitely not a trustworthy outfit in the least -- they SILENTLY reversed transactions hoping TH wouldn't notice.  That right there speaks volumes.

MtGox is playing with fire accepting Dwolla deposits.  Sure, they can cover some fraud, but what happens when it goes from 2.5% to 10%?  20%?

I also want to point out that TH only takes a small percentage (<2.5%) of each transaction. Although it does not directly correlate with the amount in dwolla transfers, a number like 47,000 is 4.7% off 1,000,000 in transactions. I dont know what they charge but lets say .5% for the sake of argument.
47,000 = 9,400,000 in transactions
Or in other words if they charge .5% they would have to process 9.4 million to make $47,000 in profit.
That really sucks to lose no matter what.

If you choose to process credit cards then that is your decision and Im sure losing the fee was part of your business plan, If it isn't part of your plan then 2.5% could potentially be all the profit or more.

Wow I'm an Idiot. Disregard what I previously posted. I am still in disbelief that Dwolla allowed this incident to occur. And to do it to they're best customers (Tradehill patrons). I apologize for the misunderstanding, It shocked me at first, but I will be sure to be diligent in my research and make sure my posts are as accurate as possible. And Mr. Owl, I'm taking care of that request.

Also,
That 2.5 % is about to skyrocket now that we have fully explained the weakness in their system to everyone.

:facepalm:

I didn't say I wouldn't use them at all, I said as a payment option...Genius
Payout is still functional.
 

^lol, dumbass.


Even if you lose 2.5% by sticking with dwolla, your decision makes you lose 100%. You just lost my potential consumerism to your site for being that dumb.


We're talking about Tradehill having $1,880,000 in transactions and losing $47,000. That's less money than i'd spend on credit card fees for accepting credit cards.

~I posted this in another thread before I found this one.~

My exchange's volume is small potatoes compared to TH and MtGox,
But I stand by our industry, and have removed Dwolla as a payment option for our exchange to protect myself, and add to the "punishment" of dwolla.
They absolutely must clear up any issues with their 2nd biggest customer, to think any company would do anything but is ludicrous.
Thank you Jered and the TradeHill team for bringing this to our attention, maybe we all (Exchange Heads) do need to stay in touch for when a potentially threatening situation is discovered.

I did speak with dwolla when opening my exchange, and their exact words were that transactions between dwolla accounts in regards to virtual currencies were irreversible and couldn't be charged-back, not that there wasnt any chargebacks or disputes. That being said it is very obvious that TradeHill is in the business of virtual currencies. If this was their Policy, then they knew they ran the risk of this happening and basically said they would cover it.
Dwolla, don't alienate your whole customer base. MtGox I'm sure will turn around and leave if they are going to risk losing 10's of thousands of dollars too. Not to mention all us 2nd tier exchanges, and bitcoin users in general.


Thanks again for the Due-Diligence, It is disturbing that a financial company either doesn't understand their own policy, or worse just plain lies about it.
The race is on to figure out a great payment solution again,
For now, MoneyGrams and Western Unions, are King when it comes to safety and that would be an unbelievable pain in the A** for a company like tradehill or mtgox I really hope we can find you guys a perfect solution ( If I figure one out I will share it of course). Good Luck in your ventures!

Also, on a completely separate note, MilkMan, you have a situation that needs to be handled with one of my customers. I have sent you an email regarding it, please handle this asap and let me know. Thank You, you can PM me if you need too but dont clutter this thread with an answer to this.

You sir have just proven that you do not comprehend that which you read, nor do you seem to have the ability to defend your "opinion".

What makes more sense? That email just proves that dwolla is being sketchy about this whole thing. You, sir, are very misinformed. Try reading the thread. It usually tells you what's going on.

I can't say from experience, but I am pretty certain that both those exchanges use dwolla as well, and as the issue is with dwolla and NOT the exchanges, they are in the same boat as TH.

Oh God, it was Dwolla's bad.... Still I'd only use http://mtgox.com or http://bitcoinbux.com. Any other site is a gamble in my opinion. Just my 2 cents

Here is the reply I received from Dwolla today about this "scandal".
It appears there have always been chargebacks available for ACH transfers, but there are no chargebacks if a Merchant uses their POS service to receive credit card payments.

Upon what evidence do you base this belief?

It's my belief Dwolla was suspecting Tradehill of making illegal, fraudulent transactions, or potentially laundrying money, but it could be a number of things. To protect Dwolla's ass, they had to return or hold any transactions that were received from tradehill. Now this is my guess, not fact. Be careful who you give your money too.

To paraphrase the two posts above me, are you retarded? Mt. Gox all the way?