Topic: More crap to deal with - Dwolla Reverses TradeHill Transactions - page 4. (Read 12197 times)

Thanks for the support BCX.

It could be game over if we shut off Dwolla but we're risking a lot by keeping it up. If we don't cut it off (until they fix it) then we are risking fraud and more importantly sacrificing our principals.
I believe continuing to use this and hide the fraud could eventually do more damage to Bitcoin. I can forgive Gox getting hacked. I can't see them hiding fraud. I think they either don't know or aren't being defrauded.
If they are and they're covering it up then that is beyond inexcusable and I will be very disappointed.

We're open to work with Dwolla and hopefully we can get this all straightened out. Outgoing Dwolla transfers should be fine.

Jered

This actually illustrates the fact that bitcoin is a superior currency - people will lie, cheat and steal to get it. Dwolla has shown its' inferiority in this regard because it is reversible.

i don't know about anyone else, but this is conjuring feelings of being GOXED all over again...........

Thanks Randy. Hopefully the other exchanges can learn from this and be on the lookout for it. A lot of our funds come in through Dwolla, that should be enough for credibility alone.
The support we're receiving has been motivating.

Jered

The issue isn't Dwolla protecting the buyer from fraud. They can certainly do that if they want to by refunding their money. That's not what happened here.

It looks like this:

Scammer <- Transaction A -> Dwolla <- Transaction B -> TradeHill

Now, if Dwolla wants to reverse transaction A due to fraud to protect the buyer, they certainly can. But there's no fraud in transaction B, and Dwolla has no grounds to reverse *that* transaction.


Exactly. The whole point of Dwolla is that TradeHill doesn't have to go through the risk and expense of entering into a transaction with a possible scammer. They can just take Dwolla and deal only with Dwolla. I sincerely hope that this was simply a mistake on Dwolla's part and they'll correct it immediately as soon as they can. Otherwise, they've just eliminated their entire purpose.

And I agree with RandyFolds amateur hour comment. I don't see how Dwolla can exist on just 25 cents per transaction. If one out of ten thousand transactions is fraudulent, they'll go broke. Dwolla's business model seems impossible to me. They've agreed to take the entire fraud risk, and yet they don't charge enough to cover those costs.

Man, this is ultra-scandalous. Another case of amateur hour getting too big for their britches?

Dwolla is bleeding rep like a stuck pig right now and they haven't said a damn thing to stem the flow. I am very interested for them to weigh in and make good with TradeHill...speaking of which, I applaud your announcements and attempts to save other exchanges and us consumers from the same BS. I think everyone here fully supports you.

Aurumxchange,

I agree with you 100% and chargebacks are always going to be a problem when you deal with products or services that are non reversible.


All we ask and I assume everyone can agree:

1) If chargebacks exist don't claim your payment is non reversible
2) If you're doing a chargeback tell the merchant. Don't just debit the account and then act like it didn't happen.

All it takes is clear communication.


Jered

Anyone operating in US under money transmitting business license will have reversible procedures in place for buyer protection against fraud. I was unbelievably surprised when I heard of Dwolla service with their claim to have no chargebacks as a benefit for merchants.

I guess for non reversible USD transactions in US only way to go is to use wire transfers, I'm not even so sure about checks, unless it's certified check which costs more than domestic wire and only ensures that specific amount is available for deposit. and maybe money orders (welcome back to 90s)

The issue is *what* gets reversed. Sure, the bank transaction can get reversed. The issue is whether the Dwolla transaction can be reversed. Dwolla says no.

Say you have a piece of furniture you want to sell on consignment. You put it in a consignment shop for $400. The agreement with the shop is you get $350 if it's sold. Then one day the shop says, "Sorry, we sold your furniture but the transaction was reversed. So you're out $350. Oh, and we're not going to give you any more details. Sorry about your furniture."

Sure, the credit card transaction can be reversed. But unless the consignment shop had some agreement that explicitly made you liable in that case, that's between them and their bank. Dwolla is acting like the consignment shop trying to get the money back from the furniture owner just because they were defrauded.

Jared,

Don't get me wrong. I am 100% with you. I always felt that Dwolla was sort of a hack kind of put together half assed. They grew up too fast and a couple of scammers quickly wised up on how to get free money. I was reading at that article somebody posted here. It starts like this:

"If a transaction on your account has been reversed it is possible one of the following scenarios has occurred:

1. The-sending party has filed a dispute with their bank, which has resulted in an automatic reversal of a transaction."

Anybody that banks in the US knows how INCREDIBLY EASY is to reverse an ACH transfer. More or less, you just pick up the phone and go "I didn't authorized it / I am not happy with the service and/or product I bought / I changed my mind / my cat is sick and I would rather use the money on that ) and the list goes on.

The possibilities to scam like this are ENDLESS. I have been exchanging e-currencies since before bitcoin was only a thought and I have learned my lesson. We have been scammed with transfers from $100 to €65,000 which we are still battling in a european court.

Here is an example of something that can be done with Dwolla (this was done to us with a direct bank transfer in the UK):

Joe is a scammer. Joe lists a car for sale on ebay. Martin likes the car and wants to buy it. Joe instructs Martin that he receives payment only through Dwolla. Joe instructs Martin to pay for the car through Dwolla to his account on Tradehill. Of course Martin does not know anything about bitcoin/tradehill/etc, so he goes with the instructions Martin gave him and happily pays Joe through Dwolla. Joe get's the money credited in Tradehill, buys bitcoins, withdraw, and then .... GOOD LUCK finding Martin and / or the car!!

This has actually happened to us. Replace dwolla with Barclays bank and bitcoin with Liberty Reserve (100% irrevocable). We lost the funds (because there was a crime involved) and on top of everything had to spend a lot of time providing information and answering questions to the police.

It's fine you have chargebacks but don't list non-reversible transactions as one of your features. http://www.dwolla.org/blog/retail-merchants-rejoice-web-kiosk-online/

Actually, they had a "dispute resolution" service from the get go. When there is dispute resolution, there is the chance for chargeback. The other day I saw an article tittled "Dwolla passes the million dollar a day". As soon as I read that, my initial thought was the bigger they get, the more like paypal they will become. They have to actually, they have no other choice operating out of the US.

You thought wrong. Everything based in the US can (and will) be reversed if it is fraudulent. Even if it is not, if the customer complains to his/her bank, etc... things will get reversed.

This is exactly why we don't take credit card payments, nor any other payment than international wire transfers when we sell e-currencies.

Roberto

If Dwolla steps up, comes clean and makes a clear statement if their transfers are reversible or not then we may be able to continue doing business with them.
At this point I would be weary as a merchant.

I'm trying to consolidate the Dwolla reversal issues in to this thread http://forum.bitcoin.org/index.php?topic=31753.0 or comments on our blog at www.tradehillblog.com so we can respond to as many questions as possible.

Jered

Sure - In this case - Dwolla is the merchant.
(edit: the customer effectively  purchased 'dwolla'  - so I agree with you.)

Of course you are affected by this foolishness, because at this moment I don't dare try to send you any more funds as I was planning to do.

What other method do you propose I use that costs and acts about the same?

+1 for CampBX!  Sucks that scandals reduce the bitcoin value, though.

Well, this is a huge black eye to the entire bitcoin community.

I'm grateful this happened before my meetings with the local bankers.

I sincerely hope Dwolla straightens this out quickly and publicly.

EDIT:
*************
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
************

Posted both as an open question and "emailed" to the following link:

http://help.dwolla.com/customer/portal/emails/new

Dwolla suspended my account a long time ago they don't "f " around!  If they suspect fraud and u are innocent... call them , email them , and call them some more its the only way!

I would trade security for anonymity (preferring the latter.)

I have been prepared to get ripped off on all of the perhaps 20 or 30 of the BTC purchases I have done so far.  I break my purchases into a fraction of the total I want, and keep that fraction to something I can afford to lose.  So far I have not been ripped off.

When I spend BTC I will be similarly prepared to get ripped off.  I've spent significant time researching the providers of certain services I want.  When I have time to deal with the fallout of acquiring the services (VPS, DNS, etc) I'll balance between the vendor's reputation and whatever other details I can find.  And I'll be prepared to be ripped off anyway.

To me BTC is a brave new world.  I am comfortable with the things I lose vs. the things I gain when compared to Visa, PayPal, etc.  So, no complaints.  My attitude tends to be along the lines of "If you can't stand the heat, stay out of the kitchen.", but I can certain understand and empathize with those who don't share this attitude.