Topic: TradeHill - Dwolla is being scammed and reversing transactions - page 5. (Read 19245 times)

My guess is that Dwolla is gone. This is their non-response they sent this afternoon:

Dwolla Support [email protected] to me
   
show details 1:27 PM (3 hours ago)
   
__________________________________
Please type your reply at the top of the email...
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

+++++++++++++++++++++

This screams of avoiding the subject. I am not sure what my response to their non-response will be.

I think the ever astute JoelKatz has nailed it on the head, they have no reserve on hand nor any plan in place to solve this type of problem.

It's been confirmed at exchangebitcoins.com and Mt Gox in IRC  but "not at the same level as TradeHill"

Jered

This is still unclear. MtGox hasn't reported having any Dwolla issues, but is could become a problem now that it is known that transactions can be reversed.

i don't give a damn as long as mtgox and dwolla is fine. LOL

I too spoke to Ben when I contacted dwolla for my issue. He was nice over the phone not so much on email. More than likely if you have a customer issue he is the only guy you will be able to talk to. I suspect they are short staffed and in over their heads!

Good!  Expensive lessons are not soon forgotten.

You guys aren't considering the fiduciary duties. When you hold someone else's property in trust there are strict liabilities. Dwolla gave out material false information publicly and privately (in the case of Tradehill) that was acted upon. There is no excuse for that.

I have seen this work real world with a Bank and fake postal money orders. The bank released the funds and they had no recourse against the person that deposited them.

you can tell Dwolla is still a rookie organization based on my conversations with their telephone contact person Ben.

Now suppose someone swipes your Dwolla password. There are STILL people out there who haven't changed their passwords since the MtGox incident and are STILL getting their accounts broken into and their money stolen.

Dwolla just has to do a better job ensuring ACH tx's to them are legit before releasing funds to merchants.  i know my acct with them had to go thru all sorts of hoops to get credentialed before i could ACH to them which is why i fail to relate to what happened here.

edit:  all the pressure we've been putting on them to make the clearance of funds faster probably contributed to errors.

Not sure there is a legal definition of "chargeback" at all, but in common use it generally refers to the rather expensive process by which credit and debit card payments reversals are carried out by the major providers. If memory serves me correctly at least one industry with high chargeback rates (the porn industry) is more worried about the nasty penalties associated with chargebacks than the transactions being reversed - they can eat the loss of income because their marginal costs are fairly small, but the fees really bite.

You're assuming the transaction was actually carried out by the account holder. There's a large chance the transactions in question genuinely were carried out fraudulently for exactly this reason: false claims of fraud would be risky and easy to trace.

Hes probably not using his own account. That would be stupid.

I think holding ACH/dwolla deposits for 60 days before allowed to use it MIGHT be the final solution here, there's no other way to prevent ACH fraud.

I would think somebody would have to have proper credentials in order to goto their bank and claim a transaction is fraudulent.

In which case they would be using their real name and information.  Isn't this traceable back to their bank?  Hard to use TOR and proxies at a physical bank location.

I hope the cyber police do a full back trace and put somebody in jail.

For the ones that hate all legal terminology, can you explain the difference between a chargeback and reversing a transaction.

Dwolla has added the following to their user agreement:


I think Dwolla will soon discover that this doesn't do what they think it does. If Dwolla can't establish any fraud on the part of the receiving party, Dwolla will lose in arbitration. Dwolla cannot use the fact that they were defrauded to justify breaching their agreement with an innocent party. This clause just says that Dwolla can take the money back until an arbitrator decides who gets it. The receiving party will llikely prevail in their arbitration with Dwolla and Dwolla will have to reverse the chargeback, again assuming they can't show any fraud on the part of the receiving party.

The unusual rules for credit card chargebacks come from specific Federal laws. There are no analogous laws for ACH that Dwolla can take advantage of. Since Dwolla drafted these terms as a contract of adhesion, any ambiguities in it will be construed in the favor of the other party.

It's also possible Mt Gox has had the same thing happen and hasn't talked about it publicly. Based on the reasons they gave for their French bank cancelling their account, we know someone's tried this with Mt Gox SEPA transfers using stolen online banking information, and since SEPA transfers are definitely reversable it's very likely they lost some money from this happening, yet they haven't said anything.

It's not like Mt Gox are exactly the most honest and straightforward organisation; in the past they haven't admitted to anything that wasn't already obvious.

It protects them by fraud by transferring the risk to the party that actually has control of it. Remember that it was TradeHill that chose to offer the high fraud risk service of selling untraceable cryptocurrency rather than something lower risk. Also, your analogy is bad. Dwolla are effectively a middleman - the reversed transactions to TradeHill were carried out at the (fraudulent) request of the person who originally transferred in money that was reversed, using that money. It's more like if Jack gave you $10 of stolen money to give to Joe, and then the victim came and demanded it back.

Did they actually claim this? I've seen them advertise "no chargebacks" as a benefit, but that's still technically true - chargebacks are considerably nastier than merely reversing the transaction. In fact, I'd always got the impression that Dwolla transactions were reversible based on their promotional material.

Jered,

What Tradehill customers were impacted by this?  IOW, the scammer bought BTC and cashed out.  Did the BTC sellers get their cash? 

Sounds like that won't be very practical:


Having to wait for two months before you are actually allowed to use your deposited funds to buy Bitcoins is surely not an option.
Dwolla probably didn't have that many scamming issues they couldn't resolve or just eat the loss up until now. I'm not sure about the US, but EFT reversal is not a very common scamming-vector here in Europe.

I suspect that the only real way to handle this is for somebody to charge higher fees and use that money to pay for lawyers handling the dispute resolution / scamming cases.

Whether Dwolla, TradeHill or the bank does that is irrelevant but somebody will eventually have to price in that risk.

Since the Dwolla Service is only for US Citizens Many of us really dont care I think...