Selling bitcoin FAQ

How to recognize scammers and protect yourself

3141 views May 15, 2017 December 18, 2017 ray 79

Selling bitcoin is rife with risks and here is a compiled list of notes by our most active bitcoin vendors:

The nature of bitcoin as a superior form of money, as irreversible digital cash makes it a paradise for scammers. Fraudsters are known to try every way they can to convert stolen credit card data to bitcoins. They then liquidate the bitcoins and cash out.

Staying a step ahead of them is an arms race that the entire bitcoin community must join. The pro traders that have been selling bitcoin peer to peer have accumulated an immense amount of knowledge on how to stop scammers. Even more impressive is how they network and band together to stop these scammers.

Sharing information is the key.

There are several payment methods that are highly risky and should only be accepted by the most experienced of traders and only then by taking the utmost precautions to collect ID and verify buyers.

  1. Paypal: Instantly reversible. Paypal always favours the buyer.
  2. Venmo: Instantly reversible. Credit cards can be loaded onto venmo and then the chargeback gets passed on.
  3. Chase QuickPay: Reversible at any time.
  4. Google Wallet: Instantly reversible at any time.
  5. Amazon  Gift Cards: Amazon gift cards can be cancelled/removed up to 45 days after redemption. ONLY PHYSICAL Gift cards should be accepted by experienced sellers and always with a picture of the card.
  6. iTunes gift cards are also most likely reversible at any time.
  7. VISA/MasterCard/Amex: The kiss of death for sellers. These can be charged back in an instant and you will lose the funds and get hit with a $25-$55 fee each time.

Those that accept the above payment methods usually ask for a selfie with state issued ID and a handwritten note with the sellers name or something unique to prove that the picture is original and not stolen. This may seem like overkill but the proliferation of scammers is just that intense.

A special note about Gift Cards.

Paxful has many traders who accept gift cards such as Target, Walmart and Amazon etc.. Even though gift cards are known as a scammer heaven they are still one of the very best ways to get people small amounts of bitcoin for their first times buying. They can be bought at drugstores all over America and many professional traders know how to liquidate them without risk. They are usually for around $5-$25 thus there is very little worry of money laundering and scammers usually avoid such low amounts as the overhead is not worth it.

Here are the precautions one Paxful vendor takes to stop fraud.

I have bought amazon.com and other codes for bitcoin on LBC and Paxful for a long long time (my username is same on both sites as here), thousands of them building up a good list of trusted buyers. And in that time I have seen all sorts of scam attempts and have been scammed. -ola95

When buying an amazon.com gift code, make sure the buyer sends

  1. High quality photo of the plastic card with the code at back clearly visible
  2. High quality photo of a cash receipt (card number will need to match the receipt), MUST BE A CASH RECEIPT from a US shop
  3. both have to be non-blurry and visible, a lot of scammers use photoshop.
  4. get them to write in pencil/pen your username on the receipt!

It is to verify that the gift card was bought in cash and hence not from a credit carder or stolen bank account (Debit card) or worse from some crypto locker style victim also to confirm the person is not a re-seller/middleman for the code and finally to cut out all the time wasters Amazon know it was bought with cash and hence have no worries about credit card fraud as added bonus this is the most anonymous way of getting bitcoin in US besides a cash in person meetup, had a lot of lady buyers with this method who of course would be afraid to meet in person and want their privacy anything else like ecode (amazon ecodes are always one character shorted than physical codes btw XXXX-YYYYY-ZZZZ vs XXXX-YYYYYY-ZZZZA ) or bought with debit/credit card in shop or no receipt AND YOU ARE GUARANTEED to be scammed especially if the buyer is not from US and if they in any way ignore your messages also, first time only accept a small amount if the buyer in any way ignores any of your requirements, send them packing.

Warning Signs

Here are a few warning signs to look for to spot scammers.

  1. They buy a small amount first to build trust then come back and buy a much bigger amount usually right away. The less time in between transactions the more of a chance they are a scammer. Normal folks usually wait a week.
  2. They will skip some part of your instructions and put pressure on that they need bitcoins urgently to get you to let it slide.
  3. If they are buying gift cards they want to buy in high amounts, over $50. Most use gift cards to buy their very first bitcoin and never go over $20.
  4. They will often send information before being asked and not follow instructions.

We will be expanding this section into a full blown FAQ and wiki at our forums http://talk.paxful.com  We also maintain an active slack at paxful.slack.com

The Paxful Difference

We only want experienced sellers on Paxful as we cannot be responsible for your trades. If you do get scammed then we will and give you all the information we have on the scammers including, email, phone and ip address as well as a csv spreadsheet of all their transactions. We will also freeze their funds if any are left in their account.

We have successfully managed to get a scammer who tried to reverse 11 Paypal charges from a single seller to withdraw their chargebacks. We provided Paypal with all evidence and thankfully it worked. Paxful is committed to creating a safe environment for all.

Any suggestions or tips are welcome. Only by banding together and sharing information can we stop scammers and bring white hats to the bitcoin world.

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