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.
- Paypal: Instantly reversible. Paypal always favours the buyer.
- Venmo: Instantly reversible. Credit cards can be loaded onto venmo and then the chargeback gets passed on.
- Chase QuickPay: Reversible at any time.
- Google Wallet: Instantly reversible at any time.
- 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.
- iTunes gift cards are also most likely reversible at any time.
- 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.
Here are a few warning signs to look for to spot scammers.
- 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.
- They will skip some part of your instructions and put pressure on that they need bitcoins urgently to get you to let it slide.
- 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.
- 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.