Quote from: xkrysis on June 06, 2011, 11:05:34 PM

I dug through the paypal tos and other documentation when I started trading at bitcoinmarket.com wanting to know just what my liability would be for funds i received via paypal. Closest thing I found is that neither the buyer protection or seller protection apply to non-tangible goods. I confirmed this an hour ago with a lengthy conversation with a paypal 'dispute specialist' on the phone. He confirmed that unless there is a physical item actually shipped to an address, there is no protection for either party.

*Furthermore* he confirmed that if the sending party claims that the transaction was not authorized (as opposed to goods not received, etc), that is an immediate trigger to close the case and resolve automatically in favor of the sender, reversing the transaction. I specifically asked if there was any avenue for appeal, arbitration, or anything else after that happened and the answer was "no, once a case is decided that is completely final".

I asked him what I as a seller could do to protect myself from liability from actual unauthorized transactions or dishonest buyers and the only suggestion he had was to deal only with verified paypal members.

Paypal is so "easy" that I really wish it was a viable option. No matter which party they choose to protect by default there will always be people who abuse it.

My personal suggestion for how to proceed, if at all, with paypal in bitcoin trading circles is some combination of:

-feedback on traders, to establish reliability (and make it obvious, not something you have to dig to see)
-new members start with a low limit on trade size
-some currency balance be held as 'collateral' for trades of considerable value to discourage theft.
-some way for both parties to the transaction to decline to proceed if the other has questionable reputation

I like the ease of use of PayPal as well, and I was lucky not to be scammed during this past weekend's run up since I was doing a large number of considerably sized transactions (30+ BTC).

You have some good suggestions and these may help somewhat mitigate the PP dilemma as well:

- Holding the BTC in escrow for a fixed period of time for new users
- An overhaul to the rating system to take into consideration successful large exchanges

If not, I'll be looking forward to the Dwolla support.

mindtheft

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