Chargeback Risks

Bitgold states that all deposits are final and non-refundable. However, I have come across complaints where users have received gold from another user for a product and a chargeback was initiated that ended in the merchant losing his funds. Has anyone run into this issue? Maybe someone official can shed light on this grey area.



  • 79Au19779Au197 Posts: 4,047 Gold ✭✭✭✭✭
  • GoldIsCurrencyGoldIsCurrency Posts: 1,820 Gold ✭✭✭✭✭
    @dmitrytokarev I don't think those charge back's came from "deposited" (purchased) gold. Maybe from free gold that came from a user that has not completed the required documentation process. Can't send gold to another user unless you have completed the full sign up process.
  • MelanieMelanie Posts: 1,045 Gold ✭✭✭✭✭
    Hi @dmitrytokarev, you are referring to two separate things here. The deposit policy is in place because otherwise we would have thousands of requests for "refunds" if the price of gold changed slightly and users wanted to buy at a slightly lower price. If a chargeback takes place on a payment, we advise both users of the reason for this. This is an infrequent occurrence, but when it happens it is because the sender sent funds that did not belong to them and were maliciously obtained. Our Send Payment tool is a peer to per payment tool that is intended for you to send quick, easy payments to friends and family, not to engage in commercial transactions with users you do not know or trust. Commercial transactions will be available with the release of our Merchant Accounts.
  • 79Au19779Au197 Posts: 4,047 Gold ✭✭✭✭✭
    @dmitrytokarev has this happened to you?

    There have been complaints by some marketing affiliates and Golden Heart users about charge backs. These were due to inactive new user sign ups. That is, a marketing affiliate or Golden Heart user signed up one or more new users who never actually did anything, just to get the extra gold bonuses. After the specified time period when no activity had occurred, BitGold recaimed the bonus gold. This is all spelled out in the Terms of Service of the affiliate and Golden Heart programs.

    Please read

    See also
  • rohanibuang61rohanibuang61 Posts: 2,379 Gold ✭✭✭✭✭
    @dmitrytokarev Possible the complaints are not true. Unless you have sighted their BitGold statement where all transactions is itemized at the bottom of BitGold paltform.
  • dmitrytokarevdmitrytokarev Posts: 12 Tin ✭
    edited January 2016
    @Melanie @79Au197 @BigD Uhhh....sorry, folks, but the proof is in the image. No, this has not happened to me. However, I was able to get a copy of the transaction history of the user who complained. Actually, this user claims he received no explanation; however it is as Melanie said (which warrants question for any transaction if you do not know the sender). I mean, for bitgold to assume that no one will use their accounts for merchant reasons is silly. What exactly is a "merchant" transaction when you get down to it. Here in Russia for example, we have Card 2 Card transfers which is the primary way of receiving deposits for salaries, or simply paying for local things as payment terminals aren't as prevalent in the west. That said, with the ruble as volatile as it is right now, if I decided to remove myself somewhat from the fiat system and bank primarily on Bitgold, it would be a huge risk. Bitgold needs to understand that if it wants to facilitate markets, then their products must cater to them.

    Bitgold should be asking themselves: "how do people use their bank accounts?". If you don't want to remonetize gold, don't issue debit cards for the holdings. People can use their account as they please, however the fact that a debit/credit card deposit method exists tells that you never know if someone will report a fraudlent transaction at all.

    To be clear, and bitgold should be as well, deposits are not final.

    Now, do not get me wrong, the debit/credit card deposit method is my favorite. It is extremely convient. However, I looked into this case and it seems deposits are not final.

    [MODERATOR EDIT: Image removed as it contains private email addresses and transactional information of other BitGold users. Please be considerate of the privacy of others.]
  • solargoldsolargold Posts: 115 Copper ✭✭
    I didn't quite understand the original post, but seeing the last one I think I get it now.

    So what has happened above is that a user (Sender) has bought gold for their account using credit/debit, then sent a payment to another (Receiver). Subsequently it was discovered that Sender actually used a fraudulent card or mechanism that eventually caused Visa/Mastercard to reject the transaction. So Sender's gold purchase was rescinded, but since that gold had already been sent as a payment, the end result was that Receiver's gold was rescinded. Is that the correct interpretation @dmitrytokarev ?

    If so, obviously such a situation for Receiver is annoying. However, I think one logical solution to such a scenario is to only allow Sender to make a payment only with gold that has fully cleared in his/her account. That way, there is no risk of charge-back to the Receiver. The negative side of this is that it could potentially take several days (weeks?) to fully clear the transaction, so in order to make a payment of XX grams, the Sender would have needed to have had such a balance of gold in the first place for the previous "clearing time". On the positive side, it could reduce fraud in the first place, since fraudulent Senders may not even bother initiating a fraudulent payment since it will be caught.

    So in the current system, it seems that Receivers are inconvenienced having to wait to see if a payment they received will fully clear (how many days?). Or the system changes, but at the expense of inconveniencing legitimate Senders that are not fraudulent who have to wait for gold to clear. I'm not sure which is better from a system-wide perspective, but maybe BitGold has chosen the way it works for a reason. Or maybe this scenario needs to be given more thought? Maybe @Melanie can let us know, or pass on this issue to the developers to think about in the next iteration of the platform.
  • MelanieMelanie Posts: 1,045 Gold ✭✭✭✭✭
    Hi @dmitrytokarev and @solargold. The image that was posted has been removed with a note as it contains email addresses and transactional information of other users. Posting information from your own account is your decision, but posting private details from another account is not permitted.

    The user in this case has been contacted by Support multiple times to explain what happened, so to say that no explanation was provided to them is incorrect. We provide the Send Payment tool as a quick, easy, and affordable way for users to send funds to their friends and family (also referred to as "Peer to Peer"), whom they know and trust. We specifically outline in the Terms of Service that users should make sure that they trust the person with whom they choose to send and receive payments with. This is not hidden, and is published in size 14 font:

    "BitGold shall not be responsible for any loss or damages resulting from any failure on your part to conduct appropriate due diligence on parties with whom you choose to deal. You accept that you may make and receive payments from other BitGold users and understand that BitGold does not accept liability for the fraudulent or misleading actions of parties to whom you make and from whom you receive payments. It is your entire responsibility to conduct appropriate due diligence and your choice whether or not to make a payment or agree to receive a payment in return for goods or services."

    Keep in mind that the majority of users who utilize the Send Payment tool use it to send payments among peers, not unknown persons from the Internet who may have questionable intentions.

  • dmitrytokarevdmitrytokarev Posts: 12 Tin ✭
    edited January 2016

    Point still stands. Transactions are not final.

    @solargold Yes, you understood perfectly what happened. However, that clearing time you mentioned is 180 days. A customer of a bank (at least in the U.S) has 180 days to report a fraudulent transaction. Businesses also have 180 days to claim their funds.

    @Melanie Back to you. Uh, before you go removing things you should understand that the transaction history photo was given to me by the user involved in the transactions in question. How else would I get it? Bitgold hasn't received any mention of a breach of an account or noticed any suspicious attempts at hacking a Spanish bitgold account from Russia have they?

    Furthermore, in case you want to imply that while 1 user may have given their consent to publish transactions, it is unclear whether the other users agreed to the same; you should remember that you stated above it is okay for me to publish my own transaction history. I do not see how that would be possible as it contains the email addresses of other said users who did not give their permission.

    Finally, @Melanie, what makes your removal even more bogus is the fact that the only email address listed in full is of the user who initiated the claim and gave me the screenshot in the first place. Or did you not bother to trace the transaction history to understand who was the owner of the account? Well, of course you have because you clearly stated bitgold support reached out to this user and asked them for a full explanation regarding the issue at hand.

  • dmitrytokarevdmitrytokarev Posts: 12 Tin ✭
    edited January 2016
    @Melanie Look, personally I don't give 2 cents about the issue. I am interested in the facts. I like things the way they are (minus the whole recant on SEPA deposits/withdraws). However, bitgold should be aware this is not the only fraudulent claim against the company. Personally, I don't think it's bitgold's fault. You guys provide a convience and well, there has to be some initiative on our end to unhold security and not expect you guys to do everything. However, Mel, clarifying things will prevent other users from doing this ; that you see the user above doing.

    All press is good press?


    [MODERATOR EDIT: The link you included contains the image that has private user details. Sorry!]
  • solargoldsolargold Posts: 115 Copper ✭✭
    edited January 2016
    @Melanie 's post makes it clear that the onus is on the recipient to only request gold from people they know/trust.
    BitGold in its current form is clearly not ideal for business transactions, and in addition to the section @Melanie mentioned, the Terms of Service also states in 2.6a that "transfers to, or from, a personal bank account, virtual currency wallet, debit or credit card, in your own name which you have linked to your BitGold Account".

    Issues like the above though are quite serious for businesses, so hopefully all this is being factored into the work on Merchant accounts if/when they launch.

    The thing that can be done to help prevent users from getting angry in the future is maybe in the Request Payment screen to have a warning up top stating it is at the user's risk and to only deal with people the user knows/trusts. Also, the email notification to the recipient about receipt of a payment could also state a similar warning.
  • dmitrytokarevdmitrytokarev Posts: 12 Tin ✭
    @solargold Believe me, I'm not advocating Bitgold introduce any more barriers for purchasing gold. Being a GoldMoney client for years, Bitgold makes things easy.

    That said, no one; and I mean no one actually reads the Terms and Conditions. Yes, we should, but be realistic. People are creating new accounts like we eat. All the time. People just don't do it. The way companies market themselves show that even they don't expect for you to read them. I mean, really. Imagine a company who was bringing a solution to a mass problem to the table and the way they marketed it was "Signing up is simple! All you need is an email address, password, and 30min to read and agree to our terms and conditions and you're up and running!"

    Nope. Not like that. Companies (bitgold included) market themselves in a way that makes signing up seem a 2 minute process. There are interviews to show.

    2min signup? Yeah, those T&Cs were read.

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