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No Chargebacks, All Transactions Final: Wont fly.


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#1 Kevin Rands

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Posted 18 November 2013 - 05:10 AM

Consumer protection is a huge issue in the world of merchants processing payments.  I am a merchant with about 30,000 customers.  Thankfully my mother raised me right, and I never seek to defraud a customer.  But I do have disagreements with customers.  Often.  Bitcoin in its current state, rendering consumers with no recourse in a dispute, puts consumers at risk.  I hate chargebacks.  The system in place by Visa and Mastercard is appalling, offensive, and downright unethical.  The burden of proof is never put on the customer, even though they are the ones making the claim, and nothing I do to dispute a chargeback matters.  The money is forceably removed from my bank account, on their whim, without telling me, and without my permission.  Yet still, there is the other side of the coin, and despite seeing this issue raised several times, nobody seems to address it.

Bitcoin puts all the power in the merchant's hands.  Obviously that can be a bad thing.  More importantly, nobody is going to allow it.

Sometimes customers deserve to get their money back:  Yes, customers can contact me directly to request a refund.  But what if I disagree with them?  What if the merchant is dishonest?  There are plenty of mom and pop shops out there who don't answer to anyone.  What recourse does the consumer have?  

"All transactions are final" is short-sighted, and its going to come back to bite Bitcoin in the rump.  Soon.  Regulators will be the first to ask this question.  They may even ask it on Monday.  I believe this is Bitcoins biggest weakness.  As much *positive* as there is about Bitcoin, if we want to send consumers running the other direction, tell them they're toast if they ever need to get their money back.  Do we want to alienate the consumer public?  This issue is the only thing about Bitcoin that gives me pause.  More importantly:  If we don't think the banks, the media, and those who stand to lose the most aren't going to jump all over this *very* issue, then we are sadly mistaken.  Zero consumer protections is not acceptable to anyone with a rational mind.  This topic needs to be thought about, and a solution needs to be provided.  

Disclaimer: if there is already a solution, please feel free to make my entire post moot, and correct me with it.

Kevin

#2 Kevin Bombino

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Posted 18 November 2013 - 06:00 AM

Merchant providers such as BitPay will evolve to offer escrow and/or consumer protection services, much like PayPal did in the early days of eBay.  Or it'll be third party escrow services.  It'll be layered on top.  There's no reason this concept has to exist at the "currency" level.

#3 Peter Todd

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Posted 18 November 2013 - 07:15 AM

What makes you think any of that matters? Evidence to date is that consumers and payments have nothing do to with Bitcoin's success: http://blockchain.in...per-transaction

That's hitting $50/tx - inflation reward * USD/BTC / # of transactions. In essence, it shows how people buy Bitcoin to hold them as a store-of-value investment, much like gold, and that actual transactions are a tiny, tiny fraction of what people value Bitcoin for.

Never mind all the accurate points Kevin raised.

#4 Charles Hoskinson

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Posted 18 November 2013 - 08:42 AM

chargebacks seem to be a layer that can be implemented on top of the protocol. It makes little sense to imbue value added features into Bitcoin when they can be addressed 2.0 protocols. Mastercoin seems to be doing a great job with this and I believe we will see communication, identity management and anonymity layers built in the foreseeable future.

#5 Jesse Vanek

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Posted 18 November 2013 - 01:42 PM

Physical cash offers zero consumer protections, yet people have been comfortable using it for quite some time.

#6 Todd Erickson

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Posted 18 November 2013 - 01:59 PM

Now I have to respectfully disagree with the statement "All transactions are final" is short-sighted, and its going to come back to bite Bitcoin"

Long before ATM's, Debit Card and Credit Cards, consumers have been making purchases and laws have been in place to protect consumers from fraud.

Today there is still a significant amount of business via cash and check all over the world and consumers still have viable recourse.

One of the negative side effects of Credit/Debit card charge backs has been that consumers have stopped their prudent practice of doing business with "reputable" firms, since it is so easy to simple call your CC company and get your money back. If the consumer had to rely on the MERCHANT to return the funds for legitimate reasons, they would be MUCH more careful to do business with companies that they believe will provide proper customer service.

Bitcoin properly brings the consumer back in as a responsible party in an internet transaction.

#7 Timo Jeranko

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Posted 18 November 2013 - 02:00 PM

The solution already exists, it just hasn't been widely implemented yet.

See: https://en.bitcoin.i...spute_mediation

But in any case, from a consumer protection perspective, it shouldn't matter whether transactions are reversible on the protocol level.  All of this can also be handled on a regulatory level.

Example: In some European countries, online banking is the most popular way to pay for stuff online, not Visa and Mastercard.  Bank transfers are practically irreversible, yet it's not hard to get a refund in those countries if you are a consumer.  In my experience, it's just as easy as in the US. That's because the regulations are strict and biased towards consumers.

#8 Barry Stinson

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Posted 18 November 2013 - 02:03 PM

Paypal / Visa / MC / et al are just services built atop of physical cash.

The same will happen with bitcoin.

#9 Joel Dalais

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Posted 18 November 2013 - 02:49 PM

View PostKevin Rands, on 18 November 2013 - 05:10 AM, said:


Consumer protection is a huge issue in the world of merchants processing payments.. etc, etc

Kevin

Answer: Bitcoin 9.0 (not released yet)

#10 Kevin Rands

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Posted 18 November 2013 - 03:28 PM

Thanks everyone.   I hope I didn't overstep my bounds.  I do know a decent amount about Bitcoin, but I also qualify as a "Lay" person, so I have still been unclear on some of the details.

I appreciate all the responses.  I truly think its going to be a "hot topic" with the media.  Its not fully apparent to the general public that the title of this thread isn't fully accurate.

They will think it is.  Glad there are responses that can be given.

#11 Mike Hearn

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Posted 18 November 2013 - 03:36 PM

Hi,

This post might interest you:

https://bitcoinfound...mer-protection/

#12 Kevin Rands

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Posted 18 November 2013 - 06:03 PM

Thanks Mike.

PS:  Its a good day to own bitcoin .... BTC China just surpassed $800 USD

#13 Joel Dalais

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Posted 18 November 2013 - 06:07 PM

View PostKevin Rands, on 18 November 2013 - 06:03 PM, said:

Thanks Mike.

PS:  Its a good day to own bitcoin .... BTC China just surpassed $800 USD

It's always a good day to own Bitcoin :)

#14 Kyle Jerviss

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Posted 19 November 2013 - 02:53 AM

This came up at the hearings.  No panic from anyone in the room.

It was even listed as a positive, allowing choice.