Preface
This is more of a first impression of the peer to peer money marketplace, my experience with several payment methods, and how to avoid the many scammers.
My strategy was to sell Bitcoin to people willing to pay +10-15% the market rate while immediately repurchasing the sold bitcoin at the market rate and it worked but now without some big downsides.
Signup was simple, no KYC/AML but a verification process for email and phone, your information isn’t shared publicly but it lets potential traders know that your phone and email has been verified.
Following my signup I added a listing to sell Bitcoin using the Square Cash payment method. It turned out this was a lucky guess because it was also one of the more successful methods and scammers didn’t seem to like it.
Almost immediately following my listing, before it was even visible in the search the scammers started to swarm. Most of them are easy to spot, some not so easy
Mistakes Made
When I signed up I used a VoIP service for phone which I later learned was a mistake and changed it to my AT&T mobile number. While your phone number is not displayed the provider is. Scammers all use VoIP, so other honest traders will, and should, avoid you.
I added just $50 in BTC to my account to test the service. I found that my listing was being hidden because while I had enough to cover my trade, I did not realize that for your listings to be made public you need to add .05 in addition to whatever you want to sell. It turns out there is a good reason to add at least this amount if not more.
Create an Offer
Creating an Offer is a simple three part process:
Step 1 - Choose a Payment method
There are many options, but most of them will result in you being scammed out of your Bitcoin or banned from the underlying service. I had success with Square Cash and Zelle. The scammers seem to prefer Gofundme, Google Pay and Square up.
Step 2 - Enter Amounts
Here you set the markup on the market price, the minimum and maximum amount that you are willing to trade and the time that you wish to allow for the trade to complete from start to finish (this is the amount of time your funds will be locked in escrow).
You can search other listings to see what other sellers are selling for to try to be competitive. Riskier methods are potentially more profitable. I started small while I figured out what social engineering methods the scammers were using.
Step 3 - Set Terms
Here you choose the title and content of your offer. You can attempt to use the advanced options to hide your ad from scammers, but this does not work, they easily get around it..
First contact
Almost immediately, I have an offer! I haven’t even fully funded my Bitcoin wallet yet, there is a message on my account stating that my listings are private until I can cover the escrow.
At the top of the chat window you can see my terms on the blue background and his offer directly below.
Hmm. How is this guy seeing my offer? Never mind, I have my first customer, Paxful says that he is in the US, is phone and email verified and has three positive reviews. Only 8 trades, but who am I to judge, I dont have a single one yet.
But wait, upon rolling over the Phone Verified, it appears that his provider is a carrier named ‘Enflick’. I have never heard of this carrier in the US. The message is asking for Squareup rather than my advertised Square Cash and a big carrot offered of ‘big amount trading’… tempting? I don’t think so.
Clearly my first customer is a scammer and judging by his English is either poorly educated or not from America at all. This is a great opportunity for me to learn how the scammers work, so I go ahead and see how he is going to try to get me to send the Bitcoin.
My offer stated that they need to give me their cash tag so that I can send an request for payment. I chose to do it this way because when I enter their cash tag I get a name back that I can match with their ID (or so I thought).
Cash tag and govt. ID provided, they match. I know that I’m not going to receive any money but curious as to how this scam will end.
Lets enter that cash tag into Square Cash and see what we get:
Name matches the ID received, request sent!
Clearly English is not his first language, but he’s telling me that he sent the $20 and has my name from Square Cash, maybe he doesn’t think I’ll check the app and see that the transaction failed?
No surprise here. For my protection no less. Thanks for looking out for me Square. This is exactly the kind of protection I expected.
Upon letting the scammer know of the issue he appears surprised. “Why?” He asked me, lets try other payment methods. I should have paid closer attention to these payment methods because later I was permanently banned from Squareup (different to Square Cash) for using it with Paxful.
Time to let him know this isn’t going any further.
He is persistent. Don’t worry about the scam attempt, lets try again.
He’s not giving up…
and just keeps going until the trade expired and my escrowed funds are returned to my wallet.
The scammers profile is still live as of 18 Hours ago over a week later. I have no way to report this clear attempt at fraud. I used the block option but this doesn’t actually block the user, it just doesn’t show him my listings. I suspect that he has other accounts that I encountered the following day.
After this first experience, I went offline for a bit and went about my day. You can see below a log of the failed transaction and another offer that was cancelled after 10 minutes because I was offline and had not responded. Fair enough.
Success, maybe
The next day I continued to experience similar attempts at fraud. Below are all of the successful transactions, about 1 in 5 were successful, the other 4 were aggressive and persistent scammers.
The top two transactions for $100 each were a big mistake and are what got me permanently banned from Squareup from which I have been a member since February of 2011.
Odd behavior
Frequent offers that are immediately cancelled have me suspecting that my account is being probed for something.
I also strongly suspect other sellers of starting a transaction and leaving it open for the 90 minute window to tie up my Bitcoin in escrow. I received many of these that temporarily emptied my account of Bitcoin that prevents my listings from being seen. The Bitcoin is sent to escrow as soon as an offer is made regardless of whether you are able to accept and process the transaction.
## More Scams
There are so many but here’s a typical one where someone is using somebody else id with selfie. I dont know what I was supposed to check that against.
Another genius not following my simple instructions and struggling with English.
[image:5A16F780-3C27-4B0E-A691-B104E5A9ED3A-2080-00027D86752FB531/Screenshot 2018-08-14 21.45.34.png]
Still there? Nope, I’m eating a chicken sandwich soaking up this nonsense.
Try selling to one of the other listings
Searching the other listings, Larry will pay 150% of the price of Bitcoin.
Wow, this cant be a scam, Larry has an excellent rating.
Larry wants my phone number, Paxful warns against this. Oh well, its for a 150% profit, lets go, I’m feeling good about this one.
Not home for 15 minutes, OK, I can wait, Larry seems cool. Besides I have a text message incoming, I had better take care of that while I wait.
Oh Larry, you disappoint me.
Scammers be persistent
This guy contacted me from two different accounts simultaneously. From account #1
Photo ID, gotta be legit. Babydust huh Michael from IL? Phone verified by Google Voice, OK, lets go, thats what I used when I registered initially and This is a SquareUp deal, they protected me from a scammer on Square Cash and I just checked their website, they have all kinds of fraud and chargeback protections.
Apparently a bad connection caused this message from Squareup
Oh dear. Thanks again for looking out for me Square, you make this safe!
I’m done with this.
He isn’t, so lets be honest. Why DO scammers love gofundme?
Persistent. But I’m responding while I’m doing a deal with someone else that I hadn’t realized is this guy just yet.
Master? He’s begging now.
Scammer marked it as paid right before it expired. Now my Bitcoin is locked up in escrow and I have to create a dispute that I Paxful will not allow until tomorrow!
At this point I had finished a transaction with the other user. This guy sends me a screenshot of the paid invoice trying to fool me that it is his invoice that was paid. Say what now?
Good thing I put the usernames on the payment request/invoices to match up.
Also pay attention to the gmail tab open with different gmail address than the one given, chrome showing user1 like he has several profiles setup for scamming, several chrome windows in addition to the tabs open in the current window and many notepads open. Looks like a scammers toolkit to me.
Connection error again. This time the connection error gave him the invoice paid invoice that was sent to the other user?
I’m losing patience now and I’m concerned because I just sold $200 in Bitcoin to this scammer on his other account.
Want to scam me for $150 now instead. That changes everything, lets go.
Because of the dispute, I was able to get this account banned. The other account is still live and active.
Meanwhile in another chat
Busy with that scammer above in the other window. It wasn’t until 8.33pm that I realized it was the same scammer.
That was easy. Checking my Squareup account.
Cool, Squareup has confirmed invoice paid.
All done and I’m done for the day… or so I thought.
He did not take no for an answer and initiated another trade before I could take my listings offline.
I’m new and do not want to risk negative feedback at this point so moved forward with the deal. Had no reason to doubt this user, its still not 8.33pm yet so do not know that this is the same scammer.
Another successful transaction. OK, that wasn’t too bad
Once again Squareup emailed me invoice paid.
He wants more, I’ve already told him that I didn’t even want this deal and only went through with it because I felt obliged.
8.39pmUh oh. Penny has dropped. Of course I know how the other guy has his receipt, its same guy.
He tries to convince me by sending me different versions of the ID that the first scammer sent to me. I don’t know if he was trying to confuse me or if he had confused himself.
OK partner?, now I’m convinced that you are from the US. The 1890’s US Wild West apparently!
Meanwhile, later that evening, I get an alarming email from Squareup.
At least 30 minutes after confirming the payment, obligating me to follow through with the transactions I received a message that my account had been suspended because of the type of payment. I only sent an invoice as enabled by the service, did not handle any credit cards.
Following that message, I signed into my Square Dashboard where I was presented with a questionnaire asking about the circumstances of the transaction and made mention of multiple payment attempts being made. I answered truthfully and in detail.
Square made it clear that there was something about the transaction that only they could know, that I did not know that made it look suspicious and were holding me accountable for it.
The following day I changed my feedback for the scammer to negative. He did not want to discuss it but did retaliate with negative feedback on both transactions on my account.
Square reviewed the questionnaire that I submitted and informed me the $200 will be frozen until November and that my account is terminated.
I contacted support to point out their their part in this (attempted?) fraud but only received a response with the same information above. I attempted to have my case escalated but was ignored and my support request was closed. Thanks Square.
What I’ve learned
Make sure to fund your account with at least .05BTC more than you want to trade with but probably more than that because of the competition creating false transactions locking up your funds in Escrow to prevent you trading.
Paxful has issues that it needs to resolve starting with easy things such as better verification of country of origin, Do not allow VoIP for phone verification, provide better tools for reporting scam attempts rather than only banning successful scammers and they need to police the traders behaving poorly by tying up other traders funds in escrow by starting false transactions.
LocalBitcoins.com has better verification and therefore less chance of being scammed.
While your listings are live be prepared to stop what you’re doing and deal with the transaction so that it is finalized within the allotted window. For me this meant pulling over my car and doing it from a parking lot while out getting lunch.
Finally, I have learned, that for me, this just isn’t worth the effort. I have only shown a small portion of the 24hr activity. Even if I eventually receive the $200 back from Square and I’m able to buy Bitcoin back at $8000 or less, I did not make enough profit to pay for a very hard days work trading.
As I started writing this I emailed Paxful about the scammer account that was still live and before I finshed writing it that account is now banned. The negative retaliation feedback the scammer left for me remains on my account.