One of the reasons I stick with Amazon is, yes, they have my payment info saved. But they also have other things like Amazon Prime, and their reputation. People don't stick with Amazon just because they have payment info saved. They trust Amazon is going to keep their info secure, and if they're unhappy with the purchase, Amazon is going to make them whole.
I don't have that trust and security using Bitcoin with a site I've never used before. I don't know if the site is on the up and up, or if they'll just take my BTC and run.
Your comment reveals something often overlooked by the crowd shouting "OMG Bitcoin doesn't have chargebacks". Most people shop from merchants they trust, most merchants are honest, most disputes are resolved without chargebacks. Therefore chargebacks aren't really that needed or that important for most transactions.
IOW: you would have no problem paying Amazon in bitcoins, because you trust them.
One thing most people who claim chargebacks are needed overlook is the impact the availability of chargebacks has on reducing the types of actions merchants take which might require one. The existence of the chargeback mechanism itself means merchants are more likely to ensure customer satisfaction to avoid them. That doesn't mean they aren't needed it could also mean they are incredibly effective at limited merchant fraud or laziness in dispute resolution.
Chargebacks are just one of many methods that customers can use to maintain uprightness among merchants: legal actions (eg. small-claims courts), complaints to FTC or BBB, online reviews, etc.
Legal action is far too time consuming and expensive, writing to the FTC or BBB is completely worthless as it will do absolutely nothing, and online reviews are limited in their ability to do anything, and might not have any impact.
A chargeback is simple, easy, and fast. And it puts the onus on the merchant to prove they didn't do anything wrong.
None of those are really comparable in effort, cost, or effectiveness compared to just calling my credit card and having the charge reversed and the threat that I have the option to do that if they don't deal with my orders or issues appropriately.
> None of those are really comparable in effort, cost, or effectiveness
Does it matter? Some defrauded users WILL be persistent and WILL go through the effort of using these recourses, so they do keep merchants in check.
The fraud world is not as simplistic as you think it is ("oh crap customers can issue chargebacks against us, I guess we have to be honest now").
Fraudulent merchants will act fraudulently, regardless if chargebacks exist or not. Honest merchants will act honestly, regardless if chargebacks exist or not.
Yes it matters to me because the fact that some customers will do it won't actually matter in getting me my money back if there is a problem. The occasional customer going through the process of paying to take a merchant to small claims court(and if they are out of state it will be a considerable expense) isn't going to stop fraud or problems like the one below it will just cause the merchants to pay those specific customers off.
The problem isn't just out right fraud. Say you come to my online store and buy something. My warehouse screws up and doesn't ship it but they list in the system they have. You call up in a week and say "Wheres by foo" and I say "We shipped it". With chargebacks I am encouraged to go investigate and solve the problem. Without I am encouraged to trust my system.
Or say I sell you tickets to an event. For whatever reason I go bankrupt before the event can exist. With a credit card I'm still getting my money back. Without chargebacks I'm boned.
So then you say "Well only use trusted merchants like Amazon!" which is great if you want to centralize all commerce on the internet to one provider per vertical but not really ideal.
> it won't actually matter in getting me my money back
You aren't answering my point. Your argument was that we need the threat of chargebacks to make merchants more likely to ensure customer satisfaction. I told you that other threats like legal action are sufficient to keep the pressure on merchants to remain honest. For example a merchant repeatedly taken to court will eventually be shut down, or maybe fined sufficiently that it will eat his profits so he will be enticed to be more honest.
> Without I am encouraged to trust my system
If customers threaten to go to court or report you to the FTC/BBB I can ensure you you will be encouraged to go investigate too.
> So then you say "Well only use trusted merchants like Amazon!"
I am not asking for change. People already do it. They already use trusted merchants (mostly). This was the central point stated at the beginnig of this thread: "most merchants are honest, most disputes are resolved without chargebacks. Therefore chargebacks aren't really that needed or that important for most transactions." So yeah for the 1% of cases where you think the merchant might be fraudulent use Bitcoin with escrow, or a credit card, or cash-on-delivery, or whatever. For the other 99% a standard non-escrowed Bitcoin transaction is acceptable.
But you're ignoring the difficulty and worthlessness of these actions. If the company isn't local going to small claims becomes expensive so despite threats almost no one will do it. FTC/BBB does nothing unless there is obvious widespread fraud and how long will a resolution take for you?
>If customers threaten to go to court or report you to the FTC/BBB I can ensure you you will be encouraged to go investigate too.
No you're encouraged to wait until they actually go through the process of taking action then if its cheaper resolve it.
You keep saying most merchants are honest which I agree with but honesty isn't the only reason for charge backs as I mentioned.
Filing a complaint to the FTC or BBB is no more difficult than filing a credit card dispute. In both cases you merely supply evidence of the fraud.
But I am not claiming a legal action is as likely as a chargeback to make the customer whole. I am claiming a legal action works just as well as a chargeback to put pressure on merchants to keep them honest.
> honesty isn't the only reason for charge backs
What other reasons? Illegal charges after theft of credit card billing information? I would say this is an argument for Bitcoin since using Bitcoin makes impossible for the merchant to steal or lose your billing information :) So what other reasons for a chargeback are you thinking about?
I repeat again: I agree the customer is less likely to get his money back with an FTC complaint than a chargeback. But FTC complaints still work as an incentive to keep merchants honest because what the FTC does eventually is one or more of the following: initiate lawsuit, shut down the business, seize the merchant's assets (offices, products, money, everything), etc.
> What evidence do I have of fraud if its just a shipping dispute and their word against mine?
The same evidence you would supply to your credit card issuer for a dispute: shipment info, package tracking numbers, pictures of items delivered, customer/merchant email exchanges, etc.
> Mistakes, and disruptions in the continuance of the company
As I said, most merchants are trying to please customers, so most mistakes are resolved without a chargeback. I don't think you will disagree here. I have never had to issue a chargeback, yet I had a few mistakes happen on me and the merchant always resolved them in my favor.
As to "disruptions in the continuance of the company" this is an extremely rare event, even rarer than outright fraud. So I will agree this is a nice case to have chargebacks available, but again as I said for 99.9...% of other purchases Bitcoin's lack of chargebacks is totally acceptable. I don't think you will disagree here either.
So your solution to the problem is one that likely won't result in the customer getting their money back and involves a lot more work on their part? It also requires that the company screw up repeatedly with many customers(to get the FTC to investigate), and is still operating?
If you are still honestly convinced that is an acceptable replacement for charge backs we will never find agreement here.
>I have never had to issue a chargeback, yet I had a few mistakes happen on me and the merchant always resolved them in my favor.
You dismiss completely the possibility that this is because of the existence of chargebacks? The fact that you have the ability to reverse the charge, cost the company a charge back fee and potentially raise their payment processing rates if they don't help you out satisfactorily? You don't think that has anything to do with the way they act?
Google tiger direct bitcoin refund for some examples of how a company handles these things without that threat. People spending days trying to resolve the issues bouncing between multiple companies. The alternative is calling their credit card company and having the funds available again in a few minutes.
Or look at all the people waiting >1 year past their expected delivery date for miner shipments and in some cases having the company go out of business before they arrive or send them used equipment.
> likely won't result in the customer getting their money back
Likewise, a good fraction of credit card disputes end up being resolved in favor of the merchant, not the customer.
> involves a lot more work on their part
I already told you submitting an FTC or BBB complaint is no more work than submitting a credit card chargeback.
> It also requires that the company screw up repeatedly
True if you go to the FTC. Not true if you go to small-claims court: it will be investigated even if only 1 screw-up occur. Yes going to small-claims court is more work than filing a credit card dispute, but then if it is not worth your time given the transaction amount, it kind of proves that being refunded isn't THAT important to you. In this case you would complain to the FTC, and write off the small amount lost.
> You dismiss completely the possibility that this is because of the existence of chargebacks?
I acknowledge chargebacks incentivize merchants to act honestly. But I will repeat for the third time: this is not the only thing that incentivize merchants. FTC, BBB, legal actions, etc.
> Google tiger direct bitcoin refund
I did and I found 2 stories, both resolved in favor of the customer:
This proves my point that most merchants act honestly and that most disputes get resolved without chargebacks :)
> having the funds available again in a few minutes
No. When credit card issuers refund you instantly, it is always a TEMPORARY refund (check the fine print of your credit card agreement) - you still need to submit a full package usually within 60 days with evidence of the dispute (tracking numbers, product descriptions, pictures of what was received, etc) for the credit card issuer to investigate and either make the refund permanent, or resolve in favor of the merchant. That's why I keep explaining t you that submitting this evidence of the dispute is similar in complexity to submitting a complaint to the FTC as they ask the same things a credit card issuer would ask.
Out of curiosity: how many credit card disputes have you ever filed? What proportion were resolved in your favor, and in the merchant's favor?
>Likewise, a good fraction of credit card disputes end up being resolved in favor of the merchant, not the customer.
Do you have any evidence of this?
>I already told you submitting an FTC or BBB complaint is no more work than submitting a credit card chargeback.
But then right after you said I would need to compile all the evidence to do so. So what is it? No more work(and I just have to fill in a form) or more work?
Also you realize the BBB is a private company that has no teeth right?
>True if you go to the FTC. Not true if you go to small-claims court:
I see bitcoin people recommend small claims court all the time. It works great when the merchant it local. It doesn't work so well when the merchant isn't since you have to file in their county. So add on travel time, missed work, etc to travel to where ever they are(assuming they are in your country) and it becomes a lot less likely someone is going to go this route.
>I did and I found 2 stories, both resolved in favor of the customer:
Both of which involved around a week of hassle just to get their product. And if they weren't newly accepted and watched by the bitcoin community at that time what would the result have been? Also if you'd looked a few results down on google you'd have also found this story https://www.cryptocoinsnews.com/coinbase-extreme-bitcoin-tra...
This was a big company and if you read the correspondences they were more than happy to ignore the people until a 3rd party stepped in. This works great on rare occasions but bitpay isn't going to be able to afford to police transactions with their fees.
I'll also note you skipped over the miner disputes in your response.
You admitted already you have never filed a dispute yet you seem to talk with authority about the process? I've filed 2 disputes against merchants both found in my favour neither required submitting evidence and 1 dispute due to fraud that required me to submit a signed letter confirming I didn't make the charges.
http://bit.ly/10iW5wJ page 12: "Merchants report that they win, on average, 40% of the chargebacks they dispute". Obviously x% of these disputes (with 0 <= x <= 100) are disputes that the customer should have won, but the merchant did because the dispute process is not flawless.
> So what is it? No more work (and I just have to fill in a form) or more work?
Typically it is no more work. I have experience from almost filing a dispute on my Wells Fargo credit card against Sprint. I didn't end up filing it because Sprint sent me a refund at the last second. Wells Fargo's online dispute forms do ask for some evidence: such as a log of email exchanges, shipping tracking numbers, etc. That's how I know. Obviously the process varies between credit card issuers. And I am sure no evidence is required when it is clear the merchant is at fault (a phone call will do). But either way this is similar to the complexity of the process of submitting a complaint with the FTC, where it can be as simple as a phone call if verbal info is all you are willing to provide to them.
> Also you realize the BBB is a private company that has no teeth right?
> I see bitcoin people recommend small claims court all the time. It works great when the merchant it local. It doesn't work so well when the merchant isn't since you have to file in their county. So add on travel time, missed work, etc to travel to where ever they are(assuming they are in your country) and it becomes a lot less likely someone is going to go this route.
I agree, but don't lie by saying "it also requires that the company screw up repeatedly".
> This was a big company and if you read the correspondences they were more than happy to ignore the people until a 3rd party stepped in. This works great on rare occasions but bitpay isn't going to be able to afford to police transactions with their fees.
You imply TigerDirect was intentionally dishonest, but it is very obvious the incorrect refund amount ($14.99 instead of $167.21) was a glitch, a bug. No matter how you want to believe it, this story doesn't show that merchants are dishonest and evil when they take bitcoins and they know there are no chargebacks. Are you claiming some evil TigerDirect employee typed in $14.99 intentionally on his terminal to try to rip off the customer?
> I'll also note you skipped over the miner disputes in your response.
I didn't reply because this is not relevant: most customers who paid the manufacturers with credit cards could not dispute the charges either, because of the 60-day limit after which chargebacks are not allowed. So I am not sure what is your point... Whether you paid the manufacturer with a credit card or in bitcoins, all customers are out of their money regardless.
Also, you too skipped over many of my points:
- "But I am not claiming a legal action is as likely as a chargeback to make the customer whole. I am claiming a legal action works just as well as a chargeback to put pressure on merchants to keep them honest."
- "But I will repeat for the third time: this is not the only thing that incentivize merchants. FTC, BBB, legal actions, etc."
- "As I said, most merchants are trying to please customers, so most mistakes are resolved without a chargeback. I don't think you will disagree here"
- "So yeah for the 1% of cases where you think the merchant might be fraudulent use Bitcoin with escrow, or a credit card, or cash-on-delivery, or whatever. For the other 99% a standard non-escrowed Bitcoin transaction is acceptable."
Yes, but at least I can be made whole from a fraudulent merchant in a timely manner with a chargeback. Not so for any of the other methods you mentioned.
I don't have that trust and security using Bitcoin with a site I've never used before. I don't know if the site is on the up and up, or if they'll just take my BTC and run.