Selling Bitcoin is Against PayPal Policy

[MissouriMiner]

This post is to share info, possibly to help people before they end up in the same situation.

I have been selling Bitcoin for about 5 months with PayPal as the payment processor.  I've been self-employed during this 5 months and have become reliant on Bitcoin-related income.  I've actually been involved with Bitcoin for over 3 years and have saved up quite a few Bitcoin, which I decided to sell when I was laid off.  

Over the 5 months, I've had several disputes which I lost because Bitcoin is not a "tangible item" and not covered under Seller Protection.  I've lost over $2000, which essentially means I had over $2000 stolen from me via fraudulent PayPal charges.  These buyers knew what they were doing and knew they could get away with it. 

On May 10, 2017, I received an email from PayPal stating that the selling of Bitcoin means I was operating as a currency exchange (which includes electronic media/money/currency), which is against the Acceptable Use Policy.  Quote "Per our current Acceptable Use Policy for Money Service Businesses, PayPal may not be used to operate a currency exchange, bureau de change or check cashing business including the sale of bitcoin."

Now I am required to sign an affidavit stating I understand and will comply.  Then they later say they look forward to hearing from me and thanks for choosing PayPal as my business partner.  Well, I just lost my business.

Hope this helps others before they get in too deep. 

[DNailor]

Thank you for sharing your experience.

[Jmmaek]

I'm not a tax professional. But bitcoin is property

IRS Notice 2014-21 declares it is for tax purposes.

Taxpayers need to know the basis in order to compute gain or loss.

IRS takes the position that the value of virtual currencies must be reported in USD and the fair market value is determined on the date of payment or receipt.

Etc.

[mhyde71]

i am finding mysefl in same situation

paypal account got hacked- dishonest buyer sends money to buy btc, and now paypal has closed case dispute and returned money or whatever - but i dont have it

what recoure might we have ??  

i hope i am not opening up old wounds for people- but there must be some recourse with all the proctions/security paypal offer

i have been good paypal user for 13+ years and never once been taken or had dispute except for a couple ebay deals that went sour
small potatoes stuff....but what to do now ?? 

what / where are we finding ourselves now that we have been shafted ??
has anyone ever spoken to a real attorney ??   i have half of mind to do so - 
I am out 2000today- but concerned that another shoe will drop - bc i conducted one other transaction on LBC- 

[DPCreations]

@mhyde71

You received payment for purchase.  You have no online tracking to show delivery.  Buyer will win a case of non-delivery.

There is no seller protection for selling virtual items.

[mhyde71]

well- while i do understand and hear what youre saying 

it wasnt that he claimed to have not recevied the items....
someone infiltrated another persons account, sent money to me, then the legitimate account holder filed dispute....

so i guess where im going with this is that someone (bad person) hacked paypal security or account or whatever, sends money to (me) good person; i can prove with ledger that coin was sent- 

isnt there shouldnt there be some kind of slush fund to (lay terms insurance); that when sellers receive payment it is by the actual account holder and if not that at least the people that are trying to make an honest living arent beconing victums also

just seems wrong tome - of course on the business end of a deal gone bad- but where is the security and confidence in with all this.

i can prove the bitcoin was sent to address as instructed by seller.  but that didnt help.

and im not sure if btc is currency or proprty or both ??  maybe more so property - but is software property ?  can any one really own currency?? idk
id have to think about that - 

i just think paypal should get with the times a little bit better

they accept btc, but wont cover any one selling off thier owend btc or btc in their possession 

[DPCreations]

First, no one hacked PayPal security.

Second, someone got access to the person's account making the payment.  PayPal would not disclose those details.  It's the buyer claiming that the payment was unauthorized.  PayPal has no choice but to refund when a buyer's payment service was used fraudulently.  

This is where seller protection is so important.  When you comply with PayPal policies for seller protection, then PayPal will reimburse the seller for the loss.  You did not comply with PayPal seller protection policices so it is your loss.

[mhyde71]

so is there any way of selling btc and being able to collect via paypal ??
thru use of card or not...?

becasue if not, if it is a hands down situation no questions asked that paypal WILL NOT cover btc purchases, any one can go onto ebay and buy any of the bitcoin amounts listed and it would be a free-for-all- wouldnt it??? or is tyhere a way these sellers are protecting themselves?

it just doesnt make sense to me ? i cant believe that all the hundreds of bitcoin listings on ebay are vunerable and able to get **bleep** by having any one buy and then claim they didnt get it.  wouldnt be that easy if they stuck to their seller protection guidelines ?? 

i get that someone used someone elses account- but there are systems and protocols in place to protect accounts a little better like google authentication or microsoft has same

accounts shouldnt be able to hacked so easily and compromised....then to find out 10 days later that the transaction was simply a mater of account having been taken-over- what protects sellers for that- nothing is clear.

[therealjayvi]

You are absolutely right about it just being a free for all, literally there is nothing these sellers could do to prevent a buyer from calling up and saying they were "hacked". After spending about 6-7 months on a total of 4 cases amounting to about $10k in losses I unfortunately regret to inform everybody that it IS this easy to perform this trick within the eBay/PayPal system. Paraphrasing from the rep I spoke with at PayPal regarding my rock solid (or so I thought) Terms & Conditions I had on my invoices: when it comes to unauthorized transaction cases, it doesn't matter what the seller says, what the seller policy is, any and all securities in place for the seller goes directly out the window. This is because for this type of case (unauthorized transaction), the ONLY, one, singular, uno, primary, and any other word you can think of to resonate the fact of 1 and only 1 thing, that gets considered is the login history of the buyer. That's it. All protection policies are null and void, non-existent, and the seller is left wide open for all losses to come. So what does this mean? This means that all somebody has to do in order to win such a case is to use a different device than what PayPal already has records of them using regularly. This can be any other phone/computer/laptop/wifi or hotspot/ip address/MAC address/hard drive serial number/IMEI or UDID (for mobile devices). So literally use a friend's laptop while you're at Starbucks for breakfast to log in to eBay and purchase some crypto then log off, wait for the seller to send it, and then wait a few days and log in using your regular device and act as if this charge is brand new. Because to PayPal, they will see that "well, there are inconsistent logins, and it would seem that a different device was used when the purchase was made, okay, you must have been hacked, *steals money from seller" and there is not a damn thing that can be done about it. How do I know? Call me **bleep**ed up but since it was "that easy" to have it happen to me from somebody, I took a shot knowing what I do now about their unfair practices, and I did it so somebody else. Feel bad for the guy but hey I mean it ain't like PayPal is gonna do anything about it. I won that case this time! So yes, a free for all indeed for everybody. Best of luck to you all.

[bitcoinnotcurre]

Bitcoin is not currency. How can PayPal get away with this? This is why we need bitcoin in this world. 

[Ag11]

I have sold on a trading platform, Paxful. I am a very legitimate seller with 50+ positive feedback -0 negative. Literally same situation for me!! I totally feel your pain! I have lost over $2,500 in reversed transactions that were completely fraudulent. I am now permanently banned for life! It has temporarily haulted my eBay business which is my income! Very frustrated