Dealing With Time Wasters & Scammers

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gingerbreadfork
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7 min read

As a vendor your time becomes valuable, discover some tips on the best way to avoid timewasters and keep scammers at bay.

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Just as in any aspect of life, you can always come across people who don't have the best intentions when trading. While these people often merely result in some wasted time for an experienced vendor, they can still be an annoyance, but there are measures you can take to help reduce their impact. Knowing what common scams are out there and how you can best mitigate them or reduce your exposure to them helps you spend more time on customers that want to trade rather than mess around.

Simple Rules to Protect Yourself

Most timewasters and scams can be avoided if you take care to either reduce your exposure to them in the first place or ensure that when you do have to deal with them that they don't affect your ability to perform other trades while delayed by them. Some of these require a judgment call. Using good judgment is one of the best tools you have as a vendor (other than escrow, of course).

  • Don't trade outside of escrow. Seriously, never trade outside of escrow, ever.
  • Set your trade limits to reasonable amounts so that a timewaster can't have you unable to trade as you have extra liquidity available to you at all times.
  • Try and gauge how serious a trader is and ensure that they agree with your terms before committing to going through with a trade.
  • If you are uncomfortable trading with a new trader who opens a large trade, ask if they'd be interested in a smaller amount and suggest they open a new trade with you.
  • Never release payment to a seller until you have confirmed receipt of the funds for yourself.
  • Beware of payment methods with high chargeback risk, especially with new users who don't have a good trade history.
  • When trading cash-in-person, don't settle to meet in areas that you don't feel safe just to get the trade.
  • Only trade with the payment method set in terms of the trade; if a user wants to use another, suggest they open that specific trade and cancel the current one.

Commonly Attempted Scams

Unfortunately, whenever it comes to money or value exchange in general, there are always those that have bad intentions and look for ways to exploit others. Understanding the common types of attempted fraud that can occur helps you be more aware of what is out there and what to watch out for as a vendor.

Man in the Middle:
The man in the middle attack can occur in a range of ways. However, it comes down to generally thought that the person you are trading with is manipulating someone else to send you payment without realizing what they are actually paying for. In these scenarios, your buyer is attempting to get payment from another person you have no involvement with and will provide your payment information to that person claiming it to be theirs. In a scenario like this, the man in the middle (MITM) doesn't have to worry about accepting the payment themselves and dealing with chargeback and is less likely to be discovered as they can take their cryptocurrency after the transaction only to stop responding to the person that sent the funds. As the seller, you'll likely end up having to deal with a chargeback or other potential issues if you are a victim of this sort of situation.

Ensure that the person you are speaking with is actually the person sending you money, whether you request them to show you an old bill with their name on it being held in front of the trade screen, or you do more intensive KYC, this can help ensure you know who you are dealing with and reduce the risk of unknowingly accepting fraudulent third party payments. If a trader claims this person is their partner, family member, or friends, there's no reason they shouldn't be able to prove they know they are sending the payment to you and know what it is for at any time. Some traders also request a memo attached to payments that describe that they are sending funds to them specifically. However, when dealing with payments, it's usually best to avoid mention of crypto in a way that your payment processor may spot it. However, that doesn't mean you could use specific phrases to make it more difficult to fool someone into paying as the unknowing third party in a trade.

Chargeback Fraud:
As we've already mentioned previously, chargebacks can be a risk you take when dealing with certain payment methods. The most well-known payment method that comes with a higher risk of a chargeback is PayPal.

A common scam or attempt to fraud traders involves simply opening trades with payment methods they know are more likely to initiate a chargeback when requested. A sign of this could be that someone wanted to use a payment method like PayPal that typically has a pretty high margin attached and relatively low trade size limits with most vendors. Still, they want to trade as much as possible yet don't seem concerned about the margins. This type of scam is often performed from unverified throw-away accounts on P2P marketplaces. If a new user is coming to you asking specifically for PayPal trades of a larger size, especially for one of their first trades, this is a sign they may (not always) be attempting chargeback fraud.

Chargeback fraud is hard to combat when accepting these kinds of high-risk payment methods. This risk is why margins are generally so high and limits so small that, on the occasions that a chargeback does occur, hopefully, other trades' profitability will help balance things out and leave the vendor with a net profit.

Escrow Avoidance:
What is easily one of the most commonly attempted scams, if not the most common, are scammers trying to get you to trade outside of escrow. There's never a good reason to trade outside escrow, even with someone you know in real life. The small fee involved ensures that everyone is kept honest and that trades go as smoothly as possible, and if there is an unforeseen dispute, admins with no vested interests can resolve it for you.

There is a range of excuses or bait that scammers will use to try and get you to trade outside of escrow. They may claim that the escrow isn't working for them, that they can offer you far better rates with "direct payment," or any number of other equally absurd excuses that all come back to trying to avoid using the escrow. If you trade outside escrow, you have no protection. Even if you have some information about the person you are dealing with, if they are committing this type of scam, they will likely be providing you false information anyway, so it won't allow you to try and use legal resources to get it resolved with much chance of success.

Fortunately, escrow avoidance is easy to protect yourself from with a couple of simple rules. Never trade outside of escrow. Always confirm that escrow has been funded when you are a buyer. LocalCoinSwap makes this clear when the escrow is funded, making this relatively straightforward. Never agree to send payment outside of escrow; it's almost certain you will be scammed and have no recourse. The scammer may try to rush you or perhaps even make you feel like you don't know what you're doing, but it's all a manipulation tactic to get you to pay without the protection of escrow so they can walk away with your money.

Always report those that try to trade with you outside of escrow. It helps not just protect others on the platform but helps cryptocurrency maintain the positive image it deserves. Every person that gets scammed by one of these people walks away with a bad story to tell. Don't let anti-escrow scammers ruin your day or anyone else's.

Dealing With Coinlockers

Coinlockers can be a real pain to deal with as a vendor. A coinlocker is a term that describes a nuisance "trader" who, for one reason or another, waits for you to lock up your coins in escrow and either just leave without communication, stops mid trade before payment, or get you to escrow to try and blackmail you into sending them some funds to agree to cancel the trade.

While coinlockers and other time wasters will always be a problem when dealing with people directly from time to time, you can do a few things to minimize the issues you have with them.

  1. Ensure you have enough funds to continue with other trades if some of your funds are held up by a coinlocker. Setting reasonable trade limits is key to being able to trade with multiple parties at any given time.
  2. If you are extremely averse to coinlockers, you can reduce the odds of dealing with them by limiting the types of users you will trade with, e.g., non-verified users, requiring a minimum number of completed trades, and so on. However, this will limit your exposure to legitimate traders.
  3. If someone has gone silent on you without cause and hasn't responded in a reasonable amount of time (use your best judgment based on a case-by-case basis), dispute the trade to have the funds released to you sooner rather than later.
  4. Use a platform like LocalCoinSwap that will resolve disputed trades and penalize coinlockers fast. Some platforms have poor dispute resolution times, resulting in long waiting periods and increasing the impact that coinlockers can have on you.
  5. Don't accept a trade that you aren't confident about from the start. Sometimes it's better to miss a transaction that doesn't feel right for some reason than to have your time wasted and your funds trapped in escrow.

Red Flags to Watch Out for Trading P2P

  • If a new trader, especially one with a lazy-looking username (often a common name followed by random numbers), comes to you with a large trade request, be sure that you have time to deal with a possible dispute before accepting.
  • Be suspicious of anyone desperate to get you to chat off the platform via Whatsapp, Telegram, etc. There's no reason to chat off-site.
  • If the price is too good to be true, it probably is and will likely result in wasted time or worse.
  • Traders suggesting to trade on other platforms than what you are currently using. Sometimes these websites can be completely fraudulent made with the sole purpose of stealing your funds.
  • Names associated with payment information that doesn't match other information you have been provided may be signs of fraudulent third-party payments.
  • Claims that the escrow isn't working, refusing to fund escrow, or pretending they already have.
  • Proof of payment screenshots or even videos that look suspicious, always confirm receipt of payment yourself to ensure you don't release the escrow to find out later that the images were modified/fake.
  • Look out for inconsistencies or strange behavior. If something feels off, it quite possibly is.
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