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I like how the reason for "chargebacks" is often touted as "consumer protection" when the real reason it to line the pockets of the credit card duopoly and ensu

by yc1010 12y ago

I like how the reason for "chargebacks" is often touted as "consumer protection" when the real reason it to line the pockets of the credit card duopoly and ensure the merchant always gets screwed. In many developed countries there are consumer protection laws which entitle the buyer to Replacement, Repair, Refund (in that order usually), so a merchant not adhering to these laws could endup in serious legal trouble as is. Bitcoin at least gives a choice to both buyers and sellers just like plain old cash does Bitcoin, Cash and Traditional Banking (SEPA etc) provide an alternative for commerce where one is free from Visa/Mastecard stupidities and ensure that the Visa/Mastercard duopoly is actually forced to compete and not grow into a more dominant and more abusive entities than they already are. They provide an alternative to being tracked and data-mined and having personal information sold to god knows who :( People do not value their privacy until they lose it, and by then its too late. * Cash allows me to pay (quite anonymously and without fear of being an entry in some datamine) for things locally * SEPA bank transfer allows me to pay EUwide for goods and services reasonably quickly and for no fees (thank you EU! credit card duopoly must hate SEPA) * Bitcoin allows me to instantly pay world wide with ultralow fees, its basically electronic Cash (credit card duopoly do hate bitcoin with a passion, just yesterday they prevented neteller from bridging bitcoin and credit card worlds which IMHO is anticompetitive! http://blog.neteller.com/2015/04/new-deposit-option-bitcoin/ http://blog.neteller.com/2015/04/new-deposit-option-bitcoin/) I forgot the last time I had to use a credit card (or paypal and their "consumer protection") in the last year, and my life both personal and business is easier and better for it.

chimeracoder 12y ago
> to line the pockets of the credit card duopoly and ensure the merchant always gets screwed. First, in the US there are four companies, not two (or three, if you don't want to count Discover). And chargebacks aren't the reason that there are so few players - they're far from the biggest barrier to entry for an upstart, aspiring credit card provider. > In many developed countries there are consumer protection laws which entitle the buyer to Replacement, Repair, Refund (in that order usually), so a merchant not adhering to these laws could endup in serious legal trouble as is. That's not what chargebacks are generally for, and in fact using a chargeback for any of those three things is oftentimes considered misuse of the chargeback system. Chargebacks are for handling disputes regarding the actual goods or services promised or rendered. Furthermore, having laws in place means nothing if it's prohibitively expensive for consumers to actually get them to be enforced in all but the largest disputes. Chargebacks are a tool that consumers can (and do) use to ensure that merchants adhere to these agreements. No individual is going to go to court with a merchant over a few hundred dollars on a disputed credit card charge. The consumer delegates this authority to the credit card company, who is more than happy to aggregate this risk across multiple customers, in exchange for a cut[0]. This is not a problem; it is the system working as intended! I'm saying this both as a consumer and as a merchant who has gotten screwed over by one of the four (not two) major credit card companies[1] - chargebacks suck, but they provide an essential protection for consumers that the judicial system cannot. (All of this is separate from fraud, which is a different matter entirely.) > I forgot the last time I had to use a credit card (or paypal and their "consumer protection") in the last year, and my life both personal and business is easier and better for it. I've had to make a few chargebacks in my life. The largest was for almost $2000. Even though the vendor was clearly in the wrong (and I had the written contract to prove it), it would have been way too expensive to actually try and get our money back through the judicial system. Fortunately, my credit card company was more than happy to settle the matter for us. [0] The consumer doesn't pay for this service directly, but they do indirectly (which isn't fundamentally different from many other products and services, in which the actual cashflow is invisible to the end consumer - this can be problematic in its own right, but that's a separate matter of discussion). [1] I have plenty of chargeback horror stories as a merchant, but that's the topic of another post. And that doesn't mean I don't see the value in chargebacks in general.
- yc1010 12y ago
  Mass use of credit cards must be an American thing, here in Europe we actually do have descent consumer friendly payment methods (beside cash) in most countries and also fairly efficient Small Claims Courts. Visa/Mastercard must absolute hate the EU and its consumer friendly policies that actually focus on making lives easier and cheaper for people here.
  - TTPrograms 12y ago
    Even going to a "fairly efficient" small claims court is infinitely less convenient than not going at all. I think the consumer wins on this one.
    - yc1010 12y ago
      The consumer doesn't win, the consumer pays 1-3% more for everything than they should for good/services and the merchants ALWAYS endsup being shafted which leads them to raise prices more to account for fraud and chargebacks. The only who actually wins is the credit card cartel.
      - tallanvor 12y ago
        You've already decided that the increased costs associated with credit/debit cards aren't worth the increased protections and convenience you get as a consumer. Personally, I find it much easier to be able to carry a credit or debit card rather than having to worry about carrying cash for everything. And knowing that I can get my money back pretty quickly if there's a breach or if a merchant doesn't provide the services they were supposed to is worth paying a bit more.
        yc1010 12y ago
        You know whats even better than having a wallet full of cash and credit cards (which can be stolen, cloned etc and having to spend hours on the phone trying to convince your bank that no you really didnt go on a trip to eastern europe paying for hookers with your card) Having a phone with a Bitcoin app where I tap on the payment terminal and pay by confirming the amount and entering my pin. Or scanning a Bitcoin QR code and paying online instead of typing long string of numbers, expiry codes, cvv etc etc and then going thru the anal probing that Verified by Visa or mastercard secure code is.
bduerst 12y ago
Insurance (and chargebacks) is one of those things you don't care about until you need it. When someone stole my debit card number (probably through a compromised reader) and began using it fraudulently, my bank contact me, shut down the card, and eventually gave me my money back. How many people at Mt. Gox were insured? You can make contrived hypotheticals about the "benefits" of not having these services, but they get harder to explain away when you do need them.
- yc1010 12y ago
  Bitcoin != Mt Gox The people using Mt Gox knew it was not an insured service and for most part ignored all warning signs for a long time that it was basically a scam. They CHOSE to trust a shady service with a ridiculous name for the storage of their bitcoins when they could have stored them locally in a quite a secure manner. They CHOSE to send bitcoins and fiat to service that had warning lights flashing above it for months and months on end. The people who lost money in Mt Gox knew exactly what they were getting into and got burned for it. Their stupidity is not the fault of bitcoin protocol/platform yet you and many others equate bitcoin to MtGox unfortunately. BTW > http://blog.ycombinator.com/coinbase-yc-s12-is-becoming-the-most-trustworthy-consumer-brand-in-bitcoin http://blog.ycombinator.com/coinbase-yc-s12-is-becoming-the-... There are services being build around bitcoin including Ycombinator funded ones that build on bitcoin and start to offer things such as insurance and good professional trading tools and api's etc etc on top. Bitcoin is a technology which gives users more options and choice (including choice to spend their money on scams such as MtGox if they so wish)
  - bduerst 12y ago
    Mt. Gox used bitcoin, just as my bank uses USD and has FDIC insurance. Stop splitting hairs. Any number of the fraudulant/hacked bitcoin exchanges or marketplaces could be used in place of Mt. Gox as an example of when you need insurance: https://bitcointalk.org/index.php?topic=83794.0 https://bitcointalk.org/index.php?topic=83794.0 You can't claim that no insurance/chargebacks is a competitive benefit and then say the ensuing consequences aren't a problem because of "expectations". People on a daily basis do not expect accidents or fraud, but when it does happen it is needed.
Nursie 12y ago
>. I like how the reason for "chargebacks" is often touted as "consumer protection" when the real reason it to line the pockets of the credit card duopoly and ensure the merchant always gets screwed. No, it's consumer protection. Without chargeback being available many people wouldn't shop online, ever. I might not go that far but I would certainly only ever shop at stores whose names I already know. There's no way in hell I'd send money to some unknown vendor that may never fulfil my order without the ability to get the money back.
- wongarsu 12y ago
  I have different observations. In Germany most people don't own a credit card, yet online shopping is alive and well. From my observation, when people don't fully trust a store they even prefer wire transfers (which are common, easy, and free, but offer no way to get your money back). People simply trust the law to protect them. Doing a chargeback already implies that one of both sides is committing fraud. If an online shop is committing fraud we trust the police to get our money back.
  - Nursie 12y ago
    Chargebacks are quicker and easier than trying to drag a vendor through the courts, especially when your only relationship to the vendor is online, the vendor may be in another country and they may have just packed up and disappeared, or for whatever reason it is they just don't have the money. Further, under UK law, the credit card issuer is a party to the debt and acts as a guarantor - they're on the hook if the merchant does somehow manage to get away with the cash. >> Doing a chargeback already implies that one of both sides is committing fraud. Yes, and we have thousands of years of 'Caveat Emptor' shenanigans to point out just how necessary consumer protections are in this space. >> If an online shop is committing fraud we trust the police to get our money back. Then you must be prepared to wait a long time and frequently be disappointed.

by yc1010 12y ago

chimeracoder 12y ago

> to line the pockets of the credit card duopoly and ensure the merchant always gets screwed. First, in the US there are four companies, not two (or three, if you don't want to count Discover). And chargebacks aren't the reason that there are so few players - they're far from the biggest barrier to entry for an upstart, aspiring credit card provider. > In many developed countries there are consumer protection laws which entitle the buyer to Replacement, Repair, Refund (in that order usually), so a merchant not adhering to these laws could endup in serious legal trouble as is. That's not what chargebacks are generally for, and in fact using a chargeback for any of those three things is oftentimes considered misuse of the chargeback system. Chargebacks are for handling disputes regarding the actual goods or services promised or rendered. Furthermore, having laws in place means nothing if it's prohibitively expensive for consumers to actually get them to be enforced in all but the largest disputes. Chargebacks are a tool that consumers can (and do) use to ensure that merchants adhere to these agreements. No individual is going to go to court with a merchant over a few hundred dollars on a disputed credit card charge. The consumer delegates this authority to the credit card company, who is more than happy to aggregate this risk across multiple customers, in exchange for a cut[0]. This is not a problem; it is the system working as intended! I'm saying this both as a consumer and as a merchant who has gotten screwed over by one of the four (not two) major credit card companies[1] - chargebacks suck, but they provide an essential protection for consumers that the judicial system cannot. (All of this is separate from fraud, which is a different matter entirely.) > I forgot the last time I had to use a credit card (or paypal and their "consumer protection") in the last year, and my life both personal and business is easier and better for it. I've had to make a few chargebacks in my life. The largest was for almost $2000. Even though the vendor was clearly in the wrong (and I had the written contract to prove it), it would have been way too expensive to actually try and get our money back through the judicial system. Fortunately, my credit card company was more than happy to settle the matter for us. [0] The consumer doesn't pay for this service directly, but they do indirectly (which isn't fundamentally different from many other products and services, in which the actual cashflow is invisible to the end consumer - this can be problematic in its own right, but that's a separate matter of discussion). [1] I have plenty of chargeback horror stories as a merchant, but that's the topic of another post. And that doesn't mean I don't see the value in chargebacks in general.

yc1010 12y ago
Mass use of credit cards must be an American thing, here in Europe we actually do have descent consumer friendly payment methods (beside cash) in most countries and also fairly efficient Small Claims Courts. Visa/Mastercard must absolute hate the EU and its consumer friendly policies that actually focus on making lives easier and cheaper for people here.
- TTPrograms 12y ago
  Even going to a "fairly efficient" small claims court is infinitely less convenient than not going at all. I think the consumer wins on this one.
  - yc1010 12y ago
    The consumer doesn't win, the consumer pays 1-3% more for everything than they should for good/services and the merchants ALWAYS endsup being shafted which leads them to raise prices more to account for fraud and chargebacks. The only who actually wins is the credit card cartel.
    - tallanvor 12y ago
      You've already decided that the increased costs associated with credit/debit cards aren't worth the increased protections and convenience you get as a consumer. Personally, I find it much easier to be able to carry a credit or debit card rather than having to worry about carrying cash for everything. And knowing that I can get my money back pretty quickly if there's a breach or if a merchant doesn't provide the services they were supposed to is worth paying a bit more.
      - yc1010 12y ago
        You know whats even better than having a wallet full of cash and credit cards (which can be stolen, cloned etc and having to spend hours on the phone trying to convince your bank that no you really didnt go on a trip to eastern europe paying for hookers with your card) Having a phone with a Bitcoin app where I tap on the payment terminal and pay by confirming the amount and entering my pin. Or scanning a Bitcoin QR code and paying online instead of typing long string of numbers, expiry codes, cvv etc etc and then going thru the anal probing that Verified by Visa or mastercard secure code is.

bduerst 12y ago

Insurance (and chargebacks) is one of those things you don't care about until you need it. When someone stole my debit card number (probably through a compromised reader) and began using it fraudulently, my bank contact me, shut down the card, and eventually gave me my money back. How many people at Mt. Gox were insured? You can make contrived hypotheticals about the "benefits" of not having these services, but they get harder to explain away when you do need them.

yc1010 12y ago
Bitcoin != Mt Gox The people using Mt Gox knew it was not an insured service and for most part ignored all warning signs for a long time that it was basically a scam. They CHOSE to trust a shady service with a ridiculous name for the storage of their bitcoins when they could have stored them locally in a quite a secure manner. They CHOSE to send bitcoins and fiat to service that had warning lights flashing above it for months and months on end. The people who lost money in Mt Gox knew exactly what they were getting into and got burned for it. Their stupidity is not the fault of bitcoin protocol/platform yet you and many others equate bitcoin to MtGox unfortunately. BTW > http://blog.ycombinator.com/coinbase-yc-s12-is-becoming-the-most-trustworthy-consumer-brand-in-bitcoin http://blog.ycombinator.com/coinbase-yc-s12-is-becoming-the-... There are services being build around bitcoin including Ycombinator funded ones that build on bitcoin and start to offer things such as insurance and good professional trading tools and api's etc etc on top. Bitcoin is a technology which gives users more options and choice (including choice to spend their money on scams such as MtGox if they so wish)
- bduerst 12y ago
  Mt. Gox used bitcoin, just as my bank uses USD and has FDIC insurance. Stop splitting hairs. Any number of the fraudulant/hacked bitcoin exchanges or marketplaces could be used in place of Mt. Gox as an example of when you need insurance: https://bitcointalk.org/index.php?topic=83794.0 https://bitcointalk.org/index.php?topic=83794.0 You can't claim that no insurance/chargebacks is a competitive benefit and then say the ensuing consequences aren't a problem because of "expectations". People on a daily basis do not expect accidents or fraud, but when it does happen it is needed.

Nursie 12y ago

>. I like how the reason for "chargebacks" is often touted as "consumer protection" when the real reason it to line the pockets of the credit card duopoly and ensure the merchant always gets screwed. No, it's consumer protection. Without chargeback being available many people wouldn't shop online, ever. I might not go that far but I would certainly only ever shop at stores whose names I already know. There's no way in hell I'd send money to some unknown vendor that may never fulfil my order without the ability to get the money back.

wongarsu 12y ago
I have different observations. In Germany most people don't own a credit card, yet online shopping is alive and well. From my observation, when people don't fully trust a store they even prefer wire transfers (which are common, easy, and free, but offer no way to get your money back). People simply trust the law to protect them. Doing a chargeback already implies that one of both sides is committing fraud. If an online shop is committing fraud we trust the police to get our money back.
- Nursie 12y ago
  Chargebacks are quicker and easier than trying to drag a vendor through the courts, especially when your only relationship to the vendor is online, the vendor may be in another country and they may have just packed up and disappeared, or for whatever reason it is they just don't have the money. Further, under UK law, the credit card issuer is a party to the debt and acts as a guarantor - they're on the hook if the merchant does somehow manage to get away with the cash. >> Doing a chargeback already implies that one of both sides is committing fraud. Yes, and we have thousands of years of 'Caveat Emptor' shenanigans to point out just how necessary consumer protections are in this space. >> If an online shop is committing fraud we trust the police to get our money back. Then you must be prepared to wait a long time and frequently be disappointed.