Reimbursement for trade LLBYSCPP

[cparke2]

Trade ID: LLBYSCPP-e54fa305-4250-41bb-82b5-f4307b7af78e-1917

GitHub handle of Mediator: @pazza83
GitHub handle of Arbitrator: @refund-agent2

Reimbursement requested:
0.0010 BTC (additional to what was already paid to me by arbitrator)
47.44 BSQ is the amount that I ask the DAO to reimburse me.
(based on 30 day average 0.00002108 BSQ/BTC shown below)

Previous reimbursement: (none)
Previous compensation: bisq-network/compensation#1640

Trade Summary:

Mediation Summary Message:

Ticket closed on 19 Nov 2024 16:13:20
Mediator node address: d7m3j3u4jo2yuymgvxisklpitd3n5xbsnnpyz2mjh6bl6gmj5rjdxead.onion:9999

Summary:
Trade ID: LLBYSCPP
Currency: USD
Reason for dispute: Bank
Payout suggestion: BTC buyer gets trade amount payout
Trade amount: 0.0020 BTC
Payout amount for BTC buyer: 0.0030 BTC (BTC buyer receives trade amount + his deposit)
Payout amount for BTC seller: 0.0010 BTC (BTC seller receives his deposit)

Summary notes:
BTC buyer attempted payment to seller but it was unable as seller was using a Zelle business account
BTC seller provided buyer with a personal account to make payment to
BTC buyer sent payment to BTC seller's personal account
BTC seller changed their mind about accepting the payment as they were worried it was sent by debit card and mediaiton opened. Mediator advised seller it would be their recommendation to accept the payment and complete the trade. BTC seller wanted to cancel the trade
BTC seller reported the payment as coming from an unknown source to their bank and asked for it to be returned to the sender
BTC seller sent proof that the payment was taken out their bank
BTC buyer sent proof that the payment was not refunded.

Proposing the trade to complete as successful. The BTC seller has made this a much more complicated situation than it needed to be and they messed the buyer around at every stage.  

The BTC buyer sent the payment as agreed and has not received a refund.



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Next steps:
... Keep in mind that the arbitrator can only make the payout of the trade amount + 1 security deposit. The other security deposit will be left unpaid.

Arbitration Summary Message:

Ticket closed on Jan 16, 2025 10:26:26 AM
Arbitrator node address: 3z5jnirlccgxzoxc6zwkcgwj66bugvqplzf6z2iyd5oxifiaorhnanqd.onion:9999

Summary:
Trade ID: LLBYSCPP
Currency: USD
Reason for dispute: Other
Payout suggestion: Custom payout
Trade amount: 0.0020 BTC
Payout amount for BTC buyer: 0.0014 BTC
Payout amount for BTC seller: 0.0020 BTC

Summary notes:
The buyer sent funds were seller said to be sent after first attempt failed. Seller decided to reject the payment because of fraud suspcious . Buyer received back the funds after a long wait time and bank/zelle inquiries.


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Next steps:
... If the arbitrator decided in your favor, you'll see a "Refund from arbitration" transaction in Funds/Transactions

I am the BTC seller as Maker.

BTC buyer opened the Arbitration ticket and published the DPT after requesting the end of mediation.

Delayed Payout Transaction ID:
59c620a656e88d37078458b5e251d3c90af6e7adf48183ba6021fe1d0b95e026

Refund Transaction ID:
368688b2d37195ad8de9b17aeb17c89bf762926331039da6655cda00c0d18332

Discussion:

Bisq protocol for arbitration cases is clearly explained on the Bisq wiki as follows:

If a trade goes to arbitration, the arbitrator will pay out the trade amount plus one peer's security deposit. This means the total arbitration payout will be less than the mediation payout. Both traders agreeing to the mediator's suggestion is the preferred outcome. Requesting arbitration should be reserved for exceptional circumstances, such as one peer not responding, or if a trader believes the mediator did not make a fair payout suggestion.

This dynamic essentially makes bitcoin confiscatable, enabling a sort of mutually assured destruction to drive dispute resolution on Bisq without trusted third parties.

These rules were established to strongly discourage someone from trying to circumvent the 2of2 multisig deposit escrow by appealing the dispute to a Bisq arbitrator for review as an alternative to fully participating in the Bisq mediation process in good faith, including making an effort to exhaust all administrative relief available from the relevant trusted third parties first. Furthermore, the rules foreclose the possibility that either party is entitled to a penalty award if the dispute is decided through arbitration.

The mediator's suggested payout on this trade was nothing more than maintaining status quo, as the buyer was not cooperating in good faith to resolve the dispute by contacting his bank and the Zelle payment service to claim his refund money so the trade could be cancelled, and furthermore the buyer had specificially stated to mediator that he wanted to escalate the case to arbitration instead. In other words, buyer requested arbitration in order to have the Bisq arbitrator to substitute for his bank as the trusted third party to resolve the dispute rather than actually contacting the Zelle payment network or his bank. Buyer was essentially seeking for Bisq to provide him with a Bitcoin payout as an indemnification for the failure of Zelle payment network and his bank to automatically credit his refund back to his account. Bisq is not, and should never be, responsible for insuring bank transactions or compensating for bank delays in this manner.

Unfortunately, the arbitrator's payout on this case demonstrates that Buyer was partially successful in manipulating and misusing Bisq Support to deviate from the standard arbitration protocol. Presumably out of sympathy towards the buyer, and as compensation for the delays that Buyer experienced with his bank to get his refund credited to his account, even though those delays were exasperated by Buyer's own inaction earlier in the Bisq trade dispute process, Buyer was improperly provided by the arbitrator with a refund of his trade deposit + an additional .0004 BTC as a penalty award. At the same time, I was penalized with loss of my entire deposit (50% of the trade amount) despite fully participating in the entire dispute process and clearly documenting that I did not have buyer's funds. This unusual arbitration payout, with penalties included, was issued unilaterally by the arbitrator despite the fact that the resolution of this issue wholly depended on Buyer contacting his Zelle and/or his bank to locate and claim his returned funds being held in a limbo (suspense) account by the banking system for suspected fraud.

This reimbursement request therefore has been opened to additionally recover my trade deposit of 0.0010 BTC, as the arbitrator apparently exceeded his authority by issuing a custom payout of this kind without obtaining mutual consent of the parties.

Providing the buyer with a refund of his security deposit, even though he did not work to resolve the payment issue in mediation and instead sought arbitration, in an attempt to get a fraudulent payout of the BTC trade amount, also invalidates the entire purpose of having buyers post a security deposit under the Bisq security model.

Follow-up Comments:

This case highlights how dangerous the Bisq arbitration process can be, because it allows a trader to deviate from the standard Bisq trade protocol by asking Bisq itself to intervene and resolve the trade by assuming the role of a trusted third party, as a form of "support" or "help". However, Bisq does not have a KYC information to know if the parties are actually the account holders, nor are Bisq arbitrators necessarily lawyers qualified to determine title and property rights to the funds based on the evidence presented, nor can Bisq or even the parties themselves necessarily know what legal or security restrictions may have been unknowingly imposed on their accounts by local governments and/or banks. So the ability of Bisq to resolve trade disputes involving the payment issues should be kept limited. Sometimes too, as occurred in this case, a trader may seek to use the Bisq arbitration process improperly with the express intention of trying to get Bisq support to serve as an instrument of fraud and theft.

As a result, traders should not be allowed by the Bisq mediator to escalate a dispute case to arbitration until all administrative remedies have been exhausted by that trader, even if the time lock on the DPT has expired. This is a reasonable, standard principle required in most legal systems before appeal to an arbitrator or other competent officer is allowed. This means that any trade dispute concerning missing or incorrect money must first be submitted to the bank, payment network, and/or as an insurance claim (if applicable) and decisions rendered by such third parties, before the Bisq arbitrator should consider the dispute.

Furthermore, Bisq should revise its arbitration policy to indicate that when a dispute case reaches arbitration, there can be no promise or guarantee that any payout will be issued to anyone. BTC sent to the Burningmen donation address via the DPT is gone. There simply are some cases, and this case proved to be one of them, where it may not be appropriate for a Bisq arbitrator to resolve the issue. Arbitrators must not feel obligated to issue a reimbursement to either party, otherwise the arbitration process cannot be said to be the extraordinary, sparingly used, "mutually assured destruction" process that it is advertised to be. A trader should not even consider escalating a dispute to arbitration unless the mediator believes that all possible efforts to resolve with the other party and with all applicable trusted third parties have been pursued and failed, no further outcome is possible, and the parties have both resigned to themselves to the fact that they have lost their funds locked in the multisig escrow due to circumstances beyond their control.

[pazza83]

@cparke2

I think the outcome for this trade was fair.

You ended up being penalized 0.001 BTC for changing your mind about accepting the payment from the buyer, and then causing the buyer considerable inconvenience by the way you went about the refund. The trade was taken 25 October and only paid out on 16 January.

I agree with the refund agents decision to compensate the buyer 0.0004 BTC for the inconvenience caused from this trade.

the buyer had specificially stated to mediator that he wanted to escalate the case to arbitration instead

Traders escalate cases to arbitration when the mediation proposal is not accepted by both traders within 20 days for fiat trades. This trade was escalated to arbitration about 1 month after the trade took place.

I advised you it was best not to refund the buyer and to instead complete the trade. You did not want to do this. The problem with this trade was caused by your decision to cancel the trade after agreeing to it. I think it is fair the buyer is compensated and that you are penalized.

My thoughts are the penalties / compensation where inline with the principles of the trade rules:

Trade rules also help with the following:

Promoting good behavior from traders
Penalizing bad behavior from traders
Promoting good payment accounts of traders
Penalizing bad payment accounts of traders
Put the 'wrong doer' in a worse position and the person 'not at fault' in a better position

In this trade I feel that, when taking everything into consideration, that generally speaking you were the 'wrong doer' and the buyer was the person 'not at fault'. So it if fair for you to be in a worse position and the buyer to be in a better position.

[cparke2]

@pazza83

I will reply to the points in your response briefly:

In mediation and arbitration, I agreed that I had made a mistake by giving the buyer a new payment address and then, upon learning new information, changed my mind and rejected that payment, and I was willing to pay up the 20% cancellation penalty indicated in the Table of penalties. So if it is true that enforcement of a penalty is considered a function of the arbitration phase's design, then I will lower my reimbursement request amount from the current 0.0010 BTC (50% of trade amount) to 0.0006 BTC (20% of trade amount) in order to comply with the maximum penalty for cancellation provided for in the penalties table.

One of my key points in the above reimbursement request was that most of the buyer's delays were induced by the buyer himself. Specifically, buyer repeatedly failed to contact Zelle or his bank to claim his refund money until arbitrator wisely refused to close the case until his funds were located. Once he finally did what he was supposed to do in January, buyer got his money back. If buyer had been participating in mediation in good faith, he would have achieved that proper end result within the normal mediation timeline.

I advised you it was best not to refund the buyer and to instead complete the trade. You did not want to do this.

The fact that you still think this was even an option demonstrates that you clearly did not comprehend the issue which allowed buyer to cause a stalemate in mediation and later arbitration, delaying resolution for months. The only refund method available under the Zelle payment method is exactly what I did: the bank must process a chargeback on the original payment. A chargeback is an irreversible transaction in the U.S. banking system. Once the chargeback case was closed by the bank, the money no longer legally belonged to me, and I had no power, no rights, to reclaim it. Nevertheless, the buyer and yourself kept suggesting that I should somehow accomplish a "chargeback of the chargeback" to "reverse the refund" (i.e. flip) instead. Furthermore, the reasons that I rejected the payment were still valid; my position was that in order to complete the trade, buyer needed to get his money back from the bank and then re-pay with another Bisq payment method. Quite disappointed with your knowledge and skills as mediator and curator of the Bisq payment methods in this regard.

Traders escalate cases to arbitration when the mediation proposal is not accepted by both traders within 20 days for fiat trades. This trade was escalated to arbitration about 1 month after the trade took place.

That flawed reasoning is exactly what leads traders to view mediation as simply a stepping stone to arbitration, as distinguished from being an extraordinary remedy. In this case, all it accomplished was putting someone else on charge of mediation and imposing a higher penalty on me. Absent from your interpretation is any consideration of the fact that arbitration is inappropriate if the dispute has not become ripe for review. If this were a formal legal arbitration proceeding, the case would be dismissed upon finding that other possible forms of relief existed but had not been pursued by the parties. This is why the arbitrator in this case was correct to delay his ruling indefinitely until the funds were located by the buyer. That deferral is something that you as mediator could have and should have done instead.

Essentially, allowing the buyer to escalate this case to arbitration represented you happily passing off the case to the next person to continue your work. This policy needs to change.

I think the outcome for this trade was fair.

In this trade I feel that, when taking everything into consideration, that generally speaking you were the 'wrong doer' and the buyer was the person 'not at fault'. So it if fair for you to be in a worse position and the buyer to be in a better position.

Really? Both parties were at fault. But I was the only one who paid a penalty, while buyer was, in fact, rewarded for his negligence and attempt at arbitrage. That is the shame in the arbitrator's payout.

Please let me know if you would better agree with the reimbursement request if I lower the amount to 0.0006 BTC to equalize my penalty to what you should have done in mediation.

[pazza83]

One of my key points in the above reimbursement request was that most of the buyer's delays were induced by the buyer himself. Specifically, buyer repeatedly failed to contact Zelle or his bank to claim his refund money until arbitrator wisely refused to close the case until his funds were located. Once he finally did what he was supposed to do in January, buyer got his money back. If buyer had been participating in mediation in good faith, he would have achieved that proper end result within the normal mediation timeline.

I think this is just assumption on your part. How do you know what the buyer did or did not do? How do you know when the trade would have been resolved if the buyer acted in a different way?

The fact that you still think this was even an option demonstrates that you clearly did not comprehend the issue which allowed buyer to cause a stalemate in mediation and later arbitration, delaying resolution for months.

The delay was caused by you changing your mind about the trade and wanting to cancel. This was the exacerbated by the way you chose to refund the buyer. "I began the process to repair that by calling the bank to return the payment. The process of doing that is quite convoluted, it is treated as a reverse chargeback... At present, the money has been put on hold by the bank until they complete the chargeback review and formally transfer it back."

Essentially, allowing the buyer to escalate this case to arbitration represented you happily passing off the case to the next person to continue your work. This policy needs to change.

Mediation can not be kept open indefinitely. About 25 days post trade the buyer informed me "I do not want to wait longer. Please make your proposal. Thank you." I think this is fair. The buyer cannot be expected to wait for an unknown period of time for the trade to be completed. They were not at fault for you wanting to cancel the trade nor for the way you chose to refund them.

Absent from your interpretation is any consideration of the fact that arbitration is inappropriate if the dispute has not become ripe for review.

Escalating a case to arbitration is appropriate for either the buyer or the seller to do once the time lock has been exceed (10 days for alt coin trades and 20 days for fiat trade). This is part of the protocol. The buyer or seller can choose to reject the mediation proposal once the time lock has been exceeded and open mediation.

Essentially, allowing the buyer to escalate this case to arbitration represented you happily passing off the case to the next person to continue your work. This policy needs to change.

Same as above, the buyer or seller can escalate the proposal to arbitration once the time lock has expired. It is not something that the mediator can prevent.

Really? Both parties were at fault. But I was the only one who paid a penalty, while buyer was, in fact, rewarded for his negligence and attempt at arbitrage. That is the shame in the arbitrator's payout.

I think you are only viewing this from your perspective. The buyer was responsive throughout the process. The buyer also communicated their concerns about the length of time things were taking. Here are some messages from the buyer I received over a period of 2 months to show you the problems caused by you deciding not to complete the trade:

"I immediately made the payment into his account. Subsequently the seller "informally" acknowledged reciept of my payment but refused to confirm the payment in BISQ until the end of the trade deadline. However, a while later he said that he would not accept the payment and instead was going to falsely report that the payment was from an "unknown person". I requested that they either complete the trade as agreed or return my payment through Zellle. He has refused and supposedly reported the payment as being from an "unknown person". Now I am supposed to wait with no Bitcoin and out the $150 until their bank supposedly does a chargeback. This person should not be trading using BISQ and Zelle, I should be entitled to the deposit, and I will still be short 0.001 BTC."

"how long do I have wait for the refund? What happens if I don't receive it?"

"I've been checking my account there is nothing has happened after the I made $150. This really sucks because I need to use the Bitcoin I was purchasing immediately, now I have to figure out how to get additional funds for the Bitcoin while I wait to get my money back. I can tell you now that any plan that involves me sending more funds to this person in any manner will be rejected by me. They seem to think that they are not liable for anything regarding this transaction, will not accept any penalty, they will likely reject any such proposal."

"Still nothing, not even pending. It's been a week since I made the payment. There is little chance of it showing up over the weekend. I will check daily and let you when and if it shows up."

"The account that I shared with you before is linked to my directly and only to my debit card and through Zelle. I have attached an updated copy for your reference. As you can see, still no deposit for the correct amount after my payment to "XXXXXX". I haven't contacted my bank, I didn't know that I was required to do that until now. I'll give them a call tomorrow, since it's past banking hours today. What kind of proof of the contact will I be asked for? Something in writing?"

"I do not want to wait longer. Please make your proposal. Thank you."

"Unless the payment he recieved is sent back to me? What is it that they expect back now? He should have just completed the transaction, instead of making this mess. What does he expect now? He recieved my money, refused to officially confirm it, and supposedly sent to money to banking limbo. He wants me to keep waiting for the funds to appear in my account? The BTC I bought is worth almost double now!"

"I saw no reason not to accept your proposal, so I went ahead and accepted it. The peer has stated that they will not accept it, but I don't know if they have "officially" rejected it yet. Please let me know where we are in the process, the peer still believes that they are in the right and will fair better when the evidence is presented to the arbritrator. How much longer will be obligated to keep checking if the money show up in my account? All the way to the end of arbritration?"

"I am really getting annoyed at this point. The arbitrator now says "Now funds are in limbo. Even if it's seller's fault, this needs to be solved before I do any payout." They won't give me any end date for this. It's up to me to find the funds which the seller refused to accept and his bank sent somewhere... I don't think I can keep using BISQ after this experience, it's a sad shame."

"What can be done? I would like this resolved soon, it's already cost enough time and grief. How long do we wait for this missing money to show up? Who is supposed keep chasing after it? Is there anything you can do to help resolve this or at least let me know how long will I have to wait, that's all I've been asking. It went from the trade deadline to 20 plus days from the trade, and now it's become indefinite again. I really wanted to be able to use BISQ but if this is what can happen, I can't afford the risk."

"I would simply like to know how long I am expected to wait to the funds to show up"

Please let me know if you would better agree with the reimbursement request if I lower the amount to 0.0006 BTC to equalize my penalty to what you should have done in mediation.

I think you should not be reimbursed for this trade. I would like to think that knowing what you know now you will avoid such a situation in the future.

[refund-agent2]

This reimbursement request therefore has been opened to additionally recover my trade deposit of 0.0010 BTC, as the arbitrator apparently exceeded his authority by issuing a custom payout of this kind without obtaining mutual consent of the parties.

I usually seek input from traders before making decisions. However, there is no need for mutual consent of traders in arbitration. I am risking my own funds when taking my decisions, since every cycle I have to ask the DAO for reimbursing me in BSQ.
That's why, as you have noticed during this process, I won't make any refund unless I have enough guarantees that it's the correct choice. I stand by the payout I've done in this case. I disagree with the suggestion that I am "suffering a moral hazard if you make a payout to the buyer knowing the DAO typically rubber stamp approves all your reimbursement requests" as you said in arbitration.

I think it was sensible to wait until we had clarity on the funds' status. The buyer had a strong interest in receiving the chargeback, which was eventually processed. It just happens that banks are slow and you initiated a rare procedure after changing your mind for no valid reason. Christmas period also added to the delays.
You were convinced that buyer was a being dishonest until I announced to you he said he got your chargeback, then your concerns seemed to shift towards proving they'd done something wrong.

In light of this, I will refuse any reimbursement to you for this case. If anyone deserves compensation, it's arguably the buyer: They did not complete their purchase, had to do unnecessary banking requirements and got locked their security deposit while BTC price increased around 30%. We can't take a word for granted, but buyer has stated he's not going to trade again using Bisq and there are reasons.

Going forward, it might be better if contributors like yourself use separate identities when going through dispute resolution processes. This can help ensure impartiality and make it easier for me to make decisions without being influenced by external factors.

You're welcome to submit a reimbursement request to the DAO, and it's possible that the contributors may have additional questions or a different perspective on the matter. Ultimately, the decision will be theirs to make. However, I think that you don't have a valid claim for compensation.

[cparke2]

@pazza83

I think this is just assumption on your part. How do you know what the buyer did or did not do? How do you know when the trade would have been resolved if the buyer acted in a different way?

It's true, because of the way on Bisq that mediator and arbitrator conversions are private with the opposite party, I only know what I was told by the mediator or arbitrator. There is no direct way for me to actually know that you, as mediator, provided buyer with the bank's notice of chargeback and asked buyer to contact Zelle and/or his bank to locate and claim the funds.

However, I can infer from the attached image below provided by the arbitrator on December 4, 2024, which was about 2 weeks after the arbitration ticket was opened and 35 days after the buyer originally escalated the trade to support by requesting mediation, that buyer was still in a waiting pattern and expecting that somehow I was supposed to make Zelle or his bank release his money to him.

It doesn't work that way... thus the arbitrator considered the case a "dead end" at that point, but thankfully arbitrator also agreed not to issue any payout until buyer located his returned funds. My belief is that was the winning strategy here out of the stalemate, which finally caused the buyer to give up the shenanigans and do what he should have done in early November: contact Zelle and/or his bank and claim his money. Finally, in early January, buyer admitted to arbitrator that he got his money back. But you're right, the funds could have just been held by the bank for some maximum delay period because buyer couldn't act or didn't act, we don't know and we can't know.

It really seems to me, as least circumstantially, that buyer was seeking to abuse the Bisq dispute resolution process and trying to make Bisq and myself responsible for his bank's delays in crediting his money back to his account. The alternative to that, which I'd prefer not to believe, is that you, as mediator from Oct 28 - Nov 19, did nothing to help and omitted and/or misrepresented our communications to buyer and failed to forward my evidence to him. I really don't know that either. Whatever the case, the delay that buyer experienced was buyer's bank delays deemed necessary by them to determine the rightful owner of the returned funds, and buyer does not seem to have been following the terms and conditions of his bank account and Zelle service agreement requiring him to contact them to report transaction issues like not receiving the funds back.

I think you are only viewing this from your perspective. The buyer was responsive throughout the process.

I was responsive too throughout the process. If I was in buyer's shoes and actually wanted my money back as soon as possible, I would have immediately disputed the original debit card payment with the bank and received a case number and likely a provisional credit. That is, in fact, what I asked the buyer to do in the beginning in order to initiate the refund, but he wouldn't do it. Buyer seems to have done nothing with Zelle or the bank until the end, if at all.

The delay was caused by you changing your mind about the trade and wanting to cancel. This was the exacerbated by the way you chose to refund the buyer. "I began the process to repair that by calling the bank to return the payment. The process of doing that is quite convoluted, it is treated as a reverse chargeback... At present, the money has been put on hold by the bank until they complete the chargeback review and formally transfer it back."

Another fault highlighted here is on you, as curator of the Bisq payment methods, of neglecting to indicate on the Bisq wiki that the Zelle payment method is sometimes backed by a debit card rather than a bank account, and in that case carries a higher risk of chargeback. In that case, the payment isn't really a Zelle payment, rather it's actually a debit card payment with chargeback rights! That issue was my entire objection to accepting the buyer's payment at my other account. It was to protect myself from possibly losing the trade amount by suffering a chargeback from buyer after the trade was closed and bitcoin released. Instead, I have lost 50% of the trade amount to Bisq itself.

They were not at fault for you wanting to cancel the trade nor for the way you chose to refund them.

That is another aspect missing on the Bisq wiki about the Zelle payment method: how do you propose that I should have refunded buyer instead? Sending a new Zelle payment does not prevent the prior Zelle payment from being later charged back, while a chargeback is the best guarantee that the money will be returned to its rightful owner.

Absent from your interpretation is any consideration of the fact that arbitration is inappropriate if the dispute has not become ripe for review.

Escalating a case to arbitration is appropriate for either the buyer or the seller to do once the time lock has been exceed (10 days for alt coin trades and 20 days for fiat trade). This is part of the protocol. The buyer or seller can choose to reject the mediation proposal once the time lock has been exceeded and open mediation.

This is a side topic, and it's clear that you and I have very different visions of how the arbitration stage is designed to work. That it actually works as you described is a problem, in my view. I take a holistic view and embrace the full spirit of the description on the wiki that arbitration is an extraordinary remedy meant to be sparingly used when mutually assured destruction seems like the only option left for a party. On the other hand, your view is once the DPT time lock has expired, arbitration is simply the next step in the dispute process flow, and the fact arbitration replaces the 2of2 multisig security model with an arbitrator in control is just fine. It's not mutually assured destruction if a payout is guaranteed to someone. And the arbitrator is not meant to be doing the mediator's job of driving the parties to a resolution just because time ran out.

I think you should not be reimbursed for this trade. I would like to think that knowing what you know now you will avoid such a situation in the future.

I would have avoided this situation already from day 1 if I knew more about the Zelle payment method than is described on the Bisq Wiki. You admitted to me on Matrix that you knew about the Zelle via debit card option for a long time, but it is not documented on the Bisq wiki to be known to others. This trade has been a nightmare for me too, and I certainly do not wish to repeat any of this again! Maybe this particular case even gave Zelle itself one headache too many: On the same day that my bank completed the chargeback of buyer's Zelle payment, Zelle formally announced that it is discontinuing by March 31, 2025 all support for using Zelle via a debit card. That's a very welcome change!

I think at this point we are just going to have to agree to disagree. I've tried to point out the facts and evidence that you got wrong, such as the fact the debit card was always the issue and buyer was not cooperating towards a resolution, but you're simply not acknowledging that sellers can suffer losses too and have a right to protect themselves. Once the trade is closed and the bitcoin is released, there is no possibility for recourse through Bisq if the payment later fails. It is not fair to penalize a seller for acting in good faith to protect his assets before it is too late. Finally, as you know, we are beholden to the banks and payment networks to withhold or transfer funds as they find proper, and any delays that may cause are not the trader's fault.

[cparke2]

@refund-agent2

I usually seek input from traders before making decisions. However, there is no need for mutual consent of traders in arbitration. I am risking my own funds when taking my decisions, since every cycle I have to ask the DAO for reimbursing me in BSQ. That's why, as you have noticed during this process, I won't make any refund unless I have enough guarantees that it's the correct choice. I stand by the payout I've done in this case. I disagree with the suggestion that I am "suffering a moral hazard if you make a payout to the buyer knowing the DAO typically rubber stamp approves all your reimbursement requests" as you said in arbitration.

Yes, that is another concern of mine with the arbitration process... I have personally seen DPT's sent to the burningmen for large amounts like 0.2 BTC (approx $20,000) which must be a very stressful amount on you! The dispute process on the Bisq wiki says that an arbitration ticket must be completed in 14 days, but for that to work, mediator should not be sending cases your way just because it's time to move it along and leave you stuck with it! And if they do send the dispute to you anyway, you should not feel pressured to make any payout until the matter is ripe for review, as I mentioned earlier.

It just happens that banks are slow and you initiated a rare procedure after changing your mind for no valid reason. You were convinced that buyer was a being dishonest until I announced to you he said he got your chargeback, then your concerns seemed to shift towards proving they'd done something wrong.

No, I don't think you got that part right at all.

I did have a very valid reason for rejecting the payment: Buyer paid using a debit card disguised as a Zelle payment. The underlying transaction on his bank account was a debit card purchase, which can be easily disputed by the cardholder. Zelle itself has also recognized this is a problem and discontinued service via debit card. I also have not shifted concerns about the buyer since he finally got his money back; he could have resolved this case much sooner if he wanted. Buyer furthermore added difficulty towards reaching a resolution by taking the case to the arbitration stage, as according to the Bisq rules (i.e. without your custom payout), buyer was in the untenable position that receiving the refund would have meant that he should lose his deposit for having requested arbitration unnecessarily. That is what should have happened in your payout.

There was nothing special that you did to help buyer get his money back, he could have done everything that he had to do by staying in mediation or working directly with me. However, as @pazza83 confirmed earlier, buyer insisted on having arbitration decide his case instead of working on the underlying issues of retrieving his money and moving on. It was the classic pattern of a trader seeking (swift) "customer support" from Bisq to resolve a payment issue for them that Bisq is not responsible for.

If anyone deserves compensation, it's arguably the buyer: They did not complete their purchase, had to do unnecessary banking requirements and got locked their security deposit while BTC price increased around 30%.

No, I don't think you got that part right either.

It was actually buyer's choice to cancel the trade, and no, he doesn't deserve any further compensation. If buyer still wanted the BTC, he should have stayed in mediation or worked with you or directly with me to arrange it once he got his refund money back. I always stated that he could complete the trade, at his option, anytime he wanted by sending a new payment via another agreed Bisq payment method that doesn't use the debit card. Or buyer could cancel the trade and keep his money back. If buyer expressed an interest to you in still completing the trade, you never explored that possibility with me.

I think that you don't have a valid claim for compensation.

I think this claim for reimbursement is delivering value to the DAO, regardless of the vote outcome. The other major stakeholders in the project deserve to get a view into what goes on behind closed doors with the software in mediation and arbitration cases. The DAO puts a lot of trust in you as its refund agent that the payouts given are judicial and fair. This discussion is also a case study of how the Bisq dispute resolution process actually works in practice, including how discretion is exercised within arbitration.

[pazza83]

It really seems to me, as least circumstantially, that buyer was seeking to abuse the Bisq dispute resolution process and trying to make Bisq and myself responsible for his bank's delays in crediting his money back to his account.

That is not the impression I got. The impression I got was that the buyer was very frustrated. They were without there fiat or bitcoin for almost 3 months. When they did get there fiat back the price of bitcoin had increased so their fiat was worth less in bitcoin terms.

The alternative to that, which I'd prefer not to believe, is that you, as mediator from Oct 28 - Nov 19, did nothing to help and omitted and/or misrepresented our communications to buyer and failed to forward my evidence to him.

This is not the case. Nor is it the only alternative to your premise that the buyer was seeking to abuse Bisq resolution process. The buyer was worse off as a result of you deciding to cancel the trade and not refund them directly.

Another fault highlighted here is on you, as curator of the Bisq payment methods, of neglecting to indicate on the Bisq wiki that the Zelle payment method is sometimes backed by a debit card rather than a bank account, and in that case carries a higher risk of chargeback.

This is something that you brought up as an issue. Zelle has been in use for a payment method for a long time on Bisq. I cannot remember a chargeback occurring on Zelle. I told you in the trade chat "The buyer has a long standing payment account, they took an offer and sent payment. I think the chance of them being a scammer is slim to none."

how do you propose that I should have refunded buyer instead? Sending a new Zelle payment does not prevent the prior Zelle payment from being later charged back, while a chargeback is the best guarantee that the money will be returned to its rightful owner

I think your fear of a chargeback does not take into consideration that Zelle chargebacks are not common on Bisq. I also told you the buyer had a longstanding account and was not a scammer. It would have saved a lot of hassle for all if you had refunded the buyer directly rather than the way you went about it.

your view is once the DPT time lock has expired, arbitration is simply the next step in the dispute process flow, and the fact arbitration replaces the 2of2 multisig security model with an arbitrator in control is just fine.

This is putting words in my mouth. Once the time lock has expired the buyer or the seller can publish the DPT. That is the protocol. I can understand why the buyer chose to send the trade to arbitration. You neither accepted nor rejected the arbitration proposal. Neither the buyer nor seller is under any obligation to wait an indefinite period of time for the trade to resolve though mediation or manual payout.

I would have avoided this situation already from day 1 if I knew more about the Zelle payment method than is described on the Bisq Wiki. You admitted to me on Matrix that you knew about the Zelle via debit card option for a long time, but it is not documented on the Bisq wiki to be known to others.

Zelle trades on Bisq do not have an issue with chargebacks. Many trades go though fine. You were the first person to raise this as a concern. Again I not sure how valid the concern is when considering it has lead to no charge backs that I am aware off during a time that Zelle is the most common payment for USD trades for a long time on Bisq.

I think at this point we are just going to have to agree to disagree.

I disagree with your reimbursement request.

It is still fine for you to make a reimbursement request to the DAO though. Everyone has different opinions and I agree that discussing the issue here is a good way to get across both sides.

Here is a guide to making a reimbursement request https://bisq.wiki/Making_a_reimbursement_request

[cparke2]

@pazza83

That is not the impression I got. The impression I got was that the buyer was very frustrated. They were without there fiat or bitcoin for almost 3 months. When they did get there fiat back the price of bitcoin had increased so their fiat was worth less in bitcoin terms.

Buyer caused himself the extra frustration by refusing to do the right things on his end. As an analogy, if you need a ride into town, but all the cars passing by refuse to give you a ride, you will get frustrated and it will take a long time to get there. But it is your own fault! Doing the right thing and taking the free shuttle bus, calling a friend or family member, or taking a taxi will get you there faster and with less frustration.

Banks take the position that they are not liable to customers for delays caused by them in processing transactions, but in contrast, the arbitrator's payout indicates that arbitrator himself assumed a personal liability of 0.0004 BTC for the bank's delay (this is the amount that the arbitrator's payout exceeds the dispute case's payout budget of trade amount plus one deposit, but arbitrator nevertheless expects Bisq to reimburse him for this too in connection with the other reimbursements due to him) plus arbitrator felt it proper to furthermore hold me personally responsible for 0.0010 BTC for the bank's delay without my consent (which I similarly ask Bisq to reimburse in this request). The arbitrator's payout was corrupt in this regard, as buyer should not have received compensation or any benefit for circumstances beyond the control of parties. Saying that I am responsible for the delay because I chose to make my bank responsible for getting the money safely back to the buyer is penalizing me for protecting myself and doing it the right way. Damages and losses caused by the banks and Zelle payment networks doing their jobs are not something that Bisq should be pinning on someone else.

Also bitcoin locked in a 2of2 multisig or frozen in a bank account is safe and not diminished in value. The rights of the parties to receive the proceeds are just temporarily undetermined and blocked. As for the change in value of the bitcoin or fiat, that is also buyer's own fault for "not trusting me" and wanting to cancel once he got his money back. Buyer had every right to receive the bitcoin which had appreciated in value by re-paying the trade price in a more acceptable manner, and the mediator's suggested payout reflected that the trade should be completed as contemplated. However, it seems buyer could not or did not want to pay another way and preferred to forfeit the rise in value. Buyer's choice to publish the DPT and request arbitration was also an act of forfeiture in its nature. That's not my fault either.

Nor is it the only alternative to your premise that the buyer was seeking to abuse Bisq resolution process. The buyer was worse off as a result of you deciding to cancel the trade and not refund them directly.

Buyer made himself worse off by not contacting Zelle and his bank to get his refund back, and furthermore by requesting arbitration knowing (or should have known) that doing so is an act of mutually assured destruction. You also keep pinning the trade cancellation on me, but it was the buyer's option to cancel. Upon receiving his refund, he could have agreed on another payment method and re-sent the funds that way. He simply didn't trust me for having acted prudently to protect myself in the transaction.

This is something that you brought up as an issue. Zelle has been in use for a payment method for a long time on Bisq. I cannot remember a chargeback occurring on Zelle. I told you in the trade chat "The buyer has a long standing payment account, they took an offer and sent payment. I think the chance of them being a scammer is slim to none."

I think your fear of a chargeback does not take into consideration that Zelle chargebacks are not common on Bisq. I also told you the buyer had a longstanding account and was not a scammer.

Zelle trades on Bisq do not have an issue with chargebacks. Many trades go though fine. You were the first person to raise this as a concern. Again I not sure how valid the concern is when considering it has lead to no charge backs that I am aware off during a time that Zelle is the most common payment for USD trades for a long time on Bisq.

That is a statement of your risk appetite. Every trader is responsible for their own risk losses and mitigation efforts, and I do not have to accept your level of risk comfort as my own. However, to respond to the flaws in your viewpoint:

1. Bisq Support would not know about chargeback fraud most of the time, because, if done correctly, the chargeback would happen after the bitcoin has been released, trade closed, and there are no support options available.
2. A specific issue with Zelle is that it is very easy to reassign a phone number or email address to a different bank account or debit card at any time, but doing so will have no impact at all on the Bisq account signing and aging parameters. Inactivity on Bisq also accrues aging without experience.
3. My position on this trade was that even if the buyer was a low likely chargeback risk, he was using the Zelle in a nuanced way which renders it a much higher chargeback risk than usual. Zelle itself has admitted that the account setup used by buyer is inconsistent with the level of safety and security that Zelle strives for, and they are discontinuing the option for everybody.

how do you propose that I should have refunded buyer instead?

It would have saved a lot of hassle for all if you had refunded the buyer directly rather than the way you went about it.

No, refunding the buyer directly would have defeated the entire purpose of sending the refund in the first place. Because as I mentioned before, the original payment is still subject to chargeback.

In fact, a common Zelle scam operates like this:

• Stranger sends an unsolicited payment to your bank account
• Stranger then contacts you at the email address or phone number that the Zelle payment was sent to, apologizing that they sent the money in error by miskeying or something. Can you please send the money back to me by Zelle?
• If you do it as requested, you'll find a few days later the original payment from the stranger gets charged back. You just got scammed and might not be able to chargeback your refund payment to the stranger, because you did so intentionally.

The correct way to refund the stranger's payment is to ask the bank to do it, as I did. In the words of Satoshi in the bitcoin whitepaper, the bank is the "trusted third party" and they have the responsibility to return the money to the sender. There can be no chargeback of the bank's chargeback, this is a virtually irreversible process once the dispute case is closed. That should have been enough for buyer, mediator, and arbitrator to provisionally (if not finally) resolve the case. If the stranger is later identified to be valid but hadn't been recognized, the only recourse to get the money again is for that person to re-send it as a new Zelle payment.

This procedure should be sanctioned and documented on the Bisq wiki as the only legitimate Zelle refund method, and it can be time consuming for the bank to process this way, as we've seen, if the buyer does not cooperate by either initiating the chargeback case himself or failing to claim the funds back by contacting the bank on his end.

You neither accepted nor rejected the arbitration proposal. Neither the buyer nor seller is under any obligation to wait an indefinite period of time for the trade to resolve though mediation or manual payout.

I told the buyer that mediator's suggested payout meant he needed to complete the trade. That meant he needed to send a new payment with a more acceptable payment method. He needed to contact Zelle or his bank to get his refund, and I would wait however long was necessary if he wanted to wait for his refund first. You and I also discussed that if he wanted to cancel the trade instead, you could help us to initiate a 2of2 multsig manual payout. Buyer took another route and chose to publish the DPT and request arbitration, and there should have been costs on him for doing that. Buyer held all the cards, he had all the choices and options, he was not disadvantaged. If anyone was in a worse the position, it was the arbitrator and me, stuck waiting indefinitely for buyer to resolve the issue with Zelle and his bank to get his refund.

I disagree with your reimbursement request.

Your disagreement is rooted in some misplaced priorities:

• Expediency may be held more important than full deliberation.
• Compensation should be offered for non-economic injury.
• Payments received must be accepted at face value.
• Traders may be held accountable for the delays or failure of third party banks and payment networks.

[refund-agent2]

I did have a very valid reason for rejecting the payment: Buyer paid using a debit card disguised as a Zelle payment.

I don't think buyer disguised anything. This is the trading chat between you and buyer, according to buyer:

I am not able to make the Zelle payment to the email address because of it being a small business and my account is connected to my debit card. Is the another account I can use that is not a business?

Why would a scammer let you know beforehand the disguised payment method being used to cheat you?

Bisq Support would not know about chargeback fraud most of the time, because, if done correctly, the chargeback would happen after the bitcoin has been released, trade closed, and there are no support options available.

There are support options available. Matrix would be the first option for a case like this.

[MwithM]

Is e2eaf94c2d9dc36c57f05401b3b8123d6ee250a00a4e78278aaad023214c0cae the correct transaction id for your reimbursement request?

[cparke2]

e2eaf94c2d9dc36c57f05401b3b8123d6ee250a00a4e78278aaad023214c0cae

Correct.

[cparke2]

I am not able to make the Zelle payment to the email address because of it being a small business and my account is connected to my debit card. Is the another account I can use that is not a business?

Why would a scammer let you know beforehand the disguised payment method being used to cheat you?

By rejecting the payment, I'm not saying he was a scammer. It's simply there was the potential to scam.

EX: "Checks not accepted." Why? Not because you're expected to write a bad check. Rather, it's because you could do that too easily and they don't want the risk.

Buyer asked for another account to bypass a Zelle security measure meant to protect me. I did not know that myself at the time, but I figured it out shortly after I had made the big mistake of giving him another account as he had asked. That much is admitted.

I have faced this situation again already on Bisq2, and I did not repeat my mistake again. Buyer was immediately given an option to either cancel or choose another payment method. That is the correct way to handle this situation. It is how I tried to repair this trade as well. Doing so should not be considered a trade violation.