Gift cards are one of the most popular ways that the unbanked use to earn bitcoin and enter the peer-to-peer economy. However, using gift cards to trade for bitcoin poses certain risks and we want you to be aware of these important specifics. At Paxful, we do our best to minimize all the downsides and foster a safer trading environment, but it’s imperative that you know how to protect yourself while trading. Here are some main cornerstones to consider:
1. Gift card seller
1.1 High number of bad cards/codes.
The percentage of codes that may be inactive or invalid is relatively high. Depending on the market and gift card type, you may find anywhere between one and five invalid codes out of 10 codes.
Solution: To relieve this situation, we have expanded our customer support team and are using more advanced technology to make it more difficult for invalid codes to get into our platform.
1.2 Coin locking.
Gift card sellers may not always be certain about the validity of their codes. Still, they may keep the trade active by insisting that their cards are valid. When a buyer doesn’t trust the code and initiates a dispute, the bitcoin of a gift card buyer remains immobile and locked in the secure trade escrow.
Solution: For such cases, we have an efficient dispute-handling procedure that decreases the handling time significantly and releases bitcoin back to the bitcoin seller quickly.
Some of our users neglect the details in our Terms of Service and attempt to re-sell the same gift card multiple times — this is a violation of our TOS. Brokering, or reselling gift card codes, is fraudulent behavior and poses risks and time loss for gift card buyers.
Solution: To counter this, we have grown our dispute-handling teams significantly across the globe. All confirmed brokers are subject to getting banned from our platform.
2. Gift card buyer
2.1 Vendors Ripping Codes.
In some cases, you may encounter a bitcoin seller with fraudulent intentions. Such traders redeem valid codes but deny having done so. This is a complicated issue — please see more details in the next point.
Solution: Paxful invests heavily in tools that help in the investigation and KYC process to check our bitcoin sellers’ background and transaction history.
2.2 Bitcoin sellers (vendors) are favored during disputes.
Bitcoin buyers who bring gift cards to our platform may have the impression that bitcoin sellers have an advantage during disputes.
- A high percentage of cards offered in trades by gift card holders is invalid.
- Many gift card sellers refuse to provide proof of card ownership.
- Inexperienced gift card holders start a trade without reading offer terms and instructions.
- Some gift cards cannot have their balance checked.
2.3 Unresponsive vendor.
This happens when the bitcoin vendor stops communicating and does not release bitcoin even after the gift card seller provides a code. This may be due to specific trade flow, usually mentioned in the vendor’s offer instructions, but it may also be the vendor using the code without paying the gift card seller. The latter then is left with the only option to cancel the trade.
Solution: We have increased the staff number in our Support Team so that we can assist gift card sellers as quickly as possible.
3. Evidence required for disputes
The following items are required as evidence to facilitate a smooth and fair resolution of any trade disputes:
3.1 A photo of the original gift card with your Paxful trade chat clearly visible in the background.
Edited or photoshopped images are not accepted.
3.2 A complete photo of the original receipt.
All four corners of the paper receipt must be visible in the photo.
3.3 For electronic codes (e-codes), an invoice for the original payment and a video recording of the bank statement as proof of purchase.
E-codes require clear proof of ownership just as physical gift cards do.
3.4 Proof of exchange between the third party’s customer support.
We may request the gift card seller to contact the gift card company for additional evidence.
4. Long dispute handling time
4.1 Average dispute handling time may be up to three weeks.
The volume of bad trades involving used gift card codes impacts the handling time for gift card disputes.
4.2 Disputes take a long time due to the following factors:
- High volume of disputes.
- Complete lack or partially presented evidence from both sides.
- No special agreements between Paxful and gift card companies.
- Unresponsive users.
5. Irresolvable disputes
A dispute may go unresolved under the following circumstances:
5.1 Neither side managed to provide adequate evidence to our moderators.
With some disputes, our moderators simply do not receive enough cooperation from either side. This may render a dispute-solving process close to impossible.
Solution: By implementing more strict ID verification requirements, Paxful aims to decrease the number of irresponsible users in general.
5.2 The gift card balance cannot be checked for some gift card types.
It is very important to remember that Paxful is an intermediate platform. We do not possess special tools to check personal e-codes or gift cards.
Solution: To avoid such a scenario, we invest in advanced ID verification tools and check suspicious users’ transaction history closely.
If you’d like to learn more about buying bitcoin with gift cards, please click here. We also have an article and a video to guide you through disputes. If you have lost a gift card dispute, please see additional information here.