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Comment by dotBen | Hacker News Reader

Didn't know this 10.1 b clause until now but it makes it VERY clear to me:

NEVER use PayPal to sell anything that could in anyway be disputed as counterfeit given that the terms allow PayPal to deems what is genuine/fake remotely, without physical inspection and results in not only money witheld but a potentially genuine item being destroyed.

So so crazy.

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I froze for a second after reading that statement, which I was completely unaware of.

I sometimes buy and sell rare coins (particularly US Morgan dollars), which regularly go for thousands of dollars. I have one on eBay at this very moment that I'm attempting to get $3000+ for.

I've never heard of such a dispute happening before, or have I had any issues in the past, but now knowing this, i'm really scared of what might happen.

We seriously need a viable competitor to the paypal/ebay system yesterday.

Out of curiosity, how do you destroy a coin?

Traditionally, by leaving it on the train tracks.

Melting.

I remember a year or three ago there was a story going around about Chinese scrap metal recyclers getting shipments of "destroyed" euro coins and reassembling them to pass off as intact money. Turns out at the time the official method to decommission the coins was to pop out the center piece.

So to answer your question: In some cases, not well enough. ;)

EDIT: source: http://www.schneier.com/blog/archives/2011/04/euro_coin_recy...

The easiest way to destroy the value of numismatic coin would probably be to clean it. A coin at the highest level of grading would be "destroyed" (lowered to a less valuable rating) by simply picking it up outside of its sealed, graded holder.

There are plenty of ways to destroy it physically (throw it in a forge, bend it with pliers, etc).

I'm a bit more concerned that a scammer wouldn't destroy the coin per se, but make a claim on authenticity, causing me to lose my money and also the coin.

Would it be trivial for someone to dispute the authenticity of the coin, receive PayPal's request for its destruction, photograph something that looked like a mangled coin, and then essentially get the coin for free?

Lets do this?! We could buy anything, dispute the validity of said item, send them pictures of the destruction (keeping the original) and PROFIT! All these years of collecting underpants have paid off.

Considering the amount of money to be made, I think it's reasonable. I present the following:

1) Get the original (say, $3000 coin) carefully out of the holder - then smash the holder with a hammer.

2) Find a replica of that year coin, which really is a fake, for $10-$50. Scratch it up, bend it, whatever.

3) Send the original coin back for grading to be certified with a new graded coin holder and serial number, to be sold for $3000.

Right which is what seems so illogical to me about this policy. I having little experience with coins could probably come up with that one pretty quickly. As well with the subject of this post a violin. I could easily go get a kids First Start violin for under $100 and smash it, take a photo and send it in. This to me seems like the most ill conceived business process ever dreamed up. Hell 20 minutes in Photoshop and I could destroy anything.

Heck, with ones made of precious metals you can even actually destroy them and still make a good buck selling the gold.

That's why PayPal insists on you destroying the counterfeit item and providing proof that you did.

Yes, but as pointed out elsewhere, the "proof" is easily photoshopped.

Except that the destruction is far easier to prove than the counterfeitness of the item.

This is just the "kill them all and let God sort them out" mentality applied to property.

A physics teacher of mine destroyed one in class by putting it in acid for an experiment.

Funny fact: at that time it was illegal in my country (France). This law has been abrogated since then to allow machines that crush coins to make souvenirs.

I presume you could take a bolt cutters to it and cut it up?

I'm pretty sure it would blend...

We seriously need a viable competitor to the paypal/ebay system yesterday.

That may be, and I make extremely little use of PayPal (only as a processor of credit card payments for merchants I trust on other grounds, and never as a seller of goods). But any new viable competitor to PayPal will have to solve all over all the cases of fraud and abuse that were responded to over the years by PayPal's current policies. "The life of the law has not been logic; it has been experience." Oliver Wendell Holmes, Jr., The Common Law (1881), page 1.

I think that the problem is exactly that paypal and credit cards try to solve the trust issue, but they do it in a simplistic way that heavily favors the buyer.

Let payments be payments like cash, and solve trust issues separately with things like escrow services.

This is where bitcoin may be useful.

It seems like this rule is designed to benefit not the buyer but an extra-transactional party, namely, the IP owner - that is usually the case in anti-counterfeit programmes. The case of the violin is just a perversion of a rule that was probably implemented to prevent the sale of fake watches, handbags, and the like.

Except that Paypal has only solved fraud from the consumer side. Policies like this leave the sellers ripe for fraud.

Square. Authorize payment via phone.

uhm, http://dwolla.com/ ?

If I where in your situation, I would immediately add that text to all of my auctions with a justification as to why you will not accept pay-pal for your particular transactions. I would then use a third party escrow service for anything that pay-pal could consider a counterfeit. This sounds to me like Pay-Pal is doing the bidding of trademark holders. When that is not it's role in society. It's not the counterfeit police and it should not be in the business of destroying counterfeit merchandise. They should require it be returned and if they feel like being good Samaritans, notify the trademark holder of the infringement. Let the holder police their own crap.

On eBay, accepting Paypal is mandatory.

Is that a contract requirement to using Ebay? I understand that the system allows them to pay via Pay-Pal, but can you not stipulate that payment's via Pay-Pal will be refunded and the purchase will be canceled?

The terms don't allow that. It says that Paypal must reasonably believe the item to be counterfeit. For this kind of item, clearly only a physical inspection would be reasonable, and I would sue them over it.

But I agree - it's clearly better not to use Paypal at all.

Actually in this case the only reasonable way to validate it would be with an expert. Do you know how to recognize a badly treated XX century violin from a Stradivarius? I don't.

It also says "in our sole discretion", though. I think it would be a difficult case to win.

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