Based on my previous experiences with such live chat help. I'm guessing they are just mindlessly going off a script/flowchart. I'm also guessing Sarah, Melissa, and John aren't their real names and they aren't native English speakers.
This seems interesting but very easy to take advantage of by either party. If I were the buyer, what if I transferred the coins somewhere and then claimed that the seller transferred the coins out before I had a chance to do it myself? And vice versa, if I were the seller, I could do exactly that but prove to eBay that the USB stick with 'free' wallet arrived correctly.
Either way, one of the parties will get cheated, and as soon as this becomes a regular occurrence then I imagine eBay will take steps to forbid trading in digital wallets.
This presents an interesting dilemma - if you're shipping a physical USB drive - the drive + shipping is going to run you a minimum of ~$15 - that means IMO you'd probably want to sell at least 1.5-2 LTC per transaction, but losing a potential dispute would hurt much more, and eBay/Paypal are notoriously wishywashy about these types of things. I doubt when it comes down to it, citing "eBay rep 3: John" is really going to help.
When I started selling BTC/LTC on eBay a few months ago when BTC was ~$150 and LTC was ~$3 - I only dealt in small chunks - 0.01-0.05BTC and 1LTC because there were so many frequent scammers that if I lost one or two disputes here and there it didn't really affect me.
This does cover the case of the spammer though - most of these guys steal eBay/Paypal accounts and just charge with the credit cards, because they know once you send over the BTC/LTC, the actual person is going to see the weird transaction, dispute it, then win. Now, if you're sending to the actual address it's much harder to dispute.
Seems like it be a lot cheaper to sell paper wallets, which are then filled with "free" cryptocoins after the buyer confirms receipt and public payment key.
For the record, it would be a bad idea to sell Bitcoin when Paypal is involved. Way too easy for the buyer to dispute the transaction, and Paypal typically sides with the buyer in these cases.
You can prove the transaction has occurred if the buyer posts his wallet address. The proof will be in the blockchain
paper wallets and usb drives arn't proof of anything.
Unfortunetly, to prove that you did send the coins to the right address, the buyer must publically provide his wallets address. At least as far as I can tell.
The question here isn't what makes sense logically, but what makes sense to the claims department at PayPal/eBay. They won't listen to you explain how the blockchain works, they'll ask for a shipping tracking number, and when you can't provide one, they'll say "we don't offer seller protection on virtual goods".
I wasn't saying the buyer wouldn't have to share his wallets address normally. Of course the buyer must share his wallets address, but the caveat is that he must do so publicly so that everyone can see that he owns that wallet, so that everyone can see that he received that money.
If the buyer didn't reveal his wallets address, he could claim that the seller owned the wallet where the bitcoins were transferred, or that they were transferred to someone else. There's no way of proving otherwise unless the buyer did something to tie the address to himself. (he bought some movie tickets and the theatre disclosed it was him, for example.)
Of course, that's looking at it from a pragmatic view. As others have explained, payment services don't care at all about what's actually happening, only that what HAS happened fits protocol. So this won't matter until the world has come to terms with crypto-currencies.
The seller can easily find out. Record the address of the wallet you put on the USB drive. Wait a week. Check out the block chain to see where the coins went from there.
Nothing that happens on the bitcoin network is private. The best you can do is try to guard the points of entry and exit, and mailing a USB stick announces where you live.
The buyer can make a fraudulent claim and get his money back.
There is no way to prove he got the money if he claims he doesn't own the wallet, and there's no way to prove he owns the wallet unless he ties that wallet to himself somehow. (which is possible but not reliable, and countermeasures exist anyway)
What happens when they want to return the item? Pretty sure you have to offer a 30 day return policy, I could take the 'free' litecoin, then return the USB stick and ask for a refund.
This reminds me of my highschool friend's "white envelope" eBay ticket scalping business: buy sports tickets and then sell them as free items inside very expensive white envelopes :)
I was reading the transcript and got increasingly worried that you were in a vicious circle of being passed on to the next eBay representative. Glad it worked out.
An escrow service can be on top of a marketplace. Actually you should use ebay for the reasons you mentioned (a) traffic, (b) exposure, but also (c) secure your transaction via an escrow service. Never use PayPal for that.
Interesting way to buy and sell coins. I wonder what the markup will be compared to some of the other services out there once you factor in commissions and so on.
As far as scams go, this isn't the worst idea, but I think the amount of 0.05 (although clearly meant to attract as many buyers as possible) is too low to be plausible. We're talking around 10,000$ here.
Also, 11.73268271 BTC is suspiciously precise. I wonder, if you lost the password to a wallet, can you easily know the amount in it?
Sometimes look-the-other-way loopholes stick around if they suit both sides.
For example, brown-paper-bagging a bottle of beer with your buddies on the corner of your block, not causing trouble, then the cops have, though reasonable suspicion, the option not to enforce a law prohibiting drinking on your street corner (if you don't give them a reason to), an unwritten understanding that to my knowledge has been pervasive.
If you don't believe me, watch HBO's The Wire, it's in there.
I know all too well. But, as the Paypal compliance department has told me umpteen times, their policies are not the same and are under different laws. So, eBay will let you list any physical good you want that conforms to their policy (basically anything that's not guns or child porn and things like that). Paypal will not you accept payment for anything that they define which contains e-currency (bitcoins, litecoins, etc), including Casascius coins and the like.
So their words may not be authoritative.