Consumer complaint received 2023-11-09
Company: Paxful Holdings, Inc.
State: NY
Product: Money transfer, virtual currency, or money service
Sub-product: Virtual currency
Issue: Other transaction problem

Complaint:
BACKGROUND : Paxful provides a Peer-To-Peer ( P2P ) trading platform to allow users to directly and anonymously buy and sell cryptocurrencies from each other. Their platform is supposed to be a safe and secure environment in which Paxful provides a structured process, including escrow services of the cryptocurrency to be exchanged, to ensure that trades go smoothly and nobody loses money. If a buyer and seller nevertheless have a disagreement over terms of an offer or settlement, Paxful provides a moderator that is supposed to provide a fair and independent Dispute Resolution process. In the event buyer or seller do not agree with the moderator, a further Appeal process is provided. Unfortunately in my trading experience, the Paxful 's P2P trading area does not work as intended and advertised, primarily because Paxful does not provide the Dispute Resolution and Appeal process as described in their Terms & Conditions, and I lost money due to a fraudulent seller on the platform because Paxful did not follow its own policies and conditions for resolving disputes and appeals. 

WHAT HAPPENED : On XX/XX/XXXX  at XXXX ( EDT ), I opened Paxful Trade ID # XXXX for seller Offer # XXXX listed by Seller " XXXX '' ( XXXX XXXX. ) I sent a new, unused {$100.00} USD XXXX XXXX XXXX ( an insecure type of cryptocurrency ) in order to buy and receive XXXX XXXX XXXX ( worth {$83.00} USD at the time of the transaction ). Paxful placed XXXX XXXX ( {$87.00} USD ) of seller 's virtual currency funds into escrow to purportedly protect and enforce the transaction 's settlement. However, the new gift card that I tendered to the seller also came with a security provision that delays activation of new gift card purchases for 24 hours, and before that waiting period expires, the card number is reported as invalid and can not be used by anyone. This gift card policy provision actually should have provided me with an extra layer of protection in a P2P exchange, because upon the seller receiving the gift card number, the seller can not immediately charge a purchase to the gift card and then falsely claim that I sent a used gift card with less than the original {$100.00} balance remaining -- -when the gift card completes the activation waiting period and becomes valid, the balance is guaranteed to be the original purchase amount and is fully available to Seller already in possession of the gift card number. Paxful, however, wrongfully interfered in the exchange and cancelled it before the gift card purchase cleared and the activation process could be completed.

DISPUTE PROCESS : The seller was impatient to wait for the gift card activate, opened a Dispute with Paxful on XXXXXXXX XXXX XXXX  at XXXX ( EDT ) ( while I am asleep ) claiming they received an bad/invalid card number. Under the Paxful Dispute Resolution policy, I was supposed to have 12-48 hours to respond to the dispute, and a decision on a dispute allowed to take up to 21-30 days, with an Appeal possible up to 10 days after the dispute decided. Instead, Paxful 's moderator closed the dispute in a record 51 minutes (! ) later at XXXX, having received no response yet from me to the dispute, with the false/improper/incorrect determination, " Card details not seen by your trading partner '' and cancelled the trade, releasing the escrow immediately back to the seller and leaving me with no trade protection. Seller of course had seen the gift card number, because they were complaining in the dispute that they had received an invalid card number, and Paxful also totally ignored the proof of purchase of the gift card provided to the seller in the exchange chat. To appeal this unfavorable decision, I opened Customer Support Ticket # XXXX on XXXX XXXXXXXX XXXX  explaining the problem with the dispute resolution process, especially that their decision was rushed before I could even respond to the claim and did not allow any time for an investigation to resolve where my USD funds used to purchase the gift card were located. Incredulously, 10 days later, Paxful responded to the appeal indicating, " Once a decision is made, it can not be reversed '', outright admitting that the appeal process described in their Terms & Conditions is not real and all appeals are automatically denied without any consideration. 

POST-MORTEM : 24 hours later, the gift card became valid and active as expected while in the seller 's possession, obtained through the trade improperly cancelled by Paxful, and it was immediately drained by the seller from its original purchase value of {$100.00} USD to {$4.00} USD, where it remains. Paxful still refuses to review the case and transfer the XXXX XXXX XXXX into my Paxful account that the seller rightfully owes me ( {$100.00} USD lost by me otherwise ). At the end of the day, Paxful provided no transaction safety and acted almost in collusion with the seller. Far from being a safe and secure P2P exchange, Paxful demonstrated in this case that it does not follow its own Terms & Conditions of service, published policies, procedures, rules with respect to dispute resolutions and appeals. My conclusion is thus that Paxful is actually a platform that facilitates fraud and theft, and as such should be shut down to protect the public.

Company response to consumer: Closed with explanation