In P2P transactions, a chargeback happens when your trade partner requests for his or her funds back after you have already closed your deal and received your payment.
To help protect you and your funds, we've provided some helpful tips to prevent chargebacks, such as avoiding third-party payments, making sure your trade partner is reputable and more.
Binance P2P, like any global marketplace, has a strict set of rules that ensure fairness and good conduct for every transaction on the platform. Although we constantly moderate the platform, peer-to-peer transactions still require users to be aware of bad actors. In this article, we’ll provide you with valuable tips to prevent, identify and combat chargeback attempts on the Binance P2P marketplace.
Binance P2P is a leading fiat-to-crypto platform that allows you to buy or sell Bitcoin and other crypto assets at competitive prices with minimal fees. With more than 300 local payment methods and more than 70 fiat currencies, Binance P2P provides a worldwide peer-to-peer marketplace to buy crypto anytime, anywhere.
At Binance P2P, user security is our top priority, which is why we regularly inform users how to prevent and fight scams when using P2P . In this guide, we’ll walk you through how to identify and protect yourself from a common fraudulent practice known as a chargeback.
What is a Chargeback and Why is it Harmful?
In the context of P2P crypto transactions, a chargeback happens when your trade partner requests to have their funds back after you’ve completed the transaction and received your money.
For instance, when you sell your crypto to get some cash, your trade partner will initially make the cash payment to you. However, once you release your crypto to complete the trade, your trade partner will then request a chargeback on their payment method, and once the request is successful, you’ll end up losing both the crypto you sold and the money you received.
Chargebacks are possible because some third-party payment options offer their users the option to reverse a transaction they made, even after the P2P deal is completed. To justify their chargeback attempt, your trade partner may fabricate alibis, such as inconsistent account details or other technicalities.
How do I Prevent or Combat Chargebacks?
Binance P2P strictly prohibits the use of chargebacks for malicious purposes and can sanction punishments for offenders. We strive to act as fast as possible on any reports of fraudulent chargebacks involving P2P transactions. However, this process is not immediate, as investigations will have to happen and parties will have to respond to inquiries.
Given the nature of P2P transactions and the intricacies involved in resolving these issues, Binance P2P also educates our users with the necessary information to prevent or combat harmful activities. We've listed 7 tips below to help you prevent and combat chargebacks.
1. Choose secure payment methods that don’t offer chargebacks
Binance P2P ads typically offer multiple payment methods, so you’ll always find a trade that suits your needs. Given this, we still encourage you to select payment methods that do not allow chargebacks as much as possible.
Before you start your P2P journey, we recommend doing a quick search and eliminating payment methods that provide chargeback options. Once you’ve crossed off all the chargeback options off the list, only then should you select the payment method that suits your needs best.
2. Check the user's reputation for potential risks
For any online transaction, one of the most important things that everyone does is check the seller's rating and feedback. You typically do this to gauge if you trust the seller of an item you want. Oftentimes, a low rating or a negative comment would deter you from buying from that seller.
We advise you to do the same for P2P transactions. Before you respond to a P2P ad, check the counterparty’s details, such as buyer’s average rating, completion rate and user feedback. If possible, look for verified P2P merchants, which you will recognize from the yellow badge beside their name or the diamond logo which stands for block merchants, verified P2P merchants who trade in large amounts. You can also set a filter to only show ads from verified merchants.
3. Verify your trade partner's name
Once you find a suitable trade partner, the first thing you should do is check the name indicated in their details. Make sure the name used on the ad or offer matches the payment information provided on their profile.
Incorporate this practice into your routine and it’ll help you detect and prevent potential chargeback situations. If the names don’t match, it's a potential red flag, and we highly recommend you proceed with caution. Typically, when there is a discrepancy in the names, a third-party transfer is likely to happen. Keep reading to learn more about third-party transfers and how to combat them.
4. Don't accept third-party payment methods
To recap, a third-party transfer attempt happens when a person you’re transacting with insists on using a payment channel that is different from the one listed on the initial offer. A third-party transfer is completed once you agree to the request and receive the money from their third-party account. You’ve received your money, and everything seems okay, however, this is where things can go wrong. Your trade partner may use the trasnfer inconsistencies against you in a fraudulent manner, such as a chargeback attempt, putting your funds and accounts at huge risk. If you want to learn more about avoiding and combating third-party transfers, you can read this article .
5. When you create an ad, make it clear in the terms that you reject third-party payments
If you create ads on Binance P2P, you have the responsibility to be clear with your terms and conditions. Including a clause in your terms that explicitly prohibits third-party transfers can help remove or lessen your chances of encountering someone who may attempt a chargeback against you. Of course, you should still perform the necessary checks, but being clear with your terms will send a message to everyone that you are aware of common P2P scams like third-party transfers.
6. Ask to cancel the transaction if your trade partner insists on third-party payments
Usually, we’d ask you to cancel the transaction yourself. However, there are instances when that can be hard, especially in transactions where your trade partner transferred the funds first. This happens when you respond to a “sell” ad or accept a buyer on a “buy” ad you created.
In addition to buying and selling, Binance P2P has a chat feature that allows you to communicate with your trade partner before either one of you pushes through with a transaction. If there are inconsistent account details, we recommend our users use the chat feature to inform their trade partner. Oftentimes, your trade partner will initiate the chat, especially when they attempt to force you into a third-party transfer. The moment your trade partner insists on a third-party transfer, even after you indicated that you don’t allow this, you can bluntly tell them to cancel the transaction on their end. In most cases, your trade partner will oblige and move on. In case they don’t, you can click the “Appeal” button to escalate the issue.
7. If you receive a third-party payment, get info on the account that sent you the payment
If you still receive a third-party payment, even after all the preventative measures above, you still have a chance to combat any chargeback attempts if you follow the correct steps. First, gather all the information you can get regarding the account your trade partner used to pay you. Doing this will arm you with evidence you may need once an appeal or investigation arises from that particular transaction.
From there, you can choose to return the funds to that same account and proceed to cancel or appeal the transaction. If you follow the steps correctly, you will have sufficient evidence to prove that you tried to prevent or reverse a third-party transfer, regardless of which side initiated the appeal, protecting you from potential chargebacks down the line.
Chargebacks are just one of the risks you face when making a P2P transaction. At Binance P2P, we maintain a platform where everyone is encouraged to list accurate details of the accounts they want to use for fund transfers. With support for more than 300 local payment methods and more than 70 fiat currencies, everyone should be able to find a suitable trade without any chargeback attempts.
In addition to an escrow system that protects users from potential issues with erroneous transactions, the Binance P2P team proactively informs its users on how to improve security awareness through articles like this. For more information on Binance P2P, particularly our safety tips, you are encouraged to read the following helpful articles: