TOPIC: Forum Norms on Friends and Family Payments and Auctions

TL;DR: I recently had two different forum auctioneers refuse PayPal payments made for my winning bids that were sent via PayPal's "goods and services" payment method, and which included additional funds to cover the seller fees so the total that hit the auctioneers account was the requested amount. I think auctioneers refusing to accept goods and services payments is bad for the community here.

Details:

Background

There is a long history in the TD forums of sellers requesting buyers send the funds for a purchase via PayPal's "friends and family" method.

I presume the reason for this, is that when funds are sent via PayPal's "goods and services" method, PayPal extracts a ~3% fee from the purchase price from the payment and the seller gets less money.

In the past, when dealing with forum purchases, rather than sending funds via "friends and family" I have instead normally sent the money via PayPal's "goods and services" method, and increased the amount sent so that the seller gets the amount we agree upon in their account. For example, if a seller is selling a token for $100, I would send them $104.12 via "goods and services," and they would receive $100.


Why send Goods and Services?

I send money as "goods and services" for a few reasons:

1. It protects me, the buyer. If the seller doesn't sent the item, or the item arrives damaged or substantially different than the description, PayPal will help me recover the purchase funds.

2. It protects my trading partner, the seller. If the seller sends me a package with proof of sending, and/or proof of delivery, and it goes missing (porch pirates steal it, a USPS employee scans it as delivered but doesn't actually deliver it, etc.), PayPal will refund me the purchase funds, but will let the seller keep the funds too - essentially this is shipping insurance.

3. It makes the transaction easier for both buyer and seller, by automatically sending the seller my shipping address, associating it with the funds, and allowing me to add a note to the transaction specifying what it is for.

4. PayPal's user agreement for accepting payment states in their " Sending Money and Buying " section:

"You must not send money as a personal transaction (often referred to as using the “send money to a friend or family member” feature in your PayPal account) when you are paying for goods or services."

I don't personally care what other people do with their PayPal accounts, and I'm not going to claim here that what other forum buyers and sellers are doing is a violation of PayPal's terms.

However, for myself, because:

* It will be PayPal's compliance and legal team who decides whether any given transaction is in violation of their user agreements
* I use my PayPal account for a bunch of important things other than my TD collecting

I'm unwilling to engage in transactions that PayPal may view as violations of their user agreement, subjecting me to the risk of my PayPal account being limited or closed.

Request for Auctioneers

In around a decade of transactions on the forums with dozens of different sellers, I have never once had a problem with this, until a few weeks ago. In the last few weeks I have had two different auctioneers refund / refuse payments sent via PayPal "Goods and Services" that included additional funds to cover PayPal's fees.

I want to be able to participate in auctions. Due to these experiences, going forward, I will not participate in any actions that specify payments "must be sent as friends and family." In the past I took this as shorthand for "the amount of money that hits my seller account needs to be the same as what I ask for" - but apparently now it has come to mean "you must agree to send me these funds in a manner that provides you with no recourse if there is an error or problem with your purchase, and which may be a violation of your PayPal user account agreement."

I'd request that if you are going to run a forum auction you consider phrasing your payment rules as something like:

"Winners must send Payment via PayPal, and ensure the amount I receive after any PayPal fees is equal to the sum of your winning bids plus shipping. Free online tools such as thefeecalculator.com/ can help you determine PayPal's fees on money sent via Goods and Services."

While I think all the auctioneers and sellers here have their hearts in the right place, normalizing that only friends and family payments are permitted creates the conditions for fraud. We know in the past people have done things like counterfeit high value tokens, so lets' not pretend the TD community or those adjacent to it are above suspicion. I'd hate to see the aftermath on this community of a crooked auctioneer who ran an $8k auction or two and then just disappears with the money.


P.S. For Auctioneers

Your PayPal agreement says when requesting money:

"you must: ... Not ask your buyer to send you money as a personal transaction (often referred to as using the “send money to a friend or family member” feature). If you do so, PayPal may remove your PayPal account’s ability to accept payments from friends or family members."

Most of us aren't businesses. That someone is buying something for someone else, which is what the auctions essentially are, is functioning as a friend, same as if I buy concert tickets for someone else or whatever.

Why this matters is that there are now tax implications with PayPal. I have zero interest in getting a tax form from PP.

I'm perfectly fine not dealing with people who view token transactions as business transactions. Number of lost shipments is tiny as a percentage.

Ian Lee wrote: Most of us aren't businesses. That someone is buying something for someone else, which is what the auctions essentially are, is functioning as a friend, same as if I buy concert tickets for someone else or whatever.

Why this matters is that there are now tax implications with PayPal. I have zero interest in getting a tax form from PP.

I'm perfectly fine not dealing with people who view token transactions as business transactions. Number of lost shipments is tiny as a percentage.

Reading between the lines of your post, I went and researched and saw that IRS's reporting threshold for 1099-K misc income, which PayPal characterizes goods and services transactions as, changed from 200 transactions or $20,000 in aggregate to $600 in aggregate in 2023, so that I suppose accounts for the change in behavior I've seen on the part of auctioneers.

I guess I'd say watch out for yourselves everyone - whether or not you are selling things, and whether or not those sales should be reported on a 1099-K misc income form to the IRS, is not dependent on what payment modes people send you money on PayPal. It's dependent on how IRS agents interpret statute.

If someone's tax return came under IRS scrutiny, and the IRS concluded that they should have reported funds from token sales in a 1099-K misc form, the fact that the person being audited took steps to evade that reporting is likely to make their legal position quite a bit worse.

I see multiple sides of this. I'll be running an auction soon, and while I won't be requiring people to use G&S or insurance on USPS if they go F&F, I do strongly suggest one or the other. It protects me, too, after all.

The text has been in pending writeup for a week already!

Matthew Hayward wrote:

Ian Lee wrote: Most of us aren't businesses. That someone is buying something for someone else, which is what the auctions essentially are, is functioning as a friend, same as if I buy concert tickets for someone else or whatever.

Why this matters is that there are now tax implications with PayPal. I have zero interest in getting a tax form from PP.

I'm perfectly fine not dealing with people who view token transactions as business transactions. Number of lost shipments is tiny as a percentage.

Reading between the lines of your post, I went and researched and saw that IRS's reporting threshold for 1099-K misc income, which PayPal characterizes goods and services transactions as, changed from 200 transactions or $20,000 in aggregate to $600 in aggregate in 2023, so that I suppose accounts for the change in behavior I've seen on the part of auctioneers.

I guess I'd say watch out for yourselves everyone - whether or not you are selling things, and whether or not those sales should be reported on a 1099-K misc income form to the IRS, is not dependent on what payment modes people send you money on PayPal. It's dependent on how IRS agents interpret statute.

If someone's tax return came under IRS scrutiny, and the IRS concluded that they should have reported funds from token sales in a 1099-K misc form, the fact that the person being audited took steps to evade that reporting is likely to make their legal position quite a bit worse.

I think the issue is selecting goods and services equals the parties agreeing that it is a business transaction. Auctions, however, aren’t run as a business. One auctioneer included a note that the buyer is buying a share of an order rather than resale (which is pretty accurate when thinking about it.)

I would suggest for individuals who aren’t comfortable with Paypal friends and family to just wire the payment or send via Venmo. The regulatory rules for those transactions are easier.

I doubt any of us want to deal with IRS scrutiny (in the case of an audit) over spending the time (and money) demonstrating TD as a hobby rather than business reseller relationship. You wouldn’t get audited due to Paypal but in the case of a random audit, it would come up and tax lawyers run $300/hr+.

Matt, I see where you are coming from as well. If you don’t know the person, using the product/services option creates a way for you to do a chargeback if it isn’t delivered. If the person is new to the community and nobody has traded or bought/sold from them. I could see using it. Personally, I’ve never had it happen but I’ve heard of a few cases on ebay auctions that weren’t 100% what they appeared to be.

You are doing the right thing in paying the additional costs. I’d recommend contacting anyine you are bidding on their auction and asking if they are cool with it so it wouldn’t mess with anyone else’s bids if they chose not to do so. Personally, I’m ok with it (but prefer friends and family) but I am in the group of players with insanely complicated taxes already (beyond company and non-profit filings, who knew being a farmer seems to require a tax law degree?)

Fred

Please read the rules of each auction. If the rules of the auction state the winning bidders are required to send payment PayPal Friends and Family and you prefer not to... don't place bids in that auction. It's that simple.

Beertram wrote: Please read the rules of each auction. If the rules of the auction state the winning bidders are required to send payment PayPal Friends and Family and you prefer not to... don't place bids in that auction. It's that simple.

Yup - good advice.

Personally I would take either F&F or Goods and Services.

Just curious about this comment: "We know in the past people have done things like counterfeit high value tokens,". I'm sure people have, do you have any specific examples of this? I've been playing a while now and can't remember the last time someone found a counterfeit Token (my memory does suck nowadays though). To keep this thread from being side tracked feel free to PM me.

Rob F wrote: Personally I would take either F&F or Goods and Services.

Just curious about this comment: "We know in the past people have done things like counterfeit high value tokens,". I'm sure people have, do you have any specific examples of this? I've been playing a while now and can't remember the last time someone found a counterfeit Token (my memory does suck nowadays though). To keep this thread from being side tracked feel free to PM me.

TD has done tons of stuff which they explicitly stated at the time was to make it harder to counterfeit tokens, including:
* Adding more backing colors, notably on trade goods and 1k reward tokens
* Making the rings around URs stars instead of circular depressions
* Making everyone turn in their CoA's for new ones with a RFID chip in them
* Making everyone turn in their trade goods for new ones on brown backs with Trade 1/2/3/4 on them
* Making everyone turn in their 1st tooth of cavadar tokens on gold backs to get new ones on green backs

TD has also in the past made statements about receiving counterfeit items in transmute orders, and steps they are taking in response to that. They have also made statements about there being counterfeit trade goods in circulation and asking people to beware.

Let me see if I can find some threads quickly... I hate the forum search function , here are some discussions around this topic:

truedungeon.com/forum?view=topic&catid=5&id=234341#234341
truedungeon.com/forum?view=topic&defaultmenu=141&catid=53&id=248597&start=0#325379
truedungeon.com/forum?view=topic&catid=5&id=246645#301284
truedungeon.com/forum?view=topic&catid=54&id=245560#288095
truedungeon.com/forum?view=topic&catid=585&id=244718&start=144#279657
truedungeon.com/forum?view=topic&catid=5&id=243155#252103
truedungeon.com/forum?view=topic&catid=5&id=244050&start=12#268091
truedungeon.com/forum?view=topic&defaultmenu=141&catid=589&id=240318&start=0
truedungeon.com/forum?view=topic&catid=53&id=243070&start=36#251230

Matthew Hayward wrote:

Rob F wrote: Personally I would take either F&F or Goods and Services.

Just curious about this comment: "We know in the past people have done things like counterfeit high value tokens,". I'm sure people have, do you have any specific examples of this? I've been playing a while now and can't remember the last time someone found a counterfeit Token (my memory does suck nowadays though). To keep this thread from being side tracked feel free to PM me.

TD has done tons of stuff which they explicitly stated at the time was to make it harder to counterfeit tokens, including:
* Adding more backing colors, notably on trade goods and 1k reward tokens
* Making the rings around URs stars instead of circular depressions
* Making everyone turn in their CoA's for new ones with a RFID chip in them
* Making everyone turn in their trade goods for new ones on brown backs with Trade 1/2/3/4 on them
* Making everyone turn in their 1st tooth of cavadar tokens on gold backs to get new ones on green backs

TD has also in the past made statements about receiving counterfeit items in transmute orders, and steps they are taking in response to that. They have also made statements about there being counterfeit trade goods in circulation and asking people to beware.

Let me see if I can find some threads quickly... I hate the forum search function , here are some discussions around this topic:

truedungeon.com/forum?view=topic&catid=5&id=234341#234341
truedungeon.com/forum?view=topic&defaultmenu=141&catid=53&id=248597&start=0#325379
truedungeon.com/forum?view=topic&catid=5&id=246645#301284
truedungeon.com/forum?view=topic&catid=54&id=245560#288095
truedungeon.com/forum?view=topic&catid=585&id=244718&start=144#279657
truedungeon.com/forum?view=topic&catid=5&id=243155#252103
truedungeon.com/forum?view=topic&catid=5&id=244050&start=12#268091
truedungeon.com/forum?view=topic&defaultmenu=141&catid=589&id=240318&start=0
truedungeon.com/forum?view=topic&catid=53&id=243070&start=36#251230

Wow your search-fu is way better than mine. Thanks for digging these up.

I have encountered a number of counterfeit tokens.

For such an inclusive community, us encountering counterfeiting just makes me sad. I would assume most (if not all) of those cases were from ebay or similar sales rather than known community members. It's funny since I haven't posting anything in it for a while but its a good reminder to ping the completed trades thread - if someone is unknown to you, see if they have been active there.