Dwolla has sent over a statement responding to the $2 million lawsuit filed yesterday by the Bitcoin exchange TradeHill. Dwolla says it has not been formally served notice of the lawsuit yet.
First and foremost, it is important to note that neither Dwolla, nor any of its management or investors, have been served formal notice of any potential lawsuits. It is also noteworthy that a party making unfounded allegations would likely notify the media of litigation prior to advising the party that it says caused it harm. That said, if served, we will vigorously defend all allegations of wrongdoing in the traditional venues of the judicial system. What we will not do is provide specific comment on specious allegations made by those who have a self-serving interest in seeking publicity.
In the interests of transparency, we’d like to say a few high-level things: Dwolla has always worked closely with merchants to rightfully identify and protect the victims of identity theft. Every day, thousands of users log thousands of successful and legal transactions in one of the industry’s safest ecosystems. Unfortunately, as is a reality with all financial services (e.g. banks, credit cards, etc.), predators can use stolen identities to create fraudulent accounts without a victim’s knowledge. That’s why Dwolla requires numerous identification and verification steps.
A necessary byproduct of this kind of fraud is bank-level reversals, “chargebacks” issued by the institutions on behalf of the victim, not Dwolla. With that said, we will not play accomplice to sources of ongoing fraud. In such cases, we move quickly and act appropriately to facilitate restitution on behalf of the financial institution and its members (the victims). This is required by federal and state consumer protection laws, but more importantly it’s the right thing to do.
Most all merchants are well aware of the problem, which is why we’ve always had something in our terms of service about chargebacks since Day One. Notably, there are certain types of businesses and marketplaces that are continued targets for illegal activity and, just like we work hard to protect and improve our community, a similar expectation should be assumed on behalf of merchants participating in high-risk industries. If any merchant continues to be a source of systemic fraud and we cannot come to an agreement, we will always take the appropriate actions.
In the event that a user or merchant feels as though they have been wronged to the point of litigation, we’ll be happy address their concerns or issues in the court of law. It is their right to do so, as it is our right to rationally and reasonably present our side. So while people may throw a bit of mud on us, it’s important to let the appropriate parties figure this stuff out. This will allow us to focus on what we do best: Build.
In the meantime, Dwolla continues to be a source for hundreds of thousands of transactions, all safe, legal, and cost-effective. Please, don’t hesitate to drop us a line.