How to Avoid Scams When Trading P2P

. 4 min read

LocalCoinSwap provides a safe place to buy and sell Bitcoin, Ethereum and other cryptocurrencies. Both the buyer and seller are protected through the escrow system that ensures the crypto being sold actually exists, is securely locked in place throughout the trade, and will only be released to the buyer once the payment is complete.

Much like any P2P market, social network, or communication channel, there will, unfortunately, always be a small group of bad actors that try to scam other users. If you follow the correct trade flow and some simple trade practices/considerations, you should easily be able to avoid the scams.

Follow the Correct Trade Steps

The first and most important thing is to follow the correct trade flow. There is an automated system that clearly guides both the buyer and seller through each step of the trade in the correct order.

These are as follows:

  1. Trade requested - a user has requested to trade (buy or sell) crypto with a vendor
  2. Trade accepted - the vendor accepts the trade
  3. Escrow funded - the seller locks the crypto being sold into escrow
  4. Payment made - the buyer pays the seller directly
  5. Escrow released - once the payment is received, the crypto is released to the buyer

Ignoring the trade instructions and completing these steps in a different order is very risky.

Never Make Payment Until the Crypto Is in Escrow

When purchasing crypto, a scammer may attempt to convince you to make the payment when there is no crypto in escrow. If you make a payment outside of escrow, then the chances of receiving your crypto are near zero. The escrow process is the key feature that keeps you safe when buying on LocalCoinSwap or any other P2P exchange.

It is apparent in the trade page whether the crypto has been escrowed and you will be clearly prompted to make payment only once the escrow is funded.

Never Release Escrow Until You Have Confirmed Receipt of the Payment

When selling crypto on LocalCoinSwap, it is essential to check you have actually received the payment before releasing escrow. Always check your payment account directly rather than relying on a screenshot provided by the buyer, or relying on a confirmation email from your payment provider.

Keep in mind a buyer could use Photoshop to create a fake payment screenshot, or they could send you a falsified “Payment Received” email pretending to be from your payment provider.

Keep All Communications in the In-Trade Chat - Especially Payment Details

Never make payment to a seller unless they have provided payment details in the in-trade chat. If you make payment to details provided in WhatsApp or Telegram, the seller could receive the payment and then provide different details in the chat.

In the case of a trade dispute, LocalCoinSwap staff only have access to the in-trade chat and therefore can only consider the payment details provided there.

Understand the Risk of Different Payment Methods

Some payment methods carry a risk to sellers due to the possibility of a chargeback (payment reversal). As a crypto transaction is not reversible, if you sell BTC and then the buyer charges back the payment, you will lose both your crypto and the local currency. Only experienced sellers should use these. Here is a short list of some common payment methods that have an associated chargeback risk

  • Paypal
  • Venmo
  • Credit Cards
  • Gift Cards not purchased with cash

As a buyer, there is minimal risk in using these payment methods; however, you will generally pay a premium as the seller needs to cover the risk with a higher selling price.

Some sellers will require some form of identity verification when using risky payment methods to reduce the risk of a payment reversal.

Consider a Vendor’s Reputation

Although there are plenty of trustworthy new vendors, It is generally a safer and smoother process to trade with a vendor that has a solid trade history. You can click on another users username to view information like how many trades they have had on LocalCoinSwap, if they have imported feedback from other P2P platforms, and view reviews from other users that have traded with them.

If It Looks Too Good to Be True It Probably Is

If you see someone selling BTC at 10% below the market price, you can generally assume that there is something suspicious. Some regions do have slightly lower BTC prices for various geographic reasons, but it is important to use some common sense. Comparing the offer to other similar ones is a good way to weed out scammers. A trade offer at a low price is not inherently risky in itself, so a scammer will generally attempt to lure users in with a low price in order to attempt one of the other scams outlined in this post.

Use the Details Specified in the Trade

If the trade specifies one payment method and a user suggests using a different one, you should not do so.

The same goes for the price. If the trade specifies an amount of money to send and the seller requests more, then you should cancel the trade or raise a dispute and report the user to LocalCoinSwap staff.

LocalCoinSwap Is Here to Help

LocalCoinSwap’s dispute resolution staff are experts at detecting fraud and resolving disputes in a fair and efficient manner. So as long as you follow the correct procedure you should not have an issue.

If you ever have any issues in a trade or see anything suspicious, you should raise a support ticket and report it to staff immediately. We are always willing to help ensure that LocalCoinSwap is a safe space where everyone can have fair and equal access to the wonderful world of cryptocurrency!



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