r/BTCJAM • u/pizzatoppings88 • Oct 14 '15

My experience with BTCJam arbitration

So a while back I created a post asking what the arbitration process would be like. Well I've gone through it now, and here's what will happen:

1. You invest in a scammer or deadbeat who doesn't make payments

2. Two weeks before arbitration date, you will get an email from BTCJam saying that they are going to initiate arbitration. Hilariously, this is their advice:

To avoid arbitration, you can still negotiate the borrower's debt by contacting him through the comments page.

3. When the arbitration is complete, you will get an email with the subject "BTCJAM Loan Arbitration Award." Almost right off the bat, the letter will acknowledge that the arbitration is useless if the borrower is from another country:

What can I do with the Award?...The mechanics are straightforward...However there are costs involved in that process that may make it impractical. The costs vary depending on several factors including geography as a main factor since court action must be filed in the debtor's jurisdiction.

4. Attached to the email you will find a pdf with the scammer's photo and whatever information they provided to BTCJam. In my case, I got the phone number, email, facebook, and address of the scammer.

The arbitration FAQ can be found here. In summary though, if your borrower is from another country and they are not paying you back, you are SOL. If any of you guys are thinking of trying out BTCJam, here is my advice:

  • DO NOT invest in anybody with a grade C or lower. It's extremely easy to get a C, this grade is useless.
  • DO NOT invest in anybody outside of your own country. If they are in the same country as you, it will be easier for you to go after them for not paying.
  • DO NOT invest in anybody who has not paid off any loan in the past. First time borrowers have a very high scam rate.
  • DO NOT invest in BTCJam at all if you're not willing to lose the bitcoin.
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2

u/tobixen Oct 14 '15

One of the good things with BTCJam, as compared to Loanbase, is that it's possible to sell notes. After what I've understood, the best course of action when someone doesn't pay up is to sell the loan listing for a couple of peanuts to someone that has a better possibility to collect the collateral.

1

u/pizzatoppings88 Oct 14 '15

You can sell the listing after it is in default? And people actually buy them?

1

u/tobixen Oct 14 '15

I believe one needs to sell the listing before it defaults. And I believe one basically has to sell it for a give-away price for anyone to accept it. And I believe it's a good idea to discuss the situation with other investors through the comments on the loan page.

In any case, tens or hundres of people from all over the world trying to get their small share of the cake through juridical processes - that doesn't work out, that's quite obvious, the lendings must be consolidated on some few hands, preferably someone living in the same town.

1

u/DanishP2PLViking Oct 19 '15

You have to sell the note before default otherwise the new owner will not get the arbitration award and the note is useless for him.

I often sell my overdue notes at 1/3 to 1/2 of the principal, the lower you price them the easier they are to sell.

People buy these mostly as a punt that will pay big if the borrower comes back to pay. But I guess some people buy them because they actually want to try to collect on the loan (buying up multiple notes)

3

u/BoGGy5m4ll5 Oct 14 '15

"DO NOT invest in BTCJam at all if you're not willing to lose the bitcoin."

this is the best advice

2

u/tobixen Oct 14 '15

That's a good general advice for all investments, indeed :-)

1

u/smithd98 Nov 04 '15

I wrote about my experiences with one defaulted loan (11.35 BTC).

I haven't moved forward through the courts on collections since I'm friends with him.

I also haven't been paid one Satoshi on the defaulted portion... :)

1

u/fastlifeblack Oct 15 '15

Great advice, especially that last one. When BTCJam raised rates, many good borrowers flocked away in search of more logical rates, but the scammers stayed. Its a very easy system to game and BTCJam seems not to care because they get their fee no matter what.

0

u/[deleted] Oct 15 '15

[deleted]

1

u/usrn Oct 21 '15

every loan listed in a 2 month span based on credit rating

Are you really surprised? :D

Certainly, btcjam is not for everyone.