What is a Dispute Reserve?
A Dispute Reserve is a quantity of gold held in a special sub-account to cover
arbitration fees, and/or provide a refund to
a customer in case of a legitimate dispute. At iGolder, once a transaction has been completed,
the transfer of gold ownership is final.
Since there is no such thing as a chargeback or a payment reversal, a seller may
set aside a small reserve of gold as a proof of his willingness to refund his
customers (in case of a dispute). Without a Dispute Reserve, a buyer has no
direct recourse to get a refund once a transaction has been closed. iGolder
will never revert a payment,
even in the case the seller is found "guilty" by arbitration. iGolder
can only take gold from the Dispute Reserve to refund a buyer. By the
way, if a seller refuses providing a refund after losing a dispute, then his
reputation status is downgraded to
Unreliable. There are stiff penalties associated with the Unreliable status,
thus putting pressure to the seller to refund his customer, however iGolder will not interfere
by reverting the payment.
If a seller whishes to provide a refund policy to his customers, then he
is welcome to set aside a small reserve of gold on behalf of his customers. Aside of providing goodwill your customers, the Dispute Reserve also
gives you a discount on all transaction fees. The higher the amount
you set aside for your Dispute Reserve, the lower are your transfer fees.
Your maximum discount is 0.4% - which is almost half a percent for
every transaction. If you make a lot of trades, you should
consider a dispute reserve for the stake of reducing your transfer fees.
||Transfer Fee Reduction Bonus
|Less than 3 grams of gold
|Between 3 grams and 10
grams of gold
|Between 10 grams and 100
grams of gold
|Between 100 grams and 1,000
grams of gold
|1,000 grams of gold or more
The amount of gold in your Dispute Reserve is always disclosed in
your public profile, next to your Karma
score. After all, the idea of having a Dispute Reserve is showing to your
customers how much you are willing to refund them in case of a legitimate
To participate in certain activities, such as selling ATM Debit Cards, iGolder requires that you maintain a minimum Dispute
Reserve in your account to secure the performance of your payment
obligations. You are welcome to sell ATM Debit Cards without any
Dispute Reserve, however you will have to do it from your own website,
without being listed as a "certified" Debit Card provider.
In the end, it is up to the buyer to decide if he
wants doing business with a seller without any Dispute Reserve. The buyer
must assume the risk of doing business with a seller without a dispute reserve.
Lifespan of the Dispute Reserve
A buyer has 6 months to update his
and feedback comment, or initiate a
dispute regarding a transaction. A transaction is automatically
closed 180 days after the completion date of the transfer - provided of
course no dispute was initiated.
To secure a refund to the buyer, iGolder must therefore maintain the
Dispute Reserve to a lifespan of 180 days. If you wish to reduce or
take out your Dispute Reserve, then you have to wait 180 days from your last
transaction. If your dispute reserve was larger than the sum of all
payments you received during the past 180 days, then the extra reserve is
instantly available to you for spending, otherwise the amount is frozen
until the closing of all pending transactions.
Rationale of the Dispute Reserve
People with nothing to lose are more
likely to behave dishonestly, so giving credit to a well earned reputation
makes a seller (or buyer) bound to its reputation. Because a great
reputation takes a lifetime to build and seconds to lose, there is an
economic benefit for honesty; each new customer brings marginal profits compared to
massive losses associated with having a bad reputation
and losing many customers.
Is a Dispute Reserve Safe?
If a dispute is initiated against a member, his dispute reserve is
automatically lowered according to the dispute amount. Therefore,
the amount available in the Dispute Reserve is the
amount available for dispute resolutions. This amount is available a first-come first-serve basis when filing a dispute.
The combination of the Safetransit™
tool and the Dispute Reserve provides a powerful incentive to keep the
seller honest - even if the Dispute Reserve is rather small compared to the
total volume of transactions.
Why? Because an entire transaction may be conducted safely with
Safetransit without any Dispute Reserve. If a dispute arises within
Safetransit, the refund will be taken directly from the gold available in
Safetransit. If the seller does not want to chip-in for the
arbitration fees, then the dispute
award will automatically default towards the plaintiff and will result in a
Demerit Point to the seller.
Therefore, the amount in Safetransit is usually enough to take cover the
entire cost of a dispute, including the arbitration fees (if any) and/or
provide a full refund to the buyer.
iGolder offers another tool to secure the performance obligations of the
parties. The buyer and seller may negotiate a
Cancellation Provision in case one
party decides to cancel the trade.