Online payment system E-Gold and its parent company have emerged as a preferred service for fraudsters and child pornography vendors, violating a handful of federal and local laws in the process, a new grand jury indictment alleges.

Digital Currency Business E-Gold Indicted for
Money Laundering and Illegal Money Transmitting

Non-reversible transactions

Unlike credit cards, there is no way of having transactions reversed, even in case of a legitimate error or an unauthorized expenditure. e-gold's Terms of Use stipulate that all transactions are final and e-gold cannot be held responsible for any spend. In this respect, an e-gold spend is more akin to a cash transaction (except for the fact that there is a fee levied) while PayPal transfers, for example, could be considered more similar to credit card transactions.

Security

As with any online payment system, e-gold is vulnerable to various threats, notably phishing (for example, forged emails asking for login details) and malware (such as keystroke logging spyware).

e-gold offers no protection whatsoever if an attacker succeeds in obtaining:
the user's e-gold account number
the user's e-gold password
access to the user's registered email account (web-based email accounts without a secure login are especially vulnerable) as the e-gold account will then be completely open for malicious use.

"Unfortunately we will not be able to refund your money because all e-gold spends are final and not reversible as stated in the e-gold account user agreement. e-gold is also contractually prohibited from freezing e-gold accounts or releasing e-gold account information in the absence of a court order or subpoena. You might want to consider obtaining some combination of help from a legal professional or law enforcement to obtain a court order, if the size of your loss warrants expenditure of your resources (time and money) to resolve."