Business 19 February 2018Vince Dioquino
Coinbase users hit with unauthorized charges, Visa takes blame
Several complaints regarding multiple charges on Coinbase customers’ credit and debit billing statements have made waves on Reddit and other social media platforms, prompting the cryptocurrency exchange company to investigate and issue an official statement.
At r/Coinbase, users complained that they’ve lost amounts ranging from a random hundred dollars to multiple charges amounting to $17,000. While some of the users were merely worried, some users based in the U.S. have taken to calling for a class action lawsuit, filing official complaints to the Consumer Financial Protection Bureau (CFPB).
In the wake of these complaints, Coinbase immediately issued a response via a Twitter thread. In the official statement, Coinbase said that the erroneous credit and debit charges were the result of Visa’s reversal and recharging of transactions. Visa has since issued a joint statement (published through the Coinbase blog) with its partner payments processor Worldpay, which handles all Coinbase transactions in Visa’s network. In the statement, Visa admitted responsibility and cleared Coinbase of any liability regarding the matter.
The issue had precedence, given how over the previous months, “large banks and card issuers requested that card networks change the MCC for purchases of digital currency,” according to Coinbase, adding that “Visa changed the MCC for digital currency purchases to a code that allows large banks and card issuers to charge consumers additional fees.”
MCC, or merchant category code, is a standard used to classify a certain business or purchase based on the kind of service it renders. In the U.S., merchant category codes are mandated by the Internal Revenue Service to determine how the purchases are taxed.
While all the charges to Coinbase users appeared to be valid and legitimate, they were duplicated without authorization from the user. The duplications (or multiple charges, in some cases) appeared to be caused by faulty code between Visa’s network and Worldpay’s payment facility.
The two companies assured Coinbase users that all reversal transactions have been issued and should reflect on their credit and debit card accounts within the next few days. It’s worth noting that Coinbase has faced issues with unauthorized charges and fund mishandling before, but the exchange company has resolved these professionally. At the time of writing, several users are still posting at r/Coinbase, complaining that their issuing banks still won’t accept their requests for refunds.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
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