Coinbase: Multiple charges were caused by banks and card issuers

Some Coinbase customers had bank accounts emptied after being charged up to 50 times for a purchase.

Update 19 February 2018

Visa and Coinbase have released a joint statement on the incident.

"Over the last two days, some customers who used a credit or debit card at Coinbase may have seen duplicate transactions posted to their cardholder accounts. This issue was not caused by Coinbase. Worldpay and Coinbase have been working with Visa and Visa issuing banks to ensure that the duplicate transactions have been reversed and appropriate credits have been posted to cardholder accounts. All reversal transactions have now been issued, and should appear on customers’ credit card and debit card accounts within the next few days. We believe the majority of these reversals have already posted to accounts. If you continue to have problems with your credit or debit card account after this reversal period, including issues relating to card fees or charges, we encourage you to contact your card issuing bank. We deeply regret any inconvenience this may have caused customers."

Coinbase has recently been experiencing technical issues, with users reporting multiple charges being made to their real world bank accounts. This has led to issues such as the following.

Source

After investigating, while doubtlessly being inundated with semi-justified abuse from thoroughly dissatisfied customers, Coinbase has found the source of the issue.

"We have determined that the erroneous credit and debit charges are the result of Visa reversing and recharging transactions. This was not done by Coinbase. We are working with Visa to ensure all affected customers are reimbursed," it announced on Twitter.

"Over the last few months, large banks and card issuers requested that card networks change the MCC for purchases of digital currency. Visa changed the MCC for digital currency purchases to a code that allows large banks and card issuers to charge consumers additional fees... If you have been affected by any erroneous charges associated with purchases of digital currency with credit and debit cards, we are encouraging customers to contact their bank or card issuer and ask about the charges. In addition, please contact Coinbase support."

What happened?

MCC refers to Merchant Category Codes. These classify businesses by what kind of merchant they are. It's used to determine things like tax obligations, which fees may apply and similar. In the case of credit cards specifically, the MCC determines whether a purchase counts as a cash advance.

This in turn affects the kinds of rates and fees you might be charged. Credit cards will typically have higher interest rates for cash advances than other purchases.

According to Coinbase, banks were asking Visa to change the MCC for cryptocurrency purchases "to charge consumers additional fees." As a result, some purchases made at Coinbase from 22 January to 11 February 2018 may have been reprocessed and refunded. Up to 50 times in one case.

The heart of the problem seems to be that the delay between the issuance of new chargesmore info button and the refunds to offset them.

Basically, someone on the bank/card end of the line charged Coinbase customers multiple times for crypto purchases. The intention was to refund these extra charges appropriately, but the refunds didn't seem to arrive in time.

"Some customers might experience a delay between the issuance of the new charge and the offsetting refund, but ultimately customers should only have a single charge on their card statement," Coinbase said in a statement.

All Coinbase customers affected should be getting fully reimbursed, but it's not entirely clear who's going to cover any incurred overdraft fees and other charges, or medical expenses incurred for the heart attacks that Coinbase staff and customers probably experienced.

But this guy is probably out of luck.

Picture: Shutterstock

Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VEN, XLM, NANO, SALT