Coinbase Promises Refunds After Repeatedly Charging Users Erroneous Fees
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A number of Coinbase customers found themselves hit with duplicate charges for a single card-based purchase over the past few days. Some even reported losing tens of thousands after being charged 17, even 50, times.
In a blog post updating customers about the situation, the cryptocurrency exchange has promised to "ensure that each affected customer will be refunded in full for any erroneous charge." The company said that after conducting an internal investigation, it has determined that the problem was a result of Visa reversing and then recharging transactions. As you know, it usually takes a while for both debit and credit card refunds to show up.
In a tweet elaborating on the results of its investigation, Coinbase said that Visa payments on its website glitched, because the credit card network has changed the Merchant Category Code (MCC) for digital currency purchases. The new code apparently allows credit card providers to treat cryptocurrency buys as "cash advance" in order to charge additional fees. A Coinbase staff member revealed the code change in a Reddit post in early February, shortly before a bunch of banks decided to ban digital coin purchases using credit cards. The banks cited cryptocurrency's volatile nature and the risks associated with it as the reason behind the ban.
Visa, however, denied that it's to blame for the incidents. Its official statement published by CNET reads:
"Visa has not made any systems changes that would result in the duplicate transactions that are being reported. We are also not aware of any other merchants who are experiencing this issue. We are reaching out to this merchant's acquiring financial institution to offer assistance and to ensure cardholders are protected from unauthorized transactions."
Regardless of who's at fault, Coinbase VP Dan Romero said it's "working closely with Visa to ensure affected customers are being refunded as soon as possible." The company will also contact customers who made transactions over the past few weeks to make sure they check their banks and CC statements. On Twitter, the exchange revealed that it's working with major credit card networks to create a brand new MCC for cryptocurrency purchases -- one that won't charge customers additional cash advance fees.
2/ 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.— Coinbase (@coinbase) February 16, 2018
4/ 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.— Coinbase (@coinbase) February 16, 2018