Coinbase, a San Francisco- based exchange confirmed that it has severely overcharged its debit and credit card users that is reportedly more than 50 times of the correct amount after users complained about it, on Reddit. The company cited a recent change brought by credit companies the reason for the same.
Users’ are complaining against increasing coinbase fees
Just a few days back, Coinbase launched its e-commerce site and now it has confirmed draining the bank account of its users by overcharging their debit and credit card purchases. It all began when the customers of Coinbase complained that the cryptocurrency exchange withdrew all of their money out of their accounts. In some cases, this drainage left the accounts with zero amount that further resulted in overdraft charges.
As explained by a user on Reddit, he purchased bitcoin, ethereum, and litecoin in February, for an amount of $300. And after a few days later, the transaction repeated itself five times resulting in $1,500, even though the user had not made any purchases. This resulted in charges and overdraft fees.
Another user posted on Reddit that he has been charged about 17 times the expected amount on his $1000 purchase. Apparently, this mistake left the user broke.
Coinbase, one of the most popular digital currency exchanges, also confirmed that it accidentally drained the users’ bank accounts.
According to Justin, an official member of the engineering team of Coinbase confirmed with:
“We are actively investigating some reports from our customers about unexpected credit or debit card charges appearing on their statements from previous Coinbase purchases. We can confirm that the unexpected charges are originating from our payment processing network, and are related to charges from previous purchases. To the best of our knowledge, these unexpected charges are not permanent and are in the process of being refunded. We are running joint investigations with all parties involved, and will provide updates as we receive them.”
Visa is apparently the culprit here
Initially, it has been unclear as to what was the cause of the problem. This led to people alleging that Coinbase was withdrawing the unauthorised money out of the accounts of its users. However, Coinbase offered a bit clarity on the issue and stated that the problem was with Visa, their credit card processor. To be specific, this was all because of Visa reversing and recharging the past charges in order to classify the coinbase transactions as “cash advances”.
It has only been last week that most of the banks and card issuers changed their Merchant Category Code for Coinbase. This means all the transaction will be classified as “cash advances” meaning your bank will be charging a higher fee.
As this extra fees won’t go to Coinbase, it’s a negative step for the exchange. This higher fees might also result in the decline of users purchasing cryptocurrency with their credit cards. However, this move has to come later while Visa revised and recharged some transactions without warning.
Coinbase comes up with solutions
As a solution to this problem, Coinbase expects the refunds of customer’s funds automatically through their respective banks. The exchange has also asked the affected users to contact the support line of the Coinbase i.e [email protected].
According to the statement released by Coinbase:
“We will be reviewing all card transactions from the last few weeks to ensure all affected customers are notified. We will post on Twitter and our blog with further updates.”
Coinbase provided additional details later in the evening that mentioned:
“Coinbase will ensure that each affected customer will be refunded in full for any erroneous charge. Our processor confirmed that any erroneous charges will be refunded over the next few days.”
Well, it’s all good for now, however, Coinbase surely seems like prone to these glitches. It hasn’t been long when the exchange was involved in insider trading of bitcoin cash and now this. What do you think of this scenario, let us know your thoughts below!
I am an entrepreneur and a writer with a bachelors degree in Computer Science. I manage the blockchain technology and crypto coverages at Coingape. follow me on Twitter at @arya_achal or reach out to me at achal[at]coingape.com.