Coinbase responds to rampant overcharges: ‘We have identified a solution’

Digital currency exchange Coinbase responded this afternoon to a report from The Verge regarding rampant overcharging of users and unauthorized withdrawals from their accounts, saying in a statement that the company has “identified a solution” to the problem. The issue, which began percolating on the dedicated Coinbase subreddit late last week, appears to be related to a recent change in the way credit cards classify digital currency transactions. Users were reporting empty cryptocurrency accounts as a result, which was creating panic and calls for legal action among Coinbase customers.

“We’re currently investigating an issue where some customers were charged incorrectly for purchases of digital currency with credit and debit cards,” the statement reads. “This is related to the recent MCC code change by the card networks and card issuers charging additional fees. We have identified a solution and future purchases will not be affected. We will ensure any customer affected by this issue is fully refunded.”

Coinbase says it expects refunds to happen for customers automatically through their respective banks. It also advised affected users to contact Coinbase’s support line at support@coinbase.com. “We will be reviewing all card transactions from the last few weeks to ensure all affected customer are notified. We will post on Twitter and our blog with further updates,” the statement concludes.

Later on in the evening, Coinbase posted a blog post with additional details. “Coinbase will ensure that each affected customer will be refunded in full for any erroneous charge,” the company writes. “Our processor confirmed that any erroneous charges will be refunded over the next few days.” The company further clarifies how the issue arose from the merchant category code, or MCC, change asked of by card issuers and banks and the time period within which transactions could have led to unexpected withdrawals, charges, or refunds:

Card issuers and banks recently requested that the MCC for digital currency purchases be changed by a number of the major credit card networks. As a result, purchases that occurred between January 22nd, 2018 and February 11th, 2018 may have been refunded and reprocessed—resulting in erroneous charges. 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.

We deeply apologize for any frustration this may cause. We are actively working with banks, processors and networks to improve the digital currency purchasing experience.

This particular issue only compounds recent problems at Coinbase, a San Francisco-based company and one of the world’s most popular digital currency exchanges. As Bitcoin has suffered volatile ups and downs this past year, companies like Coinbase have struggled to maintain a stable product and keep customers reassured they’re fast-changing cryptocurrency fortunes are at the very least safe and securely stored. Bitcoin today briefly surpassed $10,000, just as Coinbase announced this morning a new PayPal-like e-commerce product for online merchants to accept crypto payments.

Update at 7:55PM ET, 2/15: Added additional details from Coinbase’s blog post.

https://www.theverge.com/2018/2/15/17018162/coinbase-overcharging-bitcoin-cryptocurrency-response-solution