On February 16, 2018, news began to filter out from Reddit and several social media platforms that Coinbase users were experiencing unexplained charges and deductions on their Visa debit and credit cards. A vast majority of these charges and deductions were carried out multiple times, with some users experiencing more than 50 duplicate charges and deductions from their Visa cards.
Getting Down to Brass Tacks: Who’s at Fault?
Coinbase had been on the wrong end of some technical issues in the last few months, and so when the story broke, the blame was put squarely on the cryptocurrency exchange platform.
Reports have now emerged that the problem was indeed from Visa and not from Coinbase as initially thought. At the onset of the problem, unconfirmed rumors were making the rounds that Coinbase was somehow making unauthorized withdrawals from the bank accounts of its customers.
Visa then released a statement putting the blame squarely on Coinbase saying that they hadn’t carried out any significant changes to their operating protocols that would cause the occurrence of multiple charges and deductions. However, the payment platform seems to have made a complete 180 by stating that cryptocurrency exchange platform was not to blame.
— Coinbase (@coinbase) February 17, 2018
In a statement issued by both Visa and Worldpay, Coinbase was absolved of any fault in the problem and assured users that steps were being taken to rectify the problem. The statement went on further to say that modalities have been put in place to reverse all duplicate charges and deductions.
In the following business days, customers should have begun to see the reversal reflecting in their account balances, according to Visa and Worldpay. In the event of any charge or fee not being reversed, customers were advised to get in touch with their card issuing bank to register a complaint. Worldpay is the Coinbase payment processing partner.
According to a TechCrunch article, the problem appears to have been caused by Visa classifying credit card transactions on the Coinbase platform as being cash advances. This definition meant that such operations attracted a higher fee. While this is in itself not an issue, the problem came about because Visa allegedly decided to apply the new charges to old transactions retrospectively.
Because there is always a considerable lag-time between records being updated in the banking and credit card network, users started seeing odd deductions on their accounts.
Coinbase has been in the wars recently about a plethora of technical issues that have emerged over the past few months. This development will, however, come as a small victory for the platform as it looks to regain a bit of confidence among its customers.
In a tweet by Coinbase CEO, Brian Armstrong, he expressed delight at the development and spoke of his company’s resolve to pre-empt such issues in the future to get ahead of them. Dan Romero, the VP, and GM of the cryptocurrency exchange platform had been bullish in asserting that Coinbase wasn’t to blame during the crisis.