Bank chose correct reason for chargeback request to cryptocurrency trader’s bank

Categories:
Chargebacks,
Summary:
Orion disputed transactions totalling $30,000 made on his credit card to a cryptocurrency trader in between October and December 2021. He said the trader had lulled him into using its service based on promises of returns and trades, but he had suffered losses as a result of the trader “closing out” trades early. He said he had subsequently discovered the trader was not registered to provide a financial service in Vanuatu, the country it operated out of (even though it said it was), and that the Vanuatu Financial Services Commission had issued a “fraud notice” about the trader. He asked the bank to try to recover the money via chargebacks. The bank did so, but without success.
Published:
August 2024

Orion said the bank had not sought the chargebacks for the correct reason. He said it should have used the code for “fraud”, not the code for “defective/not as described”. 

 

Our investigation


We were satisfied the bank had used the correct code because Orion was, in essence, complaining that the trader had misrepresented its services. The bank could not have used the code for “fraud” because Orion himself had made the transactions. He had not been deceived into making the transactions; rather, he was alleging he had been deceived about the nature of what those transactions would buy, that is, the nature of the service he would receive. We were also satisfied the bank had acted correctly in attempting the chargebacks – even though it had warned Orion its attempts were unlikely to succeed – and then in asking the credit card company, MasterCard, to arbitrate when the trader disputed chargebacks.


Outcome

We did not uphold Orion’s complaint.

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