Coinbase slammed for what users say is terrible customer service after hackers drain their accounts

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For Tanja Vidovic, it was a consequence of panic : She had received a series of alerts about person changing access to her cryptocurrency account. And she realized, as she stared at her calculator filmdom, that about all of her $ 168,000 in holdings was gone — vanished before her eyes. She was stunned. closely four months have passed, and it has so far to sink in, she said. Tanja and Jared Vidovic jumped into cryptocurrency investing in 2017 and watched their funds closely quadruple over four years. The Vidovics used Coinbase, the nation ‘s largest cryptocurrency rally, for their dip into the virtual currency. On exchanges such as Coinbase, users can deposit U.S. dollars and trade them for cryptocurrencies, such as bitcoin and ethereum, which the couple purchased. “ I looked into Coinbase, and it seemed like it was one that everybody used and trusted, ” Tanja said. The growing investment was a welcome blessing for the Safety Harbor, Florida, match and their three children. But in belated April, Tanja, a fireman, opened her computer to a bombard of security alerts and password transfer notifications. “ I signed onto the crypto. And I said, ‘It ‘s gone, ‘ ” Tanja said. The Vidovics said they tried to contact Coinbase but they could n’t get anybody on the earphone. Interviews with Coinbase customers around the nation and a review of thousands of complaints reveal a model of report takeovers, where users see money on the spur of the moment vanish from their history, followed by poor people customer service from Coinbase that made those users feel entrust hang and angry. Making the exit even worse, cryptocurrency transactions can not be reversed, according to the FBI. Experts say once criminals access an account, funds can be drained in minutes. Coinbase, which went populace in April, has a market crown of about $ 65 billion, has more than 68 million users in 100-plus countries, more than 2,100 full-time employees and $ 223 billion in held assets, according to the caller. The Coinbase cryptocurrency exchange app pictured on the sieve of an iPhone on February 12, 2018. Chesnot | Getty Images “ hopefully, Coinbase going public and having its direct list is going to be viewed as kind of a landmark moment for the crypto space, ” CEO Brian Armstrong told CNBC in April, when the company went public. “ multitude no long need to be scared of it like in the early days. ” While the cryptocurrency central ship’s company has grown quickly, complaints have continued to arise. Since 2016, Coinbase users have filed more than 11,000 complaints against Coinbase with the Federal Trade Commission and Consumer Financial Protection Bureau, largely related to customer service. former employees told CNBC the company ‘s customer service practices shifted over meter, with representatives struggling to keep up with demand .

Money vanished

The Vidovics ‘ account had risen to $ 168,596 on April 28 when the hack occurred, according to report statements the Vidovics shared with CNBC. That measure was basically wiped out, with entirely a $ 587.15 libra shown the future day. Tanja and Jared Vidovic with their daughters. source : CNBC Like the Vidovics, Ben, a Virginia resident who asked that his last name be withheld, said he saw thousands of dollars disappear. He logged onto his Coinbase app in March, verifying his identity with two-factor authentication, but over a four-minute stretch about $ 35,000 in respective coins disappeared from his report, he said. In a reception to his frantic electronic mail, Coinbase told Ben his computer had been hacked and there was n’t anything the company could do. “ I truly am baffled, ” he said. “ It merely seems to me that Coinbase did absolutely zero inquiry and just said, ‘Hey, yeah, regretful. ‘ ” The CFPB responded to one of Ben ‘s ensuing complaints with an answer from Coinbase ‘s Regulatory Response Team. The electronic mail noted that transactions on the blockchain are irrevocable and said Coinbase ‘s indemnity policy does not cover larceny from individual accounts. “ There is no credible or bearable evidence that the compromise of your login credentials was the fault of Coinbase, ” the message said. “ As a result, Coinbase is ineffective to reimburse you for your allege losses. ” finally, the company sent a $ 200 credit, telling Ben, “ your Coinbase experience and your expect for a response to your formal complaint was not up to our standards. ” Experts say SIM swap, where fraudsters seize control of a victim ‘s call number and SIM card through their phone company, is to blame for many of the cryptocurrency thefts. “ The problem with SIM swapping and cryptocurrency is the moment you lose access to your cell earphone, master hackers will steal all of your money in less than 30 minutes, ” said David Silver, an lawyer who focuses on cryptocurrency. David Silver is an lawyer specializing in cryptocurrency. source : CNBC Silver, whose fast represents the Vidovics, said the acme complaints from potential clients are getting locked out of their cryptocurrency exchange platform explanation and SIM swaps. “ Most people who contact me would tell you it ‘s poor customer servicing, ” Silver said. “ They ‘re being about victimized twice. Because they themselves have about no ability to contact Coinbase and share with them directly, they ‘re forced to retain professionals. ” Etay Maor, senior director of security strategy for cybersecurity company Cato Networks, said he ‘s seen cybercriminals on the dark web discussing how to break into accounts, including those of Coinbase users. once hackers break into Coinbase accounts, they put them up for sale on the dark web, according to Maor. He said while credit cards sell for a few dollars, hacked Coinbase accounts can sell for $ 100 to $ 150. “ These exchanges have to invest heavily, invest in security if they want to take it badly, fair like the banks have done and have learned the unvoiced way, ” Maor said. score takeovers are on law enforcement ‘s radar. “ When the attacker withdraws those funds from the exchange, that ‘s not a transaction that you can take back, ” Ali Comolli, a management and plan analyst at the FBI, told CNBC. Ali Comolli is a management and program analyst at the FBI.

generator : CNBC Comolli said the FBI tries to help victims of account takeovers recover their stolen money. “ It ‘s obviously a huge affect on the victims, which is incredibly difficult for them, ” Comolli said. After a reappraisal of Coinbase ‘s complaints, the Better Business Bureau in March determined the company has a “ form of complaints from customers who state they are locked out of their accounts, even after providing necessitate information or updates. ” The organization has received 1,128 complaints in the by three years, according to its web site. BBB said it sent a letter to Coinbase in order to address the customers ‘ complaints and receive feedback from any follow through improvements. The group has “ not heard a reply from this clientele, about the site, blueprint of complaints for the last three years, ” Alma Galvan, a market and communication director with the organization, said in an electronic mail to CNBC. Some customers with lost funds turn to social media to seek avail from Coinbase or find community with other disgruntle users. Members of a 941-person Facebook group called “ Coinbase Corruption/Scandal Awareness Group ” update the page with their struggles to recoup money and accounts. One post horse referred to the group as a “ deplorable party, ” and respective have brainstormed new places to report their complaints and raw methods to pressure Coinbase into making them unharmed. Complaints abound on Reddit and Twitter arsenic well, where the company ‘s subscribe accounts much publicly reply to the messages, sometimes writing that they have “ escalated ” the topic to an appropriate team. The Coinbase Support account on Twitter besides posts alive updates about changes and irregular errors on the exchange platform .

Struggling to keep pace

As the company has scaled into its massive size, customer service practices have changed, former Coinbase employees told CNBC. In Coinbase ‘s early years, employees spoke with customers through a live serve chew the fat. Jason Rose, who worked half-time in customer military service at Coinbase from 2014 until 2016, said many customers asked for reassurance about cryptocurrency. “ They need that touch of person being there while they ‘re going through this complex transaction, ” he said. When Rose worked at Coinbase, he said live chew the fat acted as a sort of “ free valve ” for complaints, peculiarly helpful in moments of crypto volatility. As the company grew, Rose said, his role changed. Coinbase started a repository of answers to frequently asked questions in ordain to automate its customer service. Rose said when he left in 2016 Coinbase was starting to phase out exist chew the fat. “ The decision to do that was black because the meter that it took to respond rear to emails took a lot longer than it would for a alive new world chat. thus, we went back to the e-mail box, taking five days to complete a problem that could have been solved in a few minutes, ” he said. Jacques Reulet besides fielded customer issues and said it was hard to keep up. “ We were very diligent about making surely that everyone who wrote in got a response, but things were getting a little unresponsive towards the end [ of my time there ], ” said Reulet, who worked in operations and conformity at Coinbase from 2014 to 2015. “ The plain scale at which the ship’s company was growing was a draw to handle. I did n’t see that we were keeping up. ” On Jan. 15, Coinbase acknowledged that many new and existing customers are experiencing delays in their reply time. “ We recognize this is frustrating. This is not the know we want for you, our customers, ” said Casper Sorensen, vice president of customer experience, in a web log stake. A July web log post announced the company ‘s intent to roll out live chat message and call hold this year, arsenic well as to expand its customer accompaniment team. The customer service issue besides came up on an earnings name early this month. “ so gallant to report that we are doing much better [ with customer service ], but there ‘s constantly more to do, ” said CEO Armstrong. “ We ‘ve increased the head count five times or so since January, beginning of this year, working on patronize specifically. ” Coinbase, which declined repeated requests from CNBC for an on-camera interview, alternatively said in an electronic mail, “ Over the years, we ‘ve systematically updated our customer defend offerings to help us scale. In early 2020, we moved to email as our primary channel of support. many of our customer inquiries require our agents to conduct a significant amount of research to resolve the write out. And, to avoid long wait times, communicating asynchronously via e-mail was the prefer method. however, we recognize that customers want real-time corroborate, and that ‘s why we ‘re rolling out call support for ATOs this month and bouncy messaging for all customers later this year. ” Asked about the numeral of customer military service complaints, the caller said : “ Over the past several years, our customer al-qaeda grew exponentially. We grew from 43+ million users at the end of 2020 to 68+ million registered users, as of June 30, 2021. Through all this emergence, some of our customers unfortunately experienced challenges and delays reaching our subscribe team, which resulted in a negative impingement for some of our customers. Improving our customer experience remains a top precedence for Coinbase. ” The company would not disclose how many customers ‘ accounts have been taken over by fraudsters or the total measure it has refunded customers as a leave of hacks. It added that since customers have a two-factor authentication, at the minimum, to access their accounts, only “ a small number ( less than .01 % ) of our customers have been impacted by account takeovers. ” Marci Preble, a California-based seller, said Coinbase did credit her account the approximate sum of her original investment. But she said that was after months of a nightmare of what seemed like dateless emails. Marci Preble source : CNBC Preble had saved adequate money to take the immerse into bitcoin and ethereum earlier this class, investing about $ 8,000. By April, her investment had grown to $ 12,000. But one day that calendar month, when she was trying to buy more crypto, it all started vanish, she said. “ In front of my eyes, it went to $ 800, ” she said. Suspected fraudsters were able to somehow gain entree to her account. To this day, she said she still has no mind how they did it. “ Horrifying. And all I think could think is, ‘Wow, should n’t there be a better firewall ? ‘ ” Like the Vidovics, Preble said she never spoke to a human — barely e-mail after electronic mail. then, suddenly in August, she regained access to her bill. There was just $ 502 left in it. But to her shock, the following day, she received an electronic mail from the company informing her that it had transferred $ 6,583 in ALGO coin. “ My question is how can a publicly traded company on the New York Stock Exchange be doing this to customers ? How can they not have a customer service dedicated line global ? ” Preble said. Tanja and Jared Vidovic said they have not been able to recover their stolen funds. After CNBC inquired about what happened to the couple, Coinbase sent Tanja an electronic mail on Aug. 20 that said the company “ does not have the ability to reverse crypto transfers sent off our platform. Unlike traditional banks or credit card companies, once crypto currentness transfers are confirmed on the blockchain, they are permanent wave. ” “ Because this fire was not the result of a breach of Coinbase security or our systems, we can not reimburse you for this personnel casualty. This attack was only possible because the attacker had anterior access to your electronic mail score and entree to your 2-factor authentication codes ( meaning they had access to your earphone number through a SIM barter ) before they attempted to access your Coinbase account, ” the electronic mail said. Jared, a nurse, said he knew a cab was possible. “ But you do n’t think it ‘s going to happen to you. You think that a long as you ‘re careful with your password, you do n’t have a virus on your computer. ”

If you think you are the victim of an account coup d’etat, the FBI asks that you report it to your local FBI office or the Internet Crime Complaint Center at IC3.gov. Please email tips to investigations @ cnbc.com .

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